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EIS Fund Fee Transparency
Fees charged by EIS and SEIS Funds
The returns an investor gets from an investment in an SEIS or EIS funds will be impacted by various fees, whether these fees are charged directly or indirectly.
Direct fees, as the name suggests, are those levied at the investors themselves and will directly impact the percentage of their investment that is deployed into portfolio companies. Direct fees also come in the form of performance fees which haircut the returns above a certain threshold level. These performance fees align the Fund Manager with the investor as the better the performance of the companies, the greater the benefit to both the investor and Fund Manager.
Indirect fees are levied at the portfolio companies and will ultimately reduce the amount of the investment available to them to utilise and potentially impact the cashflow of the respective portfolio companies ongoing if there are annual charges. There can also be specific fees for the Fund having a director on the board or due diligence on the companies for example.
Fee structures for SEIS and EIS funds vary from one to the other and fees can be levied exclusively to the investor, exclusively to the portfolio companies, or can be levied at both. Whilst there’s no standard fee structure in the industry it’s very important that investors and advisers understand the impact that fees can have on the returns they will receive from their investment.
All fees, both direct and indirect, will ultimately impact the returns of the fund. Funds may market themselves as investor fee free and this can be true, but there’s no such thing as a fee free product (currently) so there will be fees being levied at the investee companies.
It is critical that Fund Managers are open with their fees and disclose all of the fees associated with the investment. A more in depth article on the different types of fees and their impact on SEIS and EIS Fund returns can be found here.
The table below has been constructed using signed off fee plans from each of the Fund Managers and is a first step towards fee transparency in the industry. Fee calculators will soon be available for each fund to help advisers and investors alike, understand the level of fees that can be charged over a five-year period from subscription.
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Table of Charges for Advised Clients
A brief summary of the Fund and fee notes for each of the Funds listed in the table can be found below the table and can be easily accessed by clicking on the Fund name in the table. It is important to read these notes alongside the data in the table to better understand how the various charges are levied.
Funds only applying Direct Investor Fees
The Haatch EIS Fund is an unapproved EIS fund targeting a 3x return to investors. The fund invests in a portfolio of 4-6 unquoted companies with a focus on B2B SaaS, solving deep pains and/or creating significant impact for organisations. Investment is done at the Pre-seed and Seed stage with typical investment is between £200-600k (+ British Business Investment monies per company).
Fee Notes
Direct Fees – Fees are charged to investors in a simple investor fee model as a single one-off initial fee of 10% and then a performance fee on exit.
Indirect Fees – Haatch does not charge its investee companies.
The Haatch SEIS Fund is an unapproved SEIS fund targeting a 5x return to investors. The fund invests in a portfolio of 9-15 unquoted companies with a focus on B2B SaaS businesses solving deep pains and/or creating significant impact for organisations. Investment is at the MVP/Pre-Seed stage with typical investments of £200-250k (+ British Business Investments per company).
Fee Notes
Direct Fees – Fees are charged to investors in a simple investor fee model as a single one-off initial fee of 10% and then a performance fee on exit.
Indirect Fees – Haatch does not charge its investee companies.
The Octopus Ventures EIS Service is an unapproved fund targeting a 10x return on the initial investment into each company. The Fund invests into a portfolio of 10 – 15 high growth companies across five specialist sectors: Health, Consumer, Fintech, Deeptech and B2B Software. Investment is done at the early stage with typical investments of between £3m – £5m per company, with co-investment from Titan VCT and (where relevant) the Future Generations VCT.
Fee Notes
Direct Fees – Octopus AMC is deferred until each company is sold and contingent on its performance. It accrues in the portfolio based on the value of the share, if the company is sold for more than Octopus invested, then Octopus are entitled to collect the AMC accrued. If not, it is not payable.
Indirect Fees – Octopus does not charge its investee companies.
Octopus Ventures Knowledge Intensive EIS Fund
The Octopus Ventures Knowledge Intensive EIS Fund is an approved fund targeting 10x return on the initial investment into each company. The Fund invests into a portfolio of 10 – 15 high growth companies across five specialist sectors: Health, Consumer, Fintech, Deeptech and B2B Software. Investment is done at the early stage with typical investments of between £3m – £5m per company, with co-investment from Titan VCT and (where relevant) the Future Generations VCT.
Fee Notes
Direct Fees – Octopus AMC is deferred until each company is sold and contingent on its performance. It accrues in the portfolio based on the value of the share, if the company is sold for more than Octopus invested, then Octopus are entitled to collect the AMC accrued. If not, it is not payable.
Indirect Fees – Octopus does not charge its investee companies.
The Oxford Capital Growth EIS Fund is an unapproved EIS fund targeting a 2.5x return to investors. The fund invests into a portfolio of 8-12 unquoted companies with a focus on FinTech, Digital Health, Digital Security, Future of Retail, AI and B2B SaaS. Investment is done at the Seed stage onwards with typical investments of up to £1m per Seed company, and £1.5m to £5m for follow-on.
Fee Notes
Direct Fees – The Oxford Capital fee structure differs from many of their peers and is designed to further align their interests with those of the investor. To summarise, the initial fee reduces for larger subscriptions and Investors will only incur the annual management charge for 7 years. The initial fee starts at 5% for investments between £25,000 and £74,999, reducing in increments down to 1% for investments above £500k. An annual management charge (AMC) of 1.25% + VAT of the net subscription will be charged annually for 7 years. Two years of AMC are reserved at subscription. There will be a Custodian share purchase transaction fee of 0.2% of net subscription and in addition to the AMC, Oxford Capital will charge an annual administration fee of £100 to cover costs from the Custodian and audit fees.
Indirect Fees – If Oxford Capital is playing a significant role in making an investment into a company, such as acting as lead investor, they may charge a transaction fee to the portfolio company. This can be up to 2% of the amount invested. This is not a direct charge on the investor’s portfolio.
The Parkwalk Opportunity EIS Fund is an unapproved fund targeting a 2-2.5x return to investors. The fund invests into a portfolio of 8 unquoted and/or AIM Listed companies with a sector agnostic approach but a focus on technology spinouts from UK universities. Investment is done at the Series A-C stages with typical investment size of £5m per company.
Fee Notes
Direct Fees – The Annual Management Fee is payable annually in advance for 2.5 years at a rate of 1.5% (plus VAT) of the net subscription amount. For the period from 2.5 years to 5 years the annual management Fees will accrue interest at a rate of 1.5% (plus VAT) of the net subscription amount. These accrued Annual Management Fees will only become payable upon the cash realisation from the exit of each Investment.
Indirect Fees – Parkwalk does not charge fees to the investee companies.
Seneca AIM EIS Fund
The Seneca AIM EIS Fund is an unapproved EIS fund targeting a 1.8x return to investors. The fund invests into a portfolio of 5-10 AIM listed companies with a generalist approach across diverse sectors. Investment is done at the pre-revenue, pre-profit and post profit stages (no Seed) with typical investment size of £0.5m-£2m per company.
Fee Notes
Direct Fees – Advised investors will pay a 2.5% + VAT Initial Fee (minimum of £500). The fund then charges a Dealing Fee of 0.5% + VAT of any shares bought after the initial fee has been levied meaning that 96.42% of the subscription is potentially eligible for tax relief. There is no Annual Management Charge. Instead, there is a Realisation Fee of 4% + VAT charged on any exit proceeds.
Indirect Fees – There are no fees levied at the EIS Investee Companies.
Funds applying both Direct Investor Fees & Indirect Investee Company Fees
Ascension EIS Fund
The Ascension EIS Fund is an unapproved EIS fund targeting a 3x return to investors. The fund invests into a portfolio of approximately 10 unquoted companies with a focus on Deeptech, FinTech, eCommerce, Sustainability, New Work, Next Generation Media and Health. Investment is done at the Pre-Series A stage with typical investments of between £200k – £400k per company.
Fee Notes
Direct Fees – Ascension Ventures charges a 5% up front initial fee at the point of Subscription, meaning 95% of the investor’s subscription amount is deployed and thus eligible for tax relief. The manager charges a deferred Annual Management Fee of 1% but this is only payable upon any distribution made to Investors.
Indirect Fees – An initial charge may be payable to the Manager of up to 5% of the Fund’s investment in the Investee Company. This initial charge may be charged to the Investee Company.
The Blackfinch Ventures EIS Fund is an unapproved EIS fund targeting a 3-5x return to investors. The fund invests into a portfolio of a minimum of 10 unquoted companies with a focus on Technology. Investment is done at the Venture Stage with typical investments of between £500k-£1.5m per company.
Fee Notes
Direct Fees – Blackfinch charges a fee of 3% to establish a client’s portfolio (after deduction of adviser fees). This fee sits outside the investment and investors won’t benefit from EIS tax relief on it.
Indirect Fees – Blackfinch charges an arrangement fee of 0.5-1% and an upfront ancillary fee of £10k per Company. Blackfinch only applies their AMC, of 2% of capital invested, to the portfolio companies for the first four years of the investment.
The Committed Capital Growth EIS Fund is an unapproved EIS fund targeting a 2-3x return to investors. The Fund invests into a diverse portfolio of 10-12 unquoted companies with a focus on tech enabled companies. Investment is done at the Growth Stage (Companies must have £1m+ annualised revenues) with typical investment size of £3m per company.
Fee Notes
Direct Fees – Committed Capital calculate their AMC against the “Managed Investment Amount” which is the Gross Investment less the Initial Charge and any Adviser Charge. 3 years of the Annual Management Charge are withheld at the point of investment as cash in the client account, and charged against quarterly. In years 4 and 5, the Managed Amount will be reduced by any investment returns (at cost) made to the client and the 2% charge (plus applicable VAT) will be accrued until returns allow the charge to be paid. The performance fee of 20% will only apply to investee company exit proceeds once the Gross Investment amount has been returned.
Indirect Fees – 3% Initial Arrangement Fee and £15k – £20k Non-Executive Director Fee (if applicable).
The Deepbridge UK Innovation Seed Fund is a SEIS Fund targeting a minimum of a 3x return to investors. The fund invests into a portfolio of around 10 unquoted companies with a focus on catalyst technologies including deeptech and life sciences. Investment is done at the seed stage with typical investment size of £150k-£250k per company.
Fee Notes
Direct Fees – An Initial Fee of 3.5% (plus VAT) is charged on the Subscription Amount once your application to the Service is accepted.
Indirect Fees – An Initial corporate advisory and arrangement fee of 3% +VAT of the investment amount is charged to each Investee Companies at the time of investment, along with a dealing charge of 0.65% + VAT. There are no annual management charges to the companies though there is an annual custody fee of 0.5% + VAT.
The Fuel Ventures SEIS Fund is an unapproved SEIS fund targeting a 5x return to investors. The fund invests into a portfolio of 20-30 unquoted companies, with a focus on Tech enabled companies operating in the Marketplace, Platform or SaaS sectors. Investment is done at the Pre-Seed stage with typical investments of approximately £200k per company.
Fee Notes
Direct Fees – Whilst there are no initial costs associated with this Fund, an annual management charge is payable to the Investment Manager by each Investor equal to 1% of the amounts invested in the Fund (unless otherwise agreed). It is noted that the annual charge relating to the first five years will be aggregated and paid in full on the date in which the Fund money is invested into each Investment Company. As this charge is paid by Investors prior to Investment in the Investee Companies it will reduce the SEIS relief available to Investors.
Indirect Fees – There are no initial costs associated with this Fund. An annual management charge is payable to the Investment Manger by each Investee Company equal to a total of 1% + VAT of the amounts invested in the Investee Company (unless otherwise agreed). It is noted that the annual charge relating to the first five years will be aggregated and paid in full on the date in which the Fund money is invested into each Investment Company.
The Green Angel Ventures EIS Climate Change Fund is an unapproved fund targeting a 3x return to investors. The Fund invests into a portfolio of 10-15 unquoted Companies with a focus on Climate Tech: energy, transport, buildings, recycling and agritech. Investment is done at the Seed stage with typical investments of £100,000 per company.
Fee Notes
Direct Fees – An Initial Charge of 1.50% + VAT of the investor’s commitment.
Indirect Fees – Green Angel Ventures will charge an Investment Fee of up to 5% + VAT of the amount invested by the Fund in the Investee Company. Green Angel Ventures aims to have the option to convert the 5% fee into shares upon exit. And Green Angel Ventures will charge an Annual Management Fee of up to 2% + VAT per annum of the amount invested by the Fund in the Investee Company.
The Guinness EIS Fund is a discretionary manager service targeting a 2x return to investors. The fund invests into a portfolio of around 10 unquoted companies with a generalist approach across diverse sectors. Investment is done at the Scale up/Series A stages with typical investment size of £1m-£5m per company.
Fee Notes
Direct Fees – An Initial Fee of 1.5% (plus VAT) is charged on your Subscription Amount once your application to the Service is accepted. The Annual Management Charge (AMC) of 1.8% (plus VAT) is charged on your Subscription Amount for four years only. The AMC for the first year is charged up-front, and the remaining three years are accrued and payable from exit proceeds. A Transaction Fee of 1.0% is charged on each purchase or sale transaction in your portfolio. This represents a fee for arranging and executing the relevant purchase or sale transaction on your behalf. There is an Annual Custody Fee of 0.2% of your Subscription Amount and this is accrued and payable from exit proceeds.
Indirect Fees – An Initial Fee of 4% of the investment amount to each company is charged to EIS Investee Companies at the time of investment.
The Mercia EIS Fund is an unapproved EIS fund targeting a 3x return to investors. The Fund invests into a portfolio of 12 unquoted Companies with a sector agnostic approach targeting companies with disruptive technologies. Investment is done at the Pre-Series A and Series A stages with typical investment size of £1m per company.
Fee Notes
Direct Fees – Mercia’s fees are charged on the Subscription into Fund, minus any advisor fees. The first three years of annual charges will be withdrawn from Subscription. Fee payments for the subsequent three years will be accrued and deducted from future proceeds. Annual management charge of 1.75% + VAT which will be charged for a total of six years. Custodian and administration fee of 0.25% + VAT will be charged for six years also.
Indirect Fees – 0 – 4% Initial Arrangement Fee per company and 1.6% Annual Management Charge.
Mercia Knowledge Intensive EIS Fund
The Mercia Knowledge Intensive EIS Fund is an approved EIS fund targeting a 3x return to investors. The Fund invests into a portfolio of 12 unquoted Companies with a sector agnostic approach targeting companies with disruptive technologies. Investment is done at the Pre-Series A and Series A stages with typical investment size of £1m per company.
Fee Notes
Direct Fees – Mercia’s fees are charged on the Subscription into Fund, minus any advisor fees. The first three years of annual charges will be withdrawn from Subscription. Fee payments for the subsequent three years will be accrued and deducted from future proceeds. Annual management charge of 1.75% + VAT which will be charged for a total of six years. Custodian and administration fee of 0.25% + VAT will be charged for six years also.
Indirect Fees – 0-4% Initial Arrangement Fee per company and 1.6% Annual Management Charge.
The Nexus Investments Scale-up EIS Fund is an unapproved EIS fund targeting a 2.5x return to investors. The fund invests into a portfolio of minimum 8-10 unquoted companies with a focus on Education, Health, Data & Digital. Investment is done at the Post Seed – Pre-Series A stage with typical investments of between £100k-£200k per company.
Fee Notes
Direct Fees – Nexus invests 90% of your net subscription into companies. This is the amount of your subscription which should be eligible for tax relief. The remaining 10% is kept as a cash balance on your account at the Custodian, from which Nexus takes their initial fee and other charges which arise in early years of your investment period. Year 4 and 5 AMC, and any Performance Fees, can only be taken from proceeds generated by disposals of underlying portfolio holdings.
Indirect Fees – Up to 5% transaction fee charged to the investee company calculated on the amount invested into that investee company. Between £1,500 – £3,000 + VAT directors fees per quarter, monitoring fee between £0 – £1,500 + VAT per quarter. Fees only payable by those Investee Companies requiring these services.
o2h Human Health KI Fund
The o2h Human Health Knowledge Intensive EIS Fund is an approved fund targeting a 2.5x return to investors. The Fund invests into a portfolio of 5-10 unquoted and/or AIM Listed Companies with a focus on Biotechnology and Life Sciences. Investment is done at the seed stage with typical investments of between £50k to £1mm per company.
Fee Notes
Direct Fees – Annual Management Fee 2% + VAT of the Subscription for each of the first 5 years of the Fund, of which only the first year is paid annually in advance and thereafter rolled up interest free, provided that if, after the first 3 years, the value of investments held in Portfolio Companies decreases below your Subscriptions invested in such companies, o2h will decrease their annual Management Fee thereafter commensurately. However, their annual Management Fee does not increase if the value of your investments exceeds your Subscriptions in such Investments.
Indirect Fees – o2h Ventures reserve the right to charge upfront arrangement, monitoring and, where it has board representation, director’s fees, and other properly incurred and approved expenses to investee companies. Arrangement Fee of 2% + VAT and 1.5% + VAT Annual Monitoring Charge, plus £1,250 Monthly Board Fee (where applicable)
The o2h Human Health SEIS Fund is an unapproved SEIS fund targeting a 2.5x return to investors. The fund invests into a portfolio of a minimum of 3 unquoted and/or AIM Listed companies with a focus on Biotechnology and Life Sciences. Investment is done at the Pre-Seed stage with typical investments of between £50k-£1m per company.
Fee Notes
Direct Fees – Annual Management Fee 2% + VAT of the Subscription for each of the first 5 years of the Fund, of which only the first year is paid annually in advance and thereafter rolled up interest free, provided that if, after the first 3 years, the value of investments held in Portfolio Companies decreases below your Subscriptions invested in such companies, o2h will decrease their annual Management Fee thereafter commensurately. However, their annual Management Fee does not increase if the value of your investments exceeds your Subscriptions in such Investments.
Indirect Fees – o2h Ventures reserve the right to charge upfront arrangement, monitoring and, where it has board representation, director’s fees, and other properly incurred and approved expenses to investee companies. Arrangement Fee of 2% + VAT and 1.5% + VAT Annual Monitoring Charge, plus £1,250 Monthly Board Fee (where applicable).
The Oxford Innovation EIS Growth Fund is an unapproved EIS fund targeting a 2-3x return to investors. The fund invests into a portfolio of 6-12 unquoted companies with a focus on Science and Technology. Investment is done at the early stage with typical investments of approximately £200k per company. The fund has quarterly soft closes and has an average time to deploy funds of 12 – 18 months.
Fee Notes
Direct Fees – Oxford Innovation Finance charges a 1% + VAT up front initial fee at the point of Subscription. There is an annual management charge (AMC) of 1% + VAT and this is charged for a total of 5 years. The first three years of AMC are charged on deposit of the funds meaning investors will get tax relief on 95.2% of their Subscription.
Indirect Fees – An initial charge may be payable by the Investee Companies to the Manager of up to 5% + VAT of the Fund’s investment in the Investee Company.
The Par EIS Fund is an unapproved fund targeting a 2-3x return to investors. The fund invests into a portfolio of 6-8 unquoted companies with a focus on Enterprise Software, Healthcare & Medical Devices, Industrials and Space, Energy and Resources, Food Security and Digital Media and Entertainment throughout Scotland and the North of England. Investment is done at the Seed-Series A stage with typical investments of between £500k-£3.5m per company.
Fee Notes
Direct Fees – For Advised Investors, a retention of 5% will be made from the Investor’s Subscription to cover the Initial Charge (1.0% inc. VAT) and 4 years of Annual Management Charges (1.0% inc. VAT). This means that 95% of an Advised Investor’s Subscription will be available to be invested in EIS Qualifying Companies. Once the retention has been utilised, payment of further Annual Management Charges will only be extracted from Exit Proceeds and charged against the original subscription amount, net of any realisations.
Indirect Fees – Par Equity reserves the right to charge Investee Companies arrangement fees on completion of an investment and fees relating to its ongoing monitoring of the Investee Company. Where it is unable to charge these fees, Par Equity bears these costs itself and does not recover them from the Fund. Since Par Equity also facilitates investments on behalf of various capital providers, such as the Par Investor Network and the Scottish Investment Bank, these fees may not specifically relate to the Fund. As the percentage shareholding that the Fund will have in any given Investee Company will vary, as well as the financial circumstances of the Investee Company, the notional impact of such fees on an Investor cannot be readily quantified. Arrangement fee of up to 5% and £6k – £50k + VAT monitoring fee per annum (equates to circa 1% of each investee company investment). Please note Monitoring fees are not a direct % of amounts invested, and as Par invests other capital alongside the EIS Fund, this leads to higher Investee Company monitoring fees relative to the EIS Fund commitment. The investee company fees are paid for by the entire shareholder base of the company and not just the EIS investor base.
The Praetura EIS Growth Fund is an unapproved EIS fund targeting a 2x return to investors. The Fund invests into a portfolio of 8-10 unquoted companies with a focus on Digital and Technology, Financial, Health and Sciences, Educational Technology with a regional focus in the North of England. Investment is done at an Early Stage with typical investments of between £1.5m-£3m per company.
Fee Notes
Direct Fees – Praetura Ventures commit to investing a minimum of 90% of an Investor’s net subscription after the deduction of any Advisor initial charge (where applicable) into EIS Qualifying Companies, with a maximum investment into EIS Qualifying companies of c. 95%. The exact amount invested is subject to the amounts required by each investment.
Indirect Fees – Initial arrangement fee of 4% and Annual Management Charge of £36k (including VAT).
The Regenerate Ventures Agtech EIS Fund is an unapproved EIS fund targeting a 5x return to investors. The fund invests into a portfolio of a minimum of 5 unquoted companies with a focus on Agtech. Investment is done at the Seed to Series A stages with typical investments of between £300k-£500k per company.
Fee Notes
Direct Fees – The Fund charges an initial upfront fee of 5% + VAT of the amount invested. This initial charge will be paid by the Investors prior to Investment in the Investee Companies and therefore this will reduce the EIS reliefs available to Investors.
Indirect Fees – Arrangement fee of up to 2% and annual management charge of Up to 2% + VAT for the first 4 years. The majority of investee companies have opted to pay 5% + VAT upfront rather than the 8% + VAT over 4 years.
The Seneca EIS Portfolio Fund is an unapproved EIS fund targeting a 1.8x return to investors. The fund invests into a portfolio of 4-6 unquoted companies with a generalist approach across diverse sectors. Investment is done at the pre-revenue, pre-profit and post profit stages (no Seed) with typical investment size of £0.5m-£2m per company.
Fee Notes
Direct Fees – Advised investors will pay a 2.5% + VAT Initial Fee (minimum of £500). The fund then charges a Dealing Fee of 0.5% + VAT of any shares bought after the initial fee has been levied meaning that 96.42% of the subscription is potentially eligible for tax relief. There is an Annual Management Charge of 2.0% + VAT, charged for a maximum of 5 years. This AMC is accrued and only charged as an exit fee out of profits at subscription level.
Indirect Fees – An Arrangement Fee of up to 4.0% + VAT of the deployed amount is charged to EIS Investee Companies at the time of investment. An Annual Monitoring Fee of up to 2% + VAT of the amount deployed is charged to the EIS Companies.
The SIS Ventures Impact First EIS Fund is an unapproved fund targeting a 3x return to investors. The Fund invests into a portfolio of 6 or more unquoted companies that are contributing innovative solutions to society’s greatest challenges. Whilst sector agnostic historically the Fund has invested across Life Sciences, MedTech, Climate Tech, Circular Economy and Biotech. Investment is done at the seed to series A stages with typical investments of between £100k to £500k per company.
Fee Notes
Direct Fees – Advised investors will pay a 2.5% + VAT Initial Fee (minimum of £The initial fee to investors in 5% + VAT meaning that 94% of the subscription will qualify for income tax relief. There are no ongoing charges levied at the investor.
Indirect Fees – Investee Companies are charged an arrangement fee of 5% of the aggregate amount invested by the Fund. The Manager will charge Investee Companies an annual monitoring fee which is the higher of the monitoring fee charged by the Lead Investor at the time of each Investment or 2.5 per cent of the amount invested, subject to a cap agreed by the Manager at its discretion.
Syndicate Room Access Fund
The Syndicate Room Access Fund is an unapproved EIS fund targeting a 3.5x return to investors. The Fund invests into a portfolio of a minimum 50 unquoted companies with a sector agnostic approach. Investment is done at the Pre-Series A stage with typical investments of around £150k per company.
Fee Notes
Direct Fees – Investors will pay a 2.0% + VAT initial fee and the Manager retains 3 years of 1.5% + VAT AMC at investment, meaning 92.2% of the investment will be eligible for tax relief. AMC is charged for 7 years only. The low performance fee of 10% + VAT is applied after returns of 110%.
Indirect Fees – Each Investee Company will be charged an initial fee of £1,100 to cover legal costs.
The Vala Better Ventures EIS Fund is an unapproved EIS fund targeting a 2.5x return to investors. The fund invests into a portfolio of 8-12 unquoted companies with a focus on Engineering, Gaming, Technology, Media, FinTech, Food and Beverage. Investment is done at the Seed to Series A stage with typical investments of between £250k-£500k per company.
Fee Notes
Direct Fees – An Annual Management Charge (AMC) of 1.5% of your subscription will be taken every year for the first three years. In years four and five, the AMC is 1.5% of the lower of the net asset value or the acquisition cost of your remaining shareholdings. No annual charge is applied after the fifth year.
Indirect Fees – Better Ventures EIS may charge an initial fee of up to 5% of the amount invested into portfolio companies.
The Vala Sustainable Growth EIS Fund is an unapproved EIS fund targeting a 2.5x return to investors. The fund invests into a portfolio of 6-10 unquoted companies with a focus on Sustainability. Investment is done at the Seed to Series A stage with typical investments of between £200k-£500k per company.
Fee Notes
Direct Fees – An Annual Management Charge (AMC) of 1.5% of your subscription will be taken every year for the first three years. In years four and five, the AMC is 1.5% of the lower of the net asset value or the acquisition cost of your remaining shareholdings. No annual charge is applied after the fifth year.
Indirect Fees – The Sustainable Growth EIS may charge an initial fee of up to 5% of the amount invested into portfolio companies.
Funds only applying Indirect Investee Company Fees
The Deepbridge Life Sciences EIS Fund targets a 1.7x return to investors. The fund invests into a portfolio of around 8-10 unquoted companies with a focus on life sciences. Investment is done at the growth stage with typical investment size of £1.2m per company.
Fee Notes
Direct Fees – Investors pay no management fees at the point of investment, for subscriptions received by a financial adviser.
Indirect Fees – An Initial corporate advisory and arrangement fee of 5% +VAT of the investment amount is charged to each Investee Companies at the time of investment, along with a dealing charge of 0.65% + VAT. There is an annual management charge of 2% + VAT to the companies along with an annual custody fee of 0.5% + VAT.
The Deepbridge Technology Growth EIS Fund targets a 1.6x return to investors. The fund invests into a portfolio of around 8-10 unquoted companies with a focus on disruptive technologies. Investment is done at the growth stage with typical investment size of £1.2m per company.
Fee Notes
Direct Fees – Investors pay no management fees at the point of investment, for subscriptions received by a financial adviser.
Indirect Fees – An Initial corporate advisory and arrangement fee of 5% +VAT of the investment amount is charged to each Investee Companies at the time of investment, along with a dealing charge of 0.65% + VAT. There is an annual management charge of 2% + VAT to the companies along with an annual custody fee of 0.5% + VAT.
The Fuel Ventures Follow-On EIS Fund is an unapproved EIS fund targeting a 5x return to investors. The fund invests into a portfolio of 5-8 unquoted companies, with a focus on Tech enabled companies operating in the Marketplace, Platform or SaaS sectors. Investment is done at the Seed and Series A stages with typical investments of approximately £1.5m per company.
Fee Notes
Direct Fees – In order to maximise the Investors’ EIS Reliefs to the extent possible, rather than fees being charged to Investors, each Investee Company will pay the Initial Costs and the Annual Charges out of the money used by the Fund to subscribe for Qualifying Shares in that Investee Company.
Indirect Fees – There will be an initial charge payable by each Investee Company to the Investment Manager for Investment Advisory Services and Mentoring Services undertaken by Fuel Ventures of 2.5% + VAT. An annual management charge is payable to the Investment Manger by each Investee Company equal to 2% + VAT of the amounts invested in the Investee Company (unless otherwise agreed).
The Jenson EIS Fund is an unapproved EIS fund targeting a 3x return to investors. The fund invests into a portfolio of 5-10 unquoted companies with a generalist approach across diverse sectors. Investment is done at the Growth Stage with typical investments £250k per company.
Fee Notes
Direct Fees – To ensure that investors receive tax reliefs on the full amount of their contribution to the Fund, charges are made to the investee companies rather than directly to the investors themselves.
Indirect Fees – When Jenson makes an investment in an investee company, Jenson will charge the investee company an initial investment fee of up to 6% of the amount invested. Jenson will charge each investee company an annual administration charge at the rate of £350 per calendar month plus VAT. Jenson may also provide each investee company with operational and accounting support covering such matters as financial reporting, business planning, financial modelling, debt fund raising, business management and general deal management (whether in relation to the initial investment or otherwise) and may charge additional fees to the investee companies for these services.
The Jenson SEIS Fund is an unapproved SEIS fund targeting a 3x return to investors. The fund invests into a portfolio of 8-12 unquoted companies with a generalist approach across diverse sectors. Investment is done at the Seed stage with typical investments of £150k per company.
Fee Notes
Direct Fees – To ensure that investors receive tax reliefs on the full amount of their contribution to the Fund, charges are made to the investee companies rather than directly to the investors themselves.
Indirect Fees – When Jenson makes an investment in an investee company, Jenson will charge the investee company an investment fee of up to 9.5% of the amount invested. This investment fee will cover all administration charges throughout the duration of the investment. Prior to each investment, a due diligence report and investment recommendation on the investee company will be produced and this is expected to cost £3,500 plus VAT for each successfully completed investment in an investee company.
The Symvan Technology EIS Fund is an unapproved EIS fund targeting a 2.85x return to investors. The fund invests into a portfolio of 8-12 unquoted companies with a focus on B2B SaaS (targeting Enterprise customers). Investment is done at the post revenue growth stage with typical investments of between £500k-£1m per company.
Fee Notes
Direct Fees – The Fund is structured so that 100% of the investment is invested into the investee companies to maximise the tax benefits for the investor, with management fees paid by the investee companies to the Fund.
Indirect Fees – The Manager will collect and administer a fee of up to 6% on the total Subscriptions made by Investors to the Fund on the initial close, and any subsequent close of the Fund. Of the investment fee, up to 100% will be recovered as an arrangement fee from each of the Portfolio Companies pro-rata to the investment made into the Portfolio Company by the Fund. There is also a discretionary due diligence fee of up to 2% + VAT. Annual Administration & Monitoring Fee of 2% + VAT of the amount invested in the Portfolio Company. Such monitoring fees shall be payable annually in advance, subject to variation by agreement between the Manager and each investee company.
The SideBySide EIS Venture Fund is an unapproved EIS fund targeting a 3x return to investors. The fund invests into a portfolio of 5 unquoted companies with a focus on Technology. Investment is done at the Series A (Scale-Up) stage with typical investments of £500k per company.
Fee Notes
Direct Fees – In order to maximise the Investors’ EIS Reliefs to the extent possible, rather than fees being charged to Investors, each Investee Company will pay the initial costs and the annual charges out of the money used by the Fund to subscribe for Qualifying Shares in that Investee Company.
Indirect Fees – An initial fee is payable by each Investee Company equal to a total of 5% (plus VAT) of the amounts invested into each Investee Company, out of which the Fund will settle any costs of fundraising, due diligence and providing Industry Expertise to the AIF Manager. A dealing charge is payable by each Investee Company equal to a total of 0.5% (plus VAT) of the amounts invested into each Investee Company, out of which the Custodian costs will be settled. An Annual Management Fee is payable by each Investee Company equal to a total of 2% (plus VAT) of the amounts invested into each Investee Company on behalf of each Investor, out of which the Fund management, the Mentoring Services and Investee Company monitoring costs will be settled.
Fund Fee Information
SEIS/EIS Fund Fees
The returns from an investment into SEIS or EIS funds will be impacted by various fees regardless of whether those fees are charged directly or indirectly. Whilst there’s no standard fee structure in the industry it’s very important that investors and advisers understand the impact fees can have on the returns they will receive from their investment. All fees, both direct and indirect, will ultimately impact the returns of the fund. Funds may market themselves as investor fee free and this can be true, but there’s no such thing as a fee free product (currently) so there will be fees being levied at the investee companies.
Direct fees, as the name suggests, are those levied at the investors themselves and will directly impact the percentage of their investment that is deployed into portfolio companies. Direct fees also come in the form of performance fees which haircut the investor returns above a certain threshold level.
Indirect fees are levied at the portfolio companies and will ultimately reduce the amount of investment the companies can utilise and reduce their cashflow going forwards if there are any ongoing charges.
Fee structures for SEIS and EIS funds vary from one fund to the other and fees can be levied exclusively to the investor, exclusively to the portfolio companies, or can be levied at both.
Direct Fees
These are probably the easiest to understand as the investor will incur them and they will see the impact of the fees on their fund statements. Most EIS and SEIS funds charge an Initial Fee, Annual Management Charge (AMC) and a Performance Fee. Other fees can be dealing fees, custodian fees or administration fees, and these may be one-off or recurring. Most fees are expressed as a percentage and can be easily calculated from the investment amount, but there can be questions on fee sequencing to determine what investment amount the fee is chargeable against. In some cases, fees are fixed amounts, and this generally relates to custodian or admin fees, where the manager simply passes through the cost of their third-party provider to the investor.
The nature of an investment into an EIS or SEIS Fund likely means that you won’t receive any distributions in the form of dividends, and almost always the investor is reliant upon the fund manager taking the portfolio company to a successful exit to receive funds back. This makes it very difficult for managers to receive ongoing fees from investors, without the need to go back to them requesting further funds to cover fees, which is not regarded as good practice in the industry. Therefore, Managers look to take sufficient years of AMC and other ongoing fees up front to ensure their early year costs are covered. Later years ongoing fees are then usually accrued and offset against realisations as and when they are made. Sometimes these accrued charges are conditional on the realisations being greater than the initial investment made, but standard market practice is to offset these against any realisations.
Taking multiple years ongoing fees up front means that less of an investors’ subscription is deployed into investee companies and it’s important to remember that an investor will only get tax relief on the investment amount deployed. Deployed investment amounts range from 90% to 100% in the market and whilst it can look appealing to target those funds offering 100% deployment and maximise your tax relief, there’s no such thing as a free lunch and the investee companies will be getting charged, indirectly impacting your performance. Some funds outline their fees but then opt to take a fixed amount (eg 10%) up front to cover initial and ongoing costs and whilst this can look expensive at the outset if very important to look and see what, if any other charges are then applied.
Almost all funds will levy their performance fees directly at the investor and whilst it’s not an up-front cost, it can be incurred on realisations in the fund. We say ‘can be incurred’ as managers will generally set themselves performance targets they need to achieve before they can charge the fee. This aligns themselves nicely with the investors, the better the portfolio company performance the better all parties do. Performance fees are generally around 20%-25% and the performance hurdles can range from investors receiving their original investment back to receiving it back plus a minimum return bar of say 10%. The performance charge can also be tiered so the higher the return the higher the performance fee, but this will be outlined in the relevant Information Memorandum. The methodology of the performance fee charging can also vary from fund to fund, some will charge on an individual portfolio company return whereas others look at the total fund investment return, for example you need to receive back your total original investment before a performance fee will be charged.
Indirect Fees
As the name suggests these fees are not levied at the investor but at the portfolio companies receiving the investment. These fees can look and feel very similar to the direct fees and take the form of Initial or Arrangement Fees, Dealing Fees, Annual Management Charge (AMC), Monitoring Fees, Director Fees, Custodian Fees and Administration Fees. These fees are settled by the portfolio companies and whilst most are settled in cash, in some cases shares, warrants or options on shares are received by the Fund Manager as an alternative. Where cash needs to be directed to pay fees it obviously cannot be reinvested into the company to help with growth.
So, whilst a company may receive more of an investor’s investment from a Fund Manager that doesn’t charge the investor, the company will need to settle the fund fees itself and redirect monies to satisfy these.
Some Fund Managers argue that charging portfolio companies would limit the quality of the investment opportunities available, whilst others opt for this route to allow an investor to get tax relief on 100% of their investment. Many top performing private companies can have the pick of Venture Capital firms to choose from and thus imposing a fee on the company can be a deterrent for that company. The indirect company fees will have the same impact of reducing the cash runway and reinvestment monies available to the company, much the same way as direct fees do and it’s very important that advisers and investors understand this.
So, whilst opting for a fund that charges the investee companies may optimise for the tax relief obtained on the full investment amount, it will still impact the investment amount available to the company, but it could also impact the quality of investment that the fund can access.
Quite a few funds charge both the investor and the portfolio companies so it’s very important that advisers and investors read through the relevant Investment Memorandums and understand what the fund fees are and to whom they are levied.
Conclusion
Whilst it is fairly easy for an adviser or investor to see the impact of direct costs, it is difficult to calculate exactly how the indirect fees impact an investment into the Fund as they are most often calculated at the Portfolio Company level. And, whilst the Information Memorandum will outline what these fees are, the fund manager may or may not receive exactly what they set out to and, further they may be paid in equity in lieu. Whilst calculations can be made using various assumptions of average investment size into a portfolio company and the number of portfolio companies an investor would have in their portfolio, it will not be a perfect science without looking back after the event to see exactly what charges were made and settled.
This makes it difficult for advisers to compare across all SEIS/EIS funds using a standard model and so it is even more important that they have a broad understanding of the impact the fees will have on fund returns regardless of where they are levied. As stated at the outset, there is no such thing as a free lunch currently in the EIS Fund market.
The table below summarises the fees that can be charged by SEIS and EIS Fund Managers to both the investor and the portfolio companies. It is worth noting that some of the ongoing direct fees are often charged up front on subscription, and then accrued until realisations are made from the Fund.
| Fees Charged to | Investor (Direct) Fees | Company (Indirect) Charges |
|---|---|---|
|
One Off |
Initial fee |
Initial / Arrangement fee |
|
Transaction fee |
Transaction fee |
|
|
|
Due Diligence fee |
|
|
On-going fees |
Annual Management Charge (AMC) |
Annual Management Charge (AMC) |
|
Custodian fee |
Custodian fee |
|
|
Administration fee |
Administration fee |
|
|
|
Monitoring / Mentoring fee |
|
|
|
Director fee |
|
|
Exit fees |
Transaction fee |
Transaction fee |
|
Performance fee |
|
