Frequently Asked Questions
If you have any additional questions, please feel free to email us at
WHO ARE 1818 VENTURE CAPITAL?
1818 Venture Capital (“1818”) is an investment firm which focuses on early and growth stage digital technology companies with the aim of generating significant returns for our clients.
1818, licensed and regulated by the Guernsey Financial Services Commission (reference 2293247), was established in Guernsey as part of RAW Capital Partners in 2012. 1818 became fully independent in 2017 and is proud of its successful track record.
WHERE ARE WE BASED?
We are based in Guernsey in the Channel Islands. Guernsey is a politically and financially stable, self-governing British Crown Dependency situated in the English Channel about 80 miles off the coast of the United Kingdom. It is a leading international financial centre in the sterling zone.
Our registered office is at: Maison Allaire, Smith Street, St Peter Port, Guernsey, GY1 2NG.
WHAT DOES 1818 VENTURE CAPITAL INVEST IN?
Early stage, high growth businesses that are focused on delivering digital technology solutions to end users.
We invest in what we know and understand. Typically, these will be FinTech and Tech-enabled start-ups.
We prioritise under-represented founders and businesses with a social purpose.
We invest early: Pre-Seed, Seed, Bridge and Series A investment rounds. This is where the biggest funding gap is and where the greatest investment opportunities lie for potentially outsized returns.
WHAT IS THE 1818 VENTURE PORTFOLIO?
The Venture Portfolio is a discretionary managed service, which means that our team invests your money on your behalf, directly into a diversified portfolio of new investment opportunities. Diversification is a sensible tool to spread risk in each client’s portfolio.
Each investment is identified on the basis that it has the potential to return at least 10 times the capital invested.
ALIGNMENT WITH INVESTORS:
Senior management of 1818 personally invest in every opportunity offered to our clients on the same terms both on entry and exit. We believe this shows total alignment with our clients.
WHAT DO WE LOOK FOR IN A FOUNDER?
We believe that talented and visionary founders and leaders are significant value drivers of early-stage investment opportunities.
1818’s strategy is to look for leadership teams that have:
Intelligence, high conviction, and new ideas
Ambition, passion, drive
An abundant mindset
Tenacity, resilience, and integrity
A balance of relevant skills
Curiosity, openness, and realism
To explore our existing portfolio please visit
www.1818venturecapital.com/portfolio.
WHERE DOES 1818 VENTURE CAPITAL INVEST?
We predominantly invest in companies incorporated in the UK as this is where our network is strongest.
WHAT IS OUR GUIDING INVESTMENT CRITERIA?
For an investment to be attractive, the target business must have:
The potential to achieve 10x return on investment
An attractive target market
An understandable and viable route to market
A competitive market edge
A commercial model with clear financial benefit to the company
A clearly articulated proposition which can be scaled
An appealing user-focused solution
Typically, investee companies will have an initial valuation of between £1.0m and £20.0m.
From time to time, we come across exceptional opportunities that do not fall within our core investment strategy. When we have a high level of conviction in such an opportunity, we can offer participation to our clients outside of the Venture Portfolio on a Deal-by-Deal basis. We believe this is a further value add service to our clients.
HOW DO WE DIVERSIFY YOUR PORTFOLIO?
Increasing portfolio size and decreasing portfolio concentration helps reduce the risk of adverse outcomes for investors. Therefore, to help mitigate the risk of losing capital and to reduce the volatility of investment returns, we build diversified portfolios of venture opportunities. We believe we source the best early-stage businesses with the most talented and visionary founders and therefore we will never sacrifice quality for quantity.
Over approximately 12 months, your funds will be invested in typically 10-15 of our carefully selected opportunities creating your own venture portfolio. Your funds are pooled with that of other clients and management into each company we invest in. Your exposure to any single portfolio company will kept to between 5-10% of the capital you invest with us.
TAX RELIEF FOR UK TAX RESIDENTS – SEIS AND EIS
We aim to invest in companies that can qualify for the UK government’s Seed Enterprise Investment Scheme (“SEIS”) and the Enterprise Investment Scheme (“EIS”) These schemes allow our UK based clients to claim certain tax reliefs to alleviate any pressure that comes with investing in riskier private enterprises.
The majority of our investments can qualify for the UK government’s initiatives, being the Seed Enterprise Investment Scheme (“SEIS”) and the Enterprise Investment Scheme (“EIS”). Where this is applicable, clients that are UK tax resident can enjoy significant tax relief on their investments. The two schemes are similar but there are some key differences:
SEIS focuses on very early-stage companies. SEIS permits an individual to invest up to £100,000 per tax year and to receive relief of 50% of the value of their investment by way of a corresponding reduction on their income tax bill in the year of investment. A UK tax resident client may also benefit from a capital gains tax exemption on any profits that arise from a sale of shares in the applicable investee company after three years.
TAX RELIEF FOR UK TAX RESIDENTS – SEIS AND EIS
EIS focuses on more mature companies. It allows an individual to invest up to £1 million in any tax year and to receive relief of 30% of the value of their investment by way of a corresponding reduction on their income tax bill in the year of investment. A UK tax resident client in an EIS qualifying investment will also pay no capital gains tax on any profit arising from the sale of the shares in the applicable investee company after a three-year holding period.
In respect of both SEIS and EIS, where shares are held in excess of two years, there is no UK inheritance tax payable. If shares are sold at a loss, the investor may offset the loss against their capital gains tax.
Please note, we do not provide tax advice and each client wishing to avail themselves of incentives such as SEIS and EIS clients should check with their own professional advisors and should check HMRC’s website regarding the latest information and updates on such schemes.
FEES
The management fees that 1818 charges are significantly below those of its peers. 1818 currently charge a one off 5% upfront management fee (with zero annual management fees), and a performance fee subject to a hurdle.
*Hurdle does not include management fee. The Venture Portfolio has a simple fee structure with no hidden charges.
**A single investment is each single investment forming part of the Venture Portfolio. Thus, the performance fee is not charged on blended performance of the Venture Portfolio but on each individual investment that makes up the portfolio.
HOW DOES A PORTFOLIO DIFFER FROM A FUND?
Clients may start a discretionary managed account with us whenever they wish, unconstrained by the fixed dates a fund would impose.
Client capital will typically be deployed more quickly than via a fund, and therefore this potentially provides better compounding effects on investment returns.
Portfolios do not incur annual administration fees in the same way a fund would. 1818 charges a fixed one-time 5% management fee covering the life of the discretionary managed account as opposed to the typical 2% per annum over the 10 year life of a fund.
Topping up or ’over investing’ option: A client may top up their investment in the opportunities that particularly appeal to them. Where possible, this is done by adding additional funds to the discretionary managed account.
HOW ARE YOUR INVESTMENTS HELD?
The Venture Portfolio is offered via a discretionary managed account in the name of the underlying client. The relationship between a client and 1818 in respect of the discretionary managed account is governed by an Investment Management Agreement (“IMA”).
Underlying securities (by which we mean the investments in investee companies comprising the Venture Portfolio) are held in the name of RAW Nominees Limited (as bare trustee), a wholly owned subsidiary of 1818. Therefore, 1818 (through RAW Nominees) holds and manages each client’s interest in the investee companies.
IS THERE A MINIMUM I NEED TO INVEST?
Private Equity and Venture Capital investing has traditionally only been accessible to investors able to invest very substantial amounts of capital.
We have set our minimum investment level to be accessible for new eligible clients at £25,000 and £10,000 for existing clients.
REPORTING AND FOUNDER WEBINAR SERIES
We will provide you with quarterly valuations via our Client Portal and our investment newsletter. We also invite our clients and prospective clients to attend our Founder Webinar Series (“FWS”). In the FWS, founders we have backed or are considering investing in provide a detailed insight into their business, markets, challenges, accomplishments and road map. These are typically interactive sessions with questions and answers.
HOW LONG WILL I BE INVESTED FOR?
Clients can expect to be invested for at least 5 - 7 years in each opportunity, prior to an exit opportunity arising. Typical exit opportunities would include trade sales and IPOs.
WHEN WILL MY CAPITAL BE RETURNED TO ME?
As portfolio companies are exited, we will return 100% of any cash realised from the exit less any applicable fees.
RISK PROFILE
The Venture Portfolio will invest at an early stage (up to and including Series A), where the market is less efficient, investments are less competitively priced, and the opportunity for attractive risk-adjusted returns is greatest.
The Venture Portfolio is only suitable for professional and sophisticated investors with a willingness to accept the lack of liquidity inherent in Venture Capital investments.
The risk associated with investments in Venture Capital is high and investors are required to familiarise themselves with the risk warnings set out in the IMA, and to seek their own professional advice in order to satisfy themselves that the investments are suitable for them before becoming clients of 1818.
WHO ARE THE VENTURE PARTNERS?
RICHARD AVERY-WRIGHT (FOUNDING PARTNER AND CEO)
Serial entrepreneur
20+ years in public markets - equities and equity derivatives
15+ years VC experience
Built international businesses at Old Mutual and Man Group
Co-founded several successful asset management firms, including Pie Funds Management, RAW Capital Partners, Castle Point, and Wealthify
Extensive Board level experience, including Chairman
Significant influence in terms of historic 1818 investment track record
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MARK SMITH (PARTNER)
20+ years of international business and legal experienc
Former partner in a private equity fund in London focused on the buy and builds of financial services businesses
Active board member in certain portfolio companies
9 years in the Middle East as General Counsel with a Qatari sovereign wealth entity and a Bahraini investment bank
Holds an LLB and LLM and is admitted as an Attorney (New York State) and as a Barrister and Solicitor (British Columbia, Canada)
I WANT TO INVEST, WHAT DO I NEED TO DO?
Please contact the team at hello@1818venturecapital.com if you wish to discuss a potential investment or call us on
01481 704810.