Stellar is Partnering with Nova to offer an EIS option
Stellar has chosen to partner with Nova to provide an EIS option with a unique investment strategy and investment approach, which we believe will provide strong returns to investors.
As well as offering attractive EIS tax reliefs, the Stellar Nova EIS Fund aims to provide exposure to a different type of investment compared to many other EIS funds. Nova continually works with start-ups enabling them to organise a cohort of seven to ten investments which provides visibility and assurance that funds will be invested promptly.
- Quick deployment of funds
- Visibility of likely EIS investments – these companies have been mentored and supported by capital from the Nova cofoundery model for approximately a year – the pipeline document provides details of the current targets
- Targeting quick EIS3 forms
- We have partnered with Nova to provide an opportunity to participate in this unique EIS to take advantage of their specialist investment strategy and methodology.
- 28 January 2022
- 28 February 2022
- 28 March 2022
- Further dates to be announced
Investing will provide exposure to more high risk and potentially high growth start-ups that Nova are co-founding.
“Coupled with the attractive range of EIS reliefs provided to those willing to invest in high risk, potentially high growth technology start-ups which uniquely are identified and known to the management team, we believe is a compelling opportunity”
Why we have chosen to co-invest an EIS fund with Nova…
Stellar has chosen to partner with Nova to provide an EIS option with a unique investment strategy/approach which we believe will provide strong returns to investors.
As well as offering attractive EIS tax breaks, the Stellar Nova EIS Fund aims to provide exposure to a different type of investment compared to many other EIS funds. Nova continually work with start-ups enabling them to organise a Cohort of ten investments which provides visibility and assurance that funds will be invested promptly.
Nova has the resources to enhance business start-up opportunities and has a unique approach to backing founders including:
- Special criteria for selecting Founder businesses
- Nurturing approach to these businesses
- Clear Methodology and support
- Mentoring from a large group of experienced entrepreneurs
- Selection and methodology to reduce the failure rate
- Focus on problem solving
- Founder attributes – seeking experts in a given field for experience and connections
We partnered with Nova because we recognised that financial advisers would find this Fund a valuable option for their investor clients.
Because of our experience in the Estate Planning space, and our range of BR products, it was a logical step to expand our services to include an EIS offering. We have partnered with Nova because it fits the values that we have of collaborating with the best people in the marketplace.
Who are Nova?
Nova’s CEO Andy Davidson introduces Nova:
“The founder journey for me was broken, and I believed I could do something to improve it. That’s what we wanted to achieve when we established Nova, and I hope that’s what Nova’s become. The better way for founders to start a start-up.”
Meet the Nova founder
Andy Davidson is a serial tech entrepreneur having co-founded more than 100 tech businesses either directly or through Nova throughout his career. Andy started as a software engineer before his entrepreneurial career where he has spent the past 12 years creating and managing growth-focused EIS & SEIS investment portfolios.
What makes Nova stand out?
Nova are a venture builder. Nova specialise in building early stage, knowledge intensive, EIS & SEIS eligible technology businesses. Nova does this with a unique empathy toward those sitting on both sides of the table, both investors and business founders. As opposed to many investment houses, Nova has an operating model that is proven to improve the performance of early stage ventures. They have an enviable track record of both investing in and also co-founding successful early stage businesses with entrepreneurial founders for over 10 years now.
Being able to leverage Nova’s ‘Venture Building’ business model gives us the ability to offer investors a direct route to the large and varied portfolio spread of growth focused technology start-ups that’s required for EIS & SEIS to really deliver returns. The success rate of their start-ups is five times higher than the industry average which mitigates a lot of the risks that have been traditionally involved in investing in early stage businesses.
It’s our ability to do this without incurring the costs that other providers do in sourcing the deal flow, that has allowed us to develop a unique EIS & SEIS investment product that maximises the benefits for both investors and the businesses it’s deployed into.Nova Overview
Benefits of investing in EIS
An Enterprise Investment Scheme (EIS) offers tax reliefs that could be attractive to those seeking to reduce their income tax,
defer a capital gain or shelter assets from inheritance tax. The main tax reliefs available are listed below.
- Income tax relief
You can claim up to 30% income tax relief on your subscription up to a maximum investment of £1 million in a single tax year.You can also pay in up to the same amount and carry back the tax relief to the previous tax year. Both are subject to your income tax liability.You must hold EIS shares for at least three years or you may be liable to p-ay back the income tax you claimed.
- Capital gains tax deferral
You can defer unlimited capital gains from any asset realised up to three years before, or up to one year after, the date of your investment into the underlying EIS companies. The gain will remain deferred for the life of the EIS investment.
- Inheritance tax relief
Shares in EIS qualifying companies should qualify for business relief. If these shares are held for two years, and at the date of death, they can be left to beneficiaries free from inheritance tax.
- Tax-free growth
Any gains you make when selling your EIS shares will be free from capital gains tax. The sale must be after the minimum three-year holding period and applies only to shares on which income tax relief has been given and not withdrawn.
- Loss relief
If a loss is made on the sale of shares in any EIS company on which income tax relief has been given and not withdrawn, it can be offset (net of any income tax relief received) against income tax at your marginal rate or capital gains. Loss relief is available at an individual company level and is irrespective of the performance of the portfolio as a whole.
- Carry back of tax relief
We aim to invest your funds within [3 months]. You can claim income tax relief in the tax year the underlying investment is made or elect to carry-back to the previous tax year – providing you didn’t exceed the maximum subscription in that year.
Note: this section does not constitute tax advice. It is a brief summary of the latest tax reliefs available, based on Stellar’s understanding of current legislation and HMRC practice. Tax reliefs depend on personal circumstances and are subject to change. You can consult your financial adviser or go to the HMRC website, which has further information on the tax reliefs available on EIS investments.
To invest, you must be an eligible investor. To be an eligible investor, you must be qualifying as one or more of the following:
- You meet the FCA’s definition of a professional investor.
- You meet the FCA’s definition of a certified net worth investor
- You meet the FCA’s definition of a self-certified sophisticated investor.
- You meet the FCA’s definition of a self-certified restricted investor.
- You are a client of an FCA authorised firm that will provide advice on the suitability of the product in question.
EIS investments are high risk. If you are thinking of investing it is important that you understsnd all the risks so that you can make an informed decision.
- Your capital is at risk
The value of your investments may go down as well as up, and you may not get back the full amount you invested.
- Tax reliefs are not guaranteed
The rates of tax, tax benefits and allowances described in this document are based on current legislation and HMRC practice. They are not guaranteed, are subject to change, and depend on personal circumstances.
- Qualifying investments are not guaranteed
There is no guarantee that sufficient investments in EIS companies will be made within the expected timetable, or at all, In addition invested companies may not qualify, or may subsequently cease to qualify, for EIS tax reliefs. In such cases, the the tax reliefs could be lost or delayed.
- EIS investments are long term and high risk
You should not consider investing if you think you may require access to your funds during the expected minimum holding period of up to five or six years from the date the shares are originally acquired.Please note, investments in EIS are in smaller, early-stage, unquoted technology companies that are higher risk than those listed on the London Stock Exchange. The chances of smaller companies failing are relatively high.
- Concentration risk
Depending on the available opportunities at the time of investment, diversification may not be achieved across different sectors. Therefore your investments may be in the same or similar sectors.
- You cannot rely on past performance
There is no guarantee that the investment objects of the fund will be achieved. Please remember that past performance is not a reliable guide to the future.
- The Financial Services Compensation Scheme
The Financial Services Compensation Scheme does not apply to an investment in the Stellar Nova EIS Fund.
Fees and Charges
The following fees will be charged to the Investee Companies:
- Corporate advisory and arrangement costs – up to 5% of funds invested in the Investee Company
- Annual management charge – up to 2% per annum on the funds invested in the Investee Companies