SUCCESS ISN’T SEASONAL, FIVE REASONS WHY INVESTORS SHOULD REDEFINE THEIR INVESTMENT TIMELINES

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The 2023-24 tax year is over, and a new tax year has begun. For many, tax efficient investments such as EIS will not be a focus again until January to March 2025. However, success isn’t seasonal. Here are five reasons why investors should look to redefine their investment timelines this year:

🔹Unquoted businesses don’t only raise new funding rounds from January to March

Even though there is a real push to deploy capital in the period of January to March, when the minds of investors are focused on taking advantage of various tax-efficient investment before it’s too late, it is important to note that unquoted businesses raise capital 12 months a year, not just in the three months where potential investors might focus on placing a subscription.

An impressive, pioneering early-stage business in fintech, healthtech or any other sector won’t raise money because they think it’s a good time of year to attract investors. They will do it at a time that suits them, either because they need to extend their cash runway, to plough more capital into R&D, to launch new products or enter into new markets. If a potential investor wants to invest into an EIS in the 2024-25 tax year, but they elect to put off making the subscription until January 2025, they will likely miss out on at least 5-6 deal between now and then, and potentially miss out on the next big thing.

To hammer home the point, since April 2023, our firm has engaged in strategic investments across numerous sectors, including a leading AI Large Language Model provider for enterprise-level solutions, a HealthTech innovator in partnership with Aviva for bespoke employee benefits, and a transformative Credit Reference Agency enhancing credit access for young people. We have also continued our support through follow-on investments in exceptional portfolio companies such as Scan.com. If we were fixated on a seasonal approach some of those would undoubtedly be missing, and anyone deferring their investment decision until after the new year would have missed out too.

🔹Strategic Tax Planning

When it comes to tax-efficient investments, whether it is EIS, VCT, ISAs or lump sum pension contributions, there is a mindset, to focus on it straight after the new year. This is due to the realisation that time is running short, and that to avoid missing out, action must be taken.

By stepping away from the tax year-end as a deadline, investors gain flexibility in tax planning. This approach allows for more strategic decisions, spreading investments to potentially optimise tax benefits across multiple years. It encourages a more thoughtful investment pace, aligning with personal financial planning and tax circumstances without the pressure of a looming deadline.

🔹Portfolio Diversification

Why limit portfolio diversification to an annual event? Our fund’s Evergreen investment strategy provides a perpetual investment model, which promotes continuous diversification across sectors and stages of growth. By taking time to fully deploy a subscription, it enables us to review each investment opportunity, and enter into a deal at a valuation that matches current sentiment. This enables us to curate far more robust and resilient investment portfolios.

🔹Ensuring a Diligent Process

From January to March, email inboxes are filled with notifications that “time is running out” to invest before tax year end. This is preying on everyone’s fear of missing out. It’s a tactic that places pressure on an investor to make a decision. How can an investor be sure it is the correct decision?

Sales pressure and time pressure needs to be taken out of the equation. Looking at EIS, or any investment for that matter, across the entirety of the tax year gives the investor the luxury of time, without pressure. It enables investors to conduct thorough due diligence on the fund house they are potentially investing in to, the underlying companies they will be investing in to, and give them time to compare and contrast different providers. From the product provider side, time enables us to source, conduct due diligence and invest in only the very best companies, that we feel will give our investors the greatest opportunity for successful investment outcomes.

🔹Capital Efficiency

Allocating capital efficiently is crucial for maximising investment returns. Investing outside the traditional tax year-end timeframe allows for strategic deployment of capital in line with market conditions and emerging opportunities. Our Evergreen EIS fund's flexible investment schedule means capital is employed judiciously, aiming for optimal growth and return on investment. If you have ever spoken to a financial adviser and they have mentioned the benefit of pound/cost averaging (investing over a period of time, rather than investing all in one go), it is the same principle here; taking advantage of the peaks and troughs in the market.

➡️ A call to forward-thinking investors

As we advance into the 2024-25 tax year, we invite investors to adopt a more strategic, forward-looking approach. Consider the advantage of engaging with EIS investments earlier, positioning yourself at the forefront of innovation and growth. Our Evergreen EIS fund is redefining investment strategy with a focus on continuous innovation, strategic tax planning, enhanced diversification, diligent decision-making, and efficient capital allocation. Ready to explore a smarter investment approach? Let's talk: https://eu1.hubs.ly/H08xZPX0

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