In this second episode of Celebrating Entrepreneurs, Bonhill plc editorial director Lawrence Gosling chats with Haatch partner Simon Penson and Dan Rodwell, founder and chief executive of GrowthInvest.
GrowthInvest is a leading platform for tax-efficient investments including EIS funds. Here Dan talks about how they welcome the Celebrating Entrepreneurs campaign, and why they are keen to widely distribute it. It helps of course that Dan Rodwell is an entrepreneur himself, and he discusses his own experiences and what he has learnt as an entrepreneur.
Companies raising money have been able to target funds from Venture Capital Trusts (VCTs) and and Enterprise Investment Schemes (EIS) for more than 25 years but it has created a very fragmented sector for both investors and the fund managers.
According to the EIS Association, more than 31,000 companies have raised over £22bn since 1994, while HMRC statistics show in the first year of VCTs in 1995 than were less than 10 groups managing a VCT fund.
With VCTs the peak year for funds was in 2005-06 where more than 80 fund managers raised assets, with this dropping to just over 40 funds in 2018-19.
Investments in VCTs and EIS have come from self-directed private investors but increasingly are being driven by advice from wealth managers and independent financial advisers look to diversify client’s investment while using the capital gains tax tax break and inheritance tax planning purposes.
The so-called tax-efficient sector has not grown as quickly as the equivalent investment markets in investment trusts and open-ended funds which have benefited from the development of investment platforms such as Hargreaves Lansdown, AJ Bell and Fidelity Fundsnetwork.
So five years ago one entrepreneur, a former City broker, who himself had invested in early stage start-up businesses using EIS, launched a platform to consolidate this fragmentation in the tax efficient world.
Dan Rodwell has grown the platform, GrowthInvest, from just an idea, to be a one-stop shop for a growing number of financial advisers and specialist professional investors to use EIS, Seed EIS and VCTs to access growth companies, but also a way for historical investments with the same tax breaks to be consolidate into one point of contact.
In the last couple of years it has also developed as a home for business relief investments, which have become very popular with entrepreneurs but also those looking to mitigate the effects of inheritance tax.
As part of a discussion with Haatch Ventures and its Celebrating Entrepreneurs campaign, Dan talks about how he took his idea from his kitchen table to be a flourishing business which has created new jobs and its helping fund businesses of the future.