Gambling industry experts have teamed up with FCA-authorised UK alternative investment fund manager Innvotec, to launch the first Seed Enterprise Investment Scheme (SEIS) aimed at the sector.
The GamCrowd 2015 SEIS Fund (the Fund) opens for investors’ commitment on Monday 9 March – a day before the start of Cheltenham Festival, where hundreds of millions of pounds will be wagered.
The fund is a joint venture between Innvotec and GamCrowd, a betting and gaming specialist crowdfunding and crowdsourcing platform that is also FCA regulated.
GamCrowd has already begun assessing opportunities for investment and only companies judged to meet the relevant regulatory and licensing requirements will be selected.
Boasting extensive operational experience among its senior executive team, GamCrowd’s activities are positioned at the centre of the gambling start-up world. Its management consists of chief executive officer Chris North, finance director Andrew Bowen, chairman Ian Hogg and head of investor relations Nick Jones.
The GamCrowd team will advise Innvotec on investments for the GamCrowd 2015 SEIS, evaluating the potential of all start-ups against strict growth criteria and assisting through the pre-funding process, before helping the companies to deliver the objectives agreed at the time of investment.
Of particular interest will be those companies that are at the cross-over of gaming and gambling and it is intended that the Fund will co-invest with investment raised over GamCrowd’s crowdfunding platform.
The fund has begun attracting commitment of at least GBP5,000 from applicable parties, such as high net worth individuals and sophisticated investors. The minimum subscription for the Fund is set at GBP0.25 million and it hopes to raise up to GBP1.5 million to invest into UK-based start-ups and early stage companies that will operate in the gambling sector.
Launched by the UK government in 2012, the SEIS is designed to help small, early-stage companies raise equity finance by offering substantial tax reliefs to individual investors who purchase new shares in those companies.
The tax benefits in SEIS are designed to mitigate against the higher risks in investing in fledgling businesses. If the start-up fails, investors who are higher rate tax payers can claim a minimum of 72.5% of their investment back from HM Revenue & Customs. If the business succeeds, investors don’t pay Capital Gains Tax on any profits made.
The Fund is aimed at those who understand and have interest in the sector but feel they do not have sufficient knowledge or time to invest directly in the young companies targeted.
“SEIS is one of the most advantageous tax schemes available to investors anywhere in Western Europe,” says Chris North, GamCrowd CEO. “Because of the UK government’s generosity and enthusiasm to funnel tax payers’ money towards UK start-ups, many specialist funds have been started. But, until now, none has existed in gambling, despite it being a huge industry – we have coincided the Fund’s launch with Cheltenham Festival to highlight this.
“The gambling industry has a history of creating scalable, high growth companies which are highly cash generative and not capital intensive. However, the sector is often avoided and under-invested in by traditional institutions. GamCrowd and Innvotec is a powerful combination and it is this opportunity which the Fund seeks to harness.” added North.
Innvotec has been making venture capital investments since 1989 and has a history of capitalising high-potential businesses. The firm raises and manages annual EIS and SEIS funds in conjunction with sector-specific strategic partners such as GamCrowd.
“GamCrowd’s collective knowledge of the gambling business is second-to-none. It can help secure maximum value for our Fund’s investors by rigorously investigating all opportunities and ensuring that the highest standards are met,” says Innvotec CEO John Marsden.