John Glencross, CEO, Calculus Capital was featured in an article in the FT on the changing landscape for EIS since solar schemes are no longer viable. The article was published on 14th January 2016.
Sunset for solar investments widens EIS spectrum
Universities are moving to mop up venture capital redirected from green energy schemes after a government clampdown on tax reliefs in the sector.
Since recent restrictions were imposed on the use of the enterprise investment scheme (EIS) to finance renewable energy generation, knowledge intensive companies that have traditionally struggled to finance growth using the generous relief have come to the fore.
A fund of early-stage spinouts from the University of Bristol, launched this week, is the latest to offer wealthy investors access to high-growth ventures that qualify for EIS. The inherent risks of investing in early-stage companies are cushioned by tax reliefs — including upfront income tax relief and capital gains tax deferral — that largely offset any losses. The smallest businesses can qualify for Seed EIS relief, which comes with even more generous tax breaks.
But the proposition offered by university spinouts is very different from that of UK solar projects, where income was secured by public subsidies, and which dominated the EIS market as recently as two years ago.
“They are a big step away from where most financial advisers and investors have been comfortable in the past with low risk, asset-backed investments,” said John Glencross, chief executive of EIS manager Calculus Capital. Very few early-stage spinouts succeed, he added, curtailing the appetite of “quite nervous” investors.
To read the full article, please click here.