The investment process
This explains the process for investing in the Octopus Ventures EIS Service and what happens once we’ve received your funds.
At every stage, we will keep you updated on progress, for example when we have made your first investment and last investment, as well as when all your EIS 3 certificates are available. You will also be able to see details of the underlying companies, annual valuations, and important documents on our online portal.
Applying for the Service
We’ve made it easy to apply online – it takes roughly 10 minutes. The minimum initial portfolio investment amount is £25,000, and you can invest as much as you like (please bear in mind the investment limit for EIS income tax and capital gains tax reliefs of £1 million). We’ll let you know when we’ve received your funds in a welcome email, which will include details of the next steps for your investment.
Identifying opportunities for your portfolio
We will invest your money alongside investments from other investors. In order to take advantage of certain investment opportunities for your portfolio, we may need to wait until we have sufficient funds sourced from a number of investors. Once we have accepted your application and received your money, it will not typically be possible for us to return any uninvested cash at your request.
Your money will be invested into EIS-qualifying companies
We will start to invest your money into early-stage businesses, and we expect to invest all your funds into around 10-15 companies over twelve months. However, it could take longer to invest all your money, as we will consistently follow our investment process and won’t compromise on the quality of the investment opportunities we source and manage for you. Each time we invest in a new EIS company, we will provide you with details of the company in our online portal. We’ll also let you know once all the funds in your portfolio are fully invested.
Issuing your EIS 3 tax certificates
You will need an EIS 3 certificate from each company in your portfolio to claim income tax relief (and capital gains deferral relief, if relevant to you). The relevant date for both is the date that we invest into each EIS company, rather than the date your application is processed.
The EIS 3 certificates are issued by HMRC and are typically available within twelve weeks of investment into each company. Please note that timing of certificates cannot be guaranteed. EIS 3 certificates issued will be available in our online portal.
Selling your investment
When we select a company for your portfolio, we expect to be invested in it for five to ten years. However, exits can happen earlier than expected, or we may choose to remain invested in a company for longer than ten years in order to achieve the most attractive exit for your portfolio. You should expect that the number of companies in your portfolio will change throughout the lifecycle of your investment. When we do sell your investment in each company, we’ll email you the details and return the proceeds (less any fees) to you.
Key risks
Capital is at risk
The value of an EIS investment can fall as well as rise. Investors might not get back the full amount they invest.
Tax treatment
Tax treatment depends on individual circumstances and tax rules might change in the future. Tax reliefs depend on companies maintaining their EIS-qualifying status.
Volatility and liquidity
Investments in smaller companies can fall or rise in value much more sharply than shares in larger, more established companies. They can also be harder to sell.
Long term investments
Investors need to hold shares for three years to keep any tax reliefs claimed. However, investors should be prepared to hold their shares for significantly longer to allow time for growth and exit.