Deepbridge Sci-Tech Daresbury SEIS
The Deepbridge Sci-Tech Daresbury SEIS is an opportunity to secure potentially attractive returns by investing in a diversified portfolio of early-stage technology companies, whilst taking advantage of the considerable income tax, capital gains tax, and inheritance tax benefits available under the Seed Enterprise Investment Scheme.
Providing seed investment to emerging technology focused companies, the Deepbridge Sci-Tech Daresbury SEIS seeks to fund companies with exciting new technologies that satisfy the needs of large and growing markets. The overarching focus of the Deepbridge Sci-Tech Daresbury SEIS is to offer investors a diversified exposure to companies engaged in the development of technology innovation, including:
- Energy and resource innovation
- Medical technologies and diagnostics
- Business enterprise IT
- Data analytics
- Control technologies
- Advanced materials
- Robotics and artificial intelligence.
Specifically, the investment strategy of the Deepbridge SciTech Daresbury SEIS is to invest in a diversified portfolio of a minimum of five investee companies that benefit from a permanent base at Sci-Tech Daresbury and the potential support a base within such a collaborative campus may provide.
Why invest in companies based at Sci-Tech Daresbury?
Sci-Tech Daresbury is a National Science and Innovation Campus established in 2006, (originally named as Daresbury Science and Innovation Campus). It is located in Cheshire close to Runcorn and Warrington, and within easy access of Liverpool and Manchester.
In December 2010 a new joint-venture company was created to spearhead the longer-term development of the site. Partners in the JV company are the Science and Technology Facilities Council (STFC), Halton Borough Council and Langtree, a property developer and investor. It changed its name to Sci-Tech Daresbury in July 2012.
Sci-Tech Daresbury is internationally recognised through the reputation of the STFC Daresbury Laboratory and Cockcroft Institute in leading-edge research and development, and the successful establishment of its open innovation model. Currently there are about 1200 people on–site, including about 500 scientists working in a variety of scientific fields including accelerator science, high performance computing, simulation and data analytics and sensors and detectors. It operates large-scale facilities used by many UK universities as well as an increasing number of industrial companies (eg IBM, Unilever, Bentley Motors, BAE Systems).
Due to its focused occupier policy, it is home to over 100 hightech companies at Daresbury employing over 500 people in areas such as advanced engineering, digital/ICT, biomedical and energy and environmental technologies. These vary from start-up companies to more mature SMEs to international corporates such as IBM and Lockheed Martin. About one in six companies have their headquarters outside the UK. Due to the collaborative and supportive approach that SciTech Daresbury and the companies on site adopt, the failure rate of start-up businesses on site is significantly lower than recognised national averages.
The technologies that Sci-Tech Daresbury excel in are high performance computing and particle acceleration, which have grown up in synergy on site over decades, each a product of the most stretching technology and engineering demands of ‘big science.’ Since the advent of the campus in 2006, Sci-Tech Daresbury has seen a wealth of highly innovative companies join, bringing expertise in areas ranging from medical devices and diagnostics to data analytics, control technologies to instrumentation, renewables to advanced materials.
The skills-base at Sci-Tech Daresbury spans all aspects of engineering, and technology especially high-precision systems, intelligent sensors and software development, all of which are in growing demand in the UK and globally. However, where Sci-Tech Daresbury adds real value to tenant companies is the skills-base and commercial acumen available via the collaborative approach.
According to statistics provided by Sci-Tech Daresbury (December 2016), over the decade that Sci-Tech Daresbury has been providing a home and services to high-tech companies only 5% of them have gone into administration whilst being based at Daresbury. This compares against the UK average of over 50% failing within five years (according to the RSA in October 2014). During the past five years, Sci-Tech Daresbury based companies have seen average sales growth rates of 30% per annum. Companies at Sci-Tech Daresbury to date have also attracted over £80m of investment and have attracted acquisitions from blue-chip companies such as IBM and Lockheed-Martin. [Figures provided by Sci-Tech Daresbury, December 2016.]
SEIS Tax Reliefs
SEIS relief is available to investors in respect of each investment in an Investee Company made by the Deepbridge Sci-Tech Daresbury SEIS, by reference to the date the investment is made. Under SEIS, the main tax advantages that may be claimed by a qualifying investor are as follows:
- 50% income tax relief up to a maximum investment in SEIS of £100,000 per tax year per individual.
- Capital gains that are reinvested in SEIS shares qualify for a 50% exemption from CGT.
- Tax free gains. There is no capital gains tax liability on gains on the ﬁrst disposal of shares which have been held for 3 years in SEIS qualifying companies, on which SEIS income tax relief has been obtained.
- 100% inheritance tax exemption after each individual investment has been held for at least 2 years.
- Income tax carry-back relief. Investors can claim income tax relief for the tax year in which they invest in the underlying companies, as well as the tax year immediately preceding the investment. This enables the investor to claim tax relief in the period(s) most advantageous to him/her.
- Loss relief (providing potential total tax relief of up to 72.5%). A loss on any qualifying investment in the portfolio, irrespective of the overall performance of the portfolio, can be offset by individuals against income of the tax year of loss, or the previous year, or against capital gains of the tax year of the loss and future years.
The 100% Rule
The Deepbridge Sci-Tech Daresbury SEIS is an investor fee-free Seed EIS opportunity. Investors are therefore not charged any fees at point of investment. Upfront and ongoing fees are paid by the Investee Companies: this advantage allows investors to enjoy 100% of SEIS tax benefits and to have 100% of their investment actually put to work earning potential investment returns.
The Target Return
The investment objective of the Deepbridge Sci-Tech Daresbury SEIS is to generate substantial tax-efficient mid-case capital growth of 200p for every 100p invested, over a minimum 5 year period.
Exit events will be sought at the earliest opportunity after the third anniversary of the investment made.
Who Is The Deepbridge Sci-Tech Daresbury SEIS Targeting?
The Deepbridge Sci-Tech Daresbury SEIS is targeting UK taxpaying individuals:
- Seeking an attractive, medium term investment opportunity
- With income tax liability in the preceding and/or current tax years
- With a large capital gain
- Who will benefit from IHT relief.
The minimum individual investment in the Deepbridge Sci-Tech Daresbury SEIS is £10,000. Investors should note that their investment comprises of shares in small unquoted companies (often with high risk) and that they are unlikely to have access to their capital for a minimum of 6 years from the date of application. Please refer to the risk section for further information.
Investors should be aware that investment in smaller unlisted companies (including SEIS qualifying companies) carries with it a high degree of inherent risk whether or not it is done through a diversified portfolio and regardless of any tax advantages which such an investment might carry and/or any steps taken to attempt to mitigate that risk. Investors are unlikely to have access to their capital for at least a period of 6 years. Investors should be aware that thier capital is at risk and they may lose all or some of their investment. Please refer to the Deepbridge Sci-Tech Daresbury SEIS Information Memorandum for further information regarding risks.
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