In Bill Bryson’s latest book he refers to a Japanese report that concluded 55 per cent of ‘significant’ inventions since the Second World War were created by the British, compared to 6 per cent the Japanese themselves and 21 per cent by Americans.
We should of course be aware that statistics can often be misappropriated (as the likes of Benjamin Disraeli and Mark Twain would agree) but the overarching sentiment is that for a small island we have an unbelievable track record of inventing ‘stuff’.
I'm (un)fortunate enough to be on the mailing list for just about every 'alternative' investment proposition that is launched and it strikes me that there is little in the way of investment propositions which offer investors the opportunity to invest in UK innovation. You can invest in wine, Indian solar farms, African water treatment plants, stamps or classic film posters.
The abundance of crowd funding opportunities are apparently an opportunity for many investors to seek innovative companies but when it comes to opportunities offering investors a portfolio approach to investing in innovation there is limited choice in the market. For those investors relying on opportunities presented by their trusted financial adviser, there are few options.
Crowd funding propositions are predominantly targeted at individual investors, so I would imagine it is unlikely that an adviser would consider such investments as part of their advice. However, if a client informs their adviser that they ‘dabble’ with crowd funding sites, then the adviser should perhaps explain to the client how that fits in with their overall financial plan, or not as the case maybe. Perhaps help the client budget so that they know how much they can realistically risk in these high-risk single-company investments.
When considered that last year venture capitalists poured a record $2.28bn (£1.56bn) into the tech scene in London alone, according to data from London and Partners, the Mayor’s promotional company; perhaps financial advisers should be considering the growth opportunities available to appropriate clients?
There are a limited number of specialist sector-specific equity funds on the market which are predominantly selecting larger-cap companies or AIM stocks. These may be an option for advisers to consider if an investor is particularly interested in tech or medical investments, for example.
If looking to take advantage of unquoted and earlier stage investment it might be appropriate to look at tax-efficient investment managers (such as EIS managers); as such providers are likely to operate in this unquoted arena, with companies that are targeting considerable growth.
It is a well broadcast opinion that 'Britain no longer makes anything.' Whilst it may be considered that our motoring industry is now a 'flat pack' version of what it once was and the industrial mills around my hometown of Wigan are now either flats or retail complexes, it should be noted that the number of small businesses being created in the UK each year has continued to grow for some considerable time.
There are growth opportunities in the UK. Suitable investors looking to support and potentially benefit from these opportunities should consider the underlying investments within a packaged portfolio and understand the investment rationale of any investment manager within this area. Is the investment manager experienced within specific sectors and do they have the skills to maximise the growth opportunity of the underlying investments? Most propositions within this market utilise tax reliefs to incentivise investors and this is why the government introduced, and continues to support, the likes of EIS, SEIS and business relief. The trick for an investor is to spot the investment managers committed to helping innovative companies grow, compared against those which are purely offering a proposition where the tax reliefs are the sole, or primary, reason for investing.
Look at tax-efficient investment managers who have a sector specific niche. With unquoted companies, it is often important that the manager understands the sector in order to best identify, at the outset, opportunities for growth. Subsequently, those with specific sector experience are likely to have a greater understanding of how to develop a company to its full potential and to generate the optimum exit.