Jenson Seed EIS Fund - Clubfinance

12 Jenson Seed EIS FundRisk Factors 131. Risk FactorsProspective Investors should be aware thatthe value of an Investment in an InvesteeCompany can fluctuate. In addition, thereis no guarantee that the valuation of anInvestment will fully reflect the underlying netasset value or the ability to buy and sell theInvestment at that valuation.Investors should be fully aware of thehigh-risk nature of seed investments inearly stage companies. In addition, thestatements regarding taxation in thisdocument are merely a brief summary andshould not be viewed as constituting taxadvice. Representations in this InformationMemorandum with respect to Tax Reliefsrelate to the generic position of a UKresidentindividual tax-payer and do notamount to tax advice to any person.The information below does not purportto be exhaustive. Additional risks anduncertainties, not presently known to theFund Manager and Jenson LLP, or which theFund Manager currently deems immaterial,may also have an adverse effect onthe business of the Investee Companies.Investors should consider carefully whetheran investment in the Fund is suitablefor them in the light of the informationin this document and their personalcircumstances. If in any doubt whatsoever,an Investor should not invest in the Fund. Inany case, it is strongly recommended thatInvestors seek the advice of their financialadviser or other appropriately qualifiedprofessional adviser.1.1 Risks relating to theInvestee CompaniesSmall unquoted companiesInvestment in smaller, unquoted companies,by its nature, involves a high degree of risk.Proper information for determining their valueor the risks to which they are exposed mayalso not be available. Investment in suchcompanies can offer good investment returnsbut the market for their shares is often illiquidand uncertain by its nature. Consequently,such investment involves a higher degreeof risk than a portfolio of quoted shares.Realisation of investments in unquotedcompanies can be difficult and may takeconsiderable time. Investment in smallerand unquoted companies is likely to involvea higher degree of risk than investment inlarger companies and those traded on themain market of the London Stock Exchange.Smaller companies generally may havelimited product lines, markets or financialresources and may be more dependent ontheir management or key individuals thanlarger companies. Although the Fund mayreceive conventional venture capital rights inconnection with its investments, as a minorityinvestor it may not be in a position to fullyprotect the interests of Investors.No liquid market on a public exchangefor InvestmentsThere is no liquid market on any publicexchange or elsewhere, nor is there intendedto be such a market for Investments; as such,an Investment made through the Fund willnot be readily realisable.Dependent on investment opportunitiesThe level of returns from Investments may be lessthan expected if there is delay in the Investmentprogramme, such that all or part of the netproceeds of the Fund are held in cash or nearcash Investments for longer than expected,or if the returns obtained on Investments areless than planned, or if Investments cannot berealised at the expected time and values. Therecan be no guarantee that suitable Investmentopportunities will be identified in order to meetthe Fund’s objectives.Fund performanceThe performance of the Fund is dependent onthe ability of the Fund Manager and JensonLLP to identify appropriate Investee Companiesand on the ability of the Investee Companiesto perform in line with their respective businessplans, from which their income may be lowerthan their costs. The number and the diversityof Investments will depend on the timing ofyour Contribution relative to the timing ofContributions by others. Early Investors in theFund are likely to enjoy a greater number andmore diversity than later Investors.Regulatory changeLegal and regulatory changes could occurduring the life of the Fund that may adverselyaffect the Fund or its Investors. These mayinclude environmental, safety, labour andother regulatory and political authorities, orforce majeure acts, terrorist events, or otheroperating risks.The value of investments may fluctuateThe value of the Fund’s Investments maygo up or down. An Investor in the Fund maynot get back the full amount invested andconsequently may lose some or all of thefunds invested.Medium-long term investmentThe timing of exits from Investee Companiesmay take longer than anticipated. AnInvestment in the Fund should be considereda medium to long-term investment.SuitabilityThe performance of the Fund is dependenton the ability of the Fund Manager andJenson LLP to identify appropriate assetsand companies. Portfolio Companiesmay fail, Investments may be realised forsubstantially less than the acquisition cost,or they may be impossible to realise at all.Investee Companies may accept otherequity or debt capital which ranks higherthan the Fund’s Investments in an insolvencysituation. Investors should only considerinvesting if this is a risk they can afford tobear, having taken independent advice.Strategy of Investee CompanyThe Fund will in a number of cases takeminority positions in Investee Companies.Although minority investor protections will besought at the time of Investment, there canbe no guarantee that the Fund will materiallyinfluence the strategy and decision makingof the Investee Company if other Investorsholding a larger stakes hold different views onthe future direction of the business.