Jenson Seed EIS Fund - Clubfinance

24 Jenson Seed EIS FundKey Points 253.3 Opening and Closing DatesThe Fund will be open to applications on 10August 2012. The final Closing Date of theFund will be 31 March 2013. The Fund mayremain open for further applications at theFund Manager’s discretion. The Fund Managermay, in its discretion, and having regard to thevalue of Contributions received by then andthe available investment opportunities, acceptapplications on one or more interim ClosingDate(s) prior to the final Closing Date, so thatContributions received by then may be investedat that point, whilst the Fund remains open forfurther applications until the final Closing Date.Investors who contribute after an interim ClosingDate may or may not be invested in the sameInvestee Companies as those who contributeearlier, depending on the timing of the makingof Investments. The Fund Manager will most likelyinvest as soon as the Fund reaches its MinimumTarget and therefore Investors may not haveaccess to early Investments if they invest in theFund later in the tax year.3.4 Costs, Fees and IncentiveArrangementsThe way EIS fund charging structures aregenerally set up often mean that Investorsdo not receive tax relief on the full amountof their contribution. Typically, for every£10,000 contributed, only around £9,000 isactually invested (owing to the initial chargeand annual management fees). This is notthe case with the Jenson Seed EIS Fund: toensure that Investors receive tax reliefs onthe full amount of their investment in theFund, charges are made to the InvesteeCompanies rather than to the Fund.3.5 Investee Company FeesInvestment FeeWhen the Fund Manager makes aninvestment in an Investee Company, JensonLLP (on behalf of the Fund Manager andacting through Jenson Solutions) will chargethe Investee Company an initial investmentfee of 5.5% of the amount invested. Thisinvestment fee will settle any agreedcommission or payments to facilitate advisercharges by an Investor’s authorised financialadviser if they have one.Monitoring FeeThe Fund will have certain direct operatingcosts, such as tax, legal, compliance, auditand Administrator & Custodian fees. The Fundwill provide Investors with regular informationon the performance of their Investmentsincluding quarterly valuations and six-monthlynewsletters and statements electronically.To pay for these services and also for themonitoring of Investee Companies byJenson, Jenson LLP (on behalf of the FundManager and acting through JensonSolutions) will charge each InvesteeCompany an annual administration chargeat the rate of £295 per calendar month plus2% per annum on amounts invested (plusVAT if applicable). From this charge JensonLLP may (where applicable) pay an annualtrail commission to an Investor’s authorisedfinancial adviser.Jenson Solutions may also provide eachInvestee Company with operational andaccounting support covering such mattersas financial reporting, business planning,financial modelling, debt fund raising,business management and general dealmanagement (whether in relation to theinitial Investment or otherwise) and maycharge additional fees to the InvesteeCompanies for these services.Other Investee Company chargesThe Fund Manager and Jenson LLP reservethe right to charge exit fees to each InvesteeCompany and (together with their associatedcompanies) will also be entitled to receivefees and other benefits if they provideadditional corporate finance or similar servicesinvolving the Investee Company.Projects which do not proceedto completionThe fees and costs incurred in connectionwith potential Investments in InvesteeCompanies which do not proceed tocompletion will be borne by Jenson LLP.VATVAT will be payable where applicable bythe Investee Company.Performance FeeLinked to the performance of yourInvestment the Fund Manager and JensonLLP will be entitled to a performance fee ifand when a realisation of an Investment inan Investee Company is achieved. This willbe as follows from the sale proceeds:• NO performance fee if the return from anInvestee Company including dividendsand other distributions to an Investor is100p (OR LESS) per 100p contributed inthat Investee Company;• IF on an Investment by Investment basis,the return including dividends and otherdistributions to an Investor from an InvesteeCompany is MORE THAN 100p per 100pcontributed the Fund Manager andJenson LLP will receive a performance feeof 25% of all returns to an Investor above100p per 100p contributed.The entitlement to performance feesmay be paid in cash or structured byway of subscriptions for shares in InvesteeCompanies by or on behalf of the FundManager and Jenson LLP.Many performance incentives work on acumulative basis, however, we believe thatfor very early stage funds an investment byinvestment performance incentive closeraligns the fund management interestswith the interest of investors. Early stagecompanies not only require funding but ahuge amount of pro-active support overmany years including detailed handsonadvice and assistance. By having aperformance incentive on each companyit ensures that the fund manager isincentivised to go beyond the normallevels of support to drive each business to asuccessful exit so far as possible. Cumulativeincentives do not necessarily provide thisassurance to investors over the long-term.For example if the cumulative performanceincentive is significantly under-water afterseveral years there may be little incentive toa fund manager to continue to drive thosebusinesses forward.