Venture Capital as an alternative asset class has been around for hundreds of years in one form or another. Today it is common for entrepreneurs to approach high net worth individuals, family offices, venture capital funds and corporate’s to fund their initiatives. Venture Capital as an asset class has never really been available to the regular investor.
Whilst entrepreneurs mostly get there start up capital from friends and family (angel investors), it usually is not nearly enough to get these ventures off the ground. Angel funding is generally a high risk investment and the angels don’t normally have the expertise and network to add value to the entrepreneur in this alternative asset class.
Section 12J Venture Capital Company (VCC) that provides investors the opportunity to invest into this alternative asset class for the first time. Section 12J VCCs not only give the investor access to this new dynamic alternative asset class, but the investor will also get the Section 12J VCC tax allowances when investing in this alternative asset class.
The tax allowance allows the tax payer to deduct the full amount of their investment into the Section 12J VCC from their taxable income in the year in which the investment is made. This tax allowance effectively adjusts the risk of the investor in this alternative Venture Capital asset class. The investor now has only 55% risk with 100% of the potential upside.