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A new venture

I rarely recommend buying venture capital funds, but the current financial crisis means entrepreneurs are now expecting much less money for a stake in their business as they are finding it harder to raise money and borrow from banks.

The fund I like best is an EIS fund investing in high growth businesses. It is the Oxford Gateway fund No 5, run by Oxford Capital Partners, which will drip-feed capital into a diversified portfolio over the next 12 to 18 months.

The Oxford Gateway funds have a good reputation. Their first fund launched in 1999 andhas delivered returns of over 200 per cent despite market setbacks. The firm has won many awards including Winner of the Venture Capital House of the Year 2005.

The downturn will have a negligible impact on prospects for growth due to the types of business Oxford Capital backs.

This fund will invest in companies developing new technologies to address the world’s healthcare needs, climate change and sustainability risks. These are the businesses most likely to deliver investors the potential for real growth in the future.

Some of the firms they have backed include Oxitec, which is pioneering the control of pest insect populations without the use of pesticides, Glide Pharma, a pharmaceutical company enabling fast and simple delivery of drugs, vaccines and solid formulations of the skin, and Inetec, the UK’s leader in food waste to the energy market. Inetec is the UK’s first company to be granted permission to build a power station fuelled by industrial food waste.

The tax benefits of EIS funds include 20 per cent income tax relief, capital gains tax deferral relief, tax-free gains and 100 per cent inheritance tax exemption after two years. I strongly recommend it.

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