The MMC new generation fund will invest in at least four unquoted UK companies that are eligible for EIS investment. These will comprise of new deals and follow-on investments into companies in which MMC Ventures already invests. The firm has a generalist approach but tends to find opportunities in healthcare, financial services, support services and technology, including media, because it focuses on high growth sectors.
MMC initially makes an investment of £500,000 to £2m in a company, and supports it through follow-on funding as they grow. Typically, they invest up to £5m in any single business.
The firm, which was launched in 2000 to invest in early stage growth companies, felt there was a gap in the market for a fund that encourages younger people to invest for their future. It says venture capital has typically been open to high net worth individuals with over £25,000 to invest, but MMC wants to make it an accessible asset class for younger investors. It has set a £2,500 investment minimum for the fund, with a maximum of £10,000.
To encourage investment into the fund the firm has waived its usual 2.5 per cent annual management fee and 1 per cent subscription costs, but will still charge a 20 per cent performance fee. The firm has also waived its usual £125 membership fee for investors in the fund.
MMC Ventures says that investments made during previous downturns have produced above average returns. It says the time is right for investing in venture capital because companies are finding it difficult to access capital to grow, so valuations are low and sensible investments can be made. The firm says its investment team personally invest in the deals and points out that EIS tax relief mean that investors will never lose all their original capital.
However, the tax relief exist as an incentive to invest because venture capital is high risk. The fund may attract younger investors who are looking for an introduction to venture capital to diversify their existing portfolio.