Investments  

VCT gives the green light for ventures run by ex-military

The Time:Reboot VCT, managed by Time Investments, with investment advice from Reboot Ventures, will only invest in businesses run by commercially-experienced, ex-military personnel.

The team behind Time Reboot said it believed that ex-military entrepreneurs had qualities required for business success, such as resilience under pressure, strong decision-making and problem-solving abilities, discipline and adaptability.

The team aims to provide investors with more than 70 per cent growth in the first five years and to double investors’ money within 10 years. The minimum investment is £3000 and it is planned to raise up to £20m by the end of April 2014.

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The VCT will not invest in businesses involved in the production or sale of weapons, or in companies whose staff carry weapons.

Time Investments will charge an ongoing annual management fee of 2.15 per cent. It will also donate 0.1 per cent of its annual net assets to Heropreneurs, a charity that provides assistance to former members of the armed forces and their spouses, to enable them to set up, run and grow their own businesses. This donation will be capped at £30,000 annually. After five years, Time:Reboot VCT will make further donations, subject to outperformance of shareholder returns.

The Time Reboot team claims that as the UK’s military forces continue to reduce, the number of investment opportunities will increase. It estimates that there are more than 2m veterans in the UK of working age and that as a result of the government’s strategic defence review around 5000 people will leave the military every year for the next three years.

REACTIONS

Provider view

n Nigel Ashfield, managing director of Time Investments, said: “VCTs now have around £2.9bn in funds under management which is the highest amount since they were launched in 1995. With the improving sector track record, its strong tax benefits and the current bull market in small and medium-sized enterprises, investors are increasingly looking to increase their exposure here.”

Mr Ashfield also said he believed that the combination of a relatively cautious investment philosophy, with a focus on backing ex-military entrepreneurs, would appeal strongly to investors.

n Stuart Nicol, fund manager for Time:Reboot VCT, said: “There are numerous examples of great businesses that have been created by veterans including Mergermarket, Trailfinders and Go Ape.”

Adviser view

Minesh Patel, managing director of London-based EA Financial Solutions, said: “The sentiment is very admirable. Adjustment is not always easy for ex-military personnel.

“As to whether ex-military personnel might make better entrepreneurs though, I would need to see more evidence. I believe many fund managers have this background, but it is not necessarily a formula for success. This is an interesting concept but I am not yet convinced.”

Verdict

The strong emotive appeal of this VCT may attract attention but there is no guarantee that businesses run by ex-military personnel will perform as well as, or better than, businesses run by other entrepreneurs.