Abacus has the experience and expertise to create and manage bespoke trusts, companies and funds to help our clients achieve their ambitions.
Offering a variety of structures enhances our ability to build long-term relationships with clients. For instance, a client may start with a trust for estate planning, later require a company for business operations and eventually seek to invest through a fund.
Here the Abacus funds team outlines some of the advantages of an exempt fund structure for entrepreneurs:
- A fund allows an entrepreneur to access a pool of capital from multiple investors, which can provide the significant financial resources needed to scale a business.
- By bringing together multiple investors investment risk is pooled which can be advantageous for an entrepreneur as it can be easier to raise larger sums.
- Entrepreneurs can focus upon specific types of investors, such as venture capitalists, private equity firms, institutional investors or high-net-worth individuals, depending on the objectives of the fund.
- Funds can be structured to provide stage-specific financing, allowing the start-up to receive capital in phases as it meets certain milestones, particularly appropriate for the new technologies, infrastructure, aviation, yachting and medical sectors.
- By using underlying SPVs underneath the fund structure for different projects and opportunities each can be insulated from the failure of another.
- Funds often bring together investors who offer more than just capital. Many investors in funds are experienced professionals who can provide strategic advice, industry connections and operational support. For an entrepreneur, this access to a network of knowledgeable investors can be invaluable in accelerating growth and entering new markets.
- Investors in a fund may take an active role in mentoring the entrepreneur to help navigate the challenges of scaling a business.
- By participating in a fund, investors collectively share the risk, making it less daunting for them to invest in a start-up that might otherwise seem too high risk on its own.
- Funds can be structured to include risk mitigation strategies, such as diversification across multiple start-ups or sectors, which can make the fund more attractive to investors while still providing the entrepreneur with the necessary capital.
- Funds are often designed with a long-term investment horizon allowing an entrepreneur to focus on building the business without the pressure of short-term returns.
- Backing from a well-structured fund can enhance the start-up’s credibility in the eyes of customers, partners and future investors.
No action should be taken on the basis of this note, nor should it be construed as amounting to tax, legal or VAT advice. Suitable, specific and professional advice should always be obtained in respect of any particular issue.
