What Are SMVCFs?
Self Managed Venture Capital Funds do for SME equity investment what Self Managed Super Funds did for superannuation investment, and in the same way.
Self Managed Super Funds allow the investor to retain investment control of their superannuation while reducing the fees paid to fund managers through a government created and legislated investment vehicle with significant tax advantages.
An investors Self Managed VC Fund empowers that investor to invest into the burgeoning Australian SME equity market without loss of control, within a government created and legislated tax exempt investment vehicle and without any out-of-pocket fees.
A Lellco Development
To maximise the amount of investment capital available to SMEs Lellco has developed the Self-Managed Venture Capital Fund (SMVCF) model for the benefit of investors.
This capitalises on the availability of complete investment tax exemptions on investments made by a government registered venture capital fund, but rather than only being available to the largest investors we make it available with Self-Managed Venture Capital Funds, which are administered by Lellco, holder of an Australian Financial Services Licence (AFSL 544979) .
Adviser involvement
Lellco is the administrator of Self Managed VC Funds but does not provide advice to either investors or investees. Our objective is to work in collaboration with firms providing professional advice.
As such, an adviser may introduce investors or investees and then provide ongoing management and advisory services, sharing in the management fees generated.
Finding SMVCF Investments
For simplicity and consistency look for the SMVCF Certified badge. Listings on AuSMEquity will detail if those investments have:
- Pre-qualified Tax Exempt Investment status, meaning they meet the legislative requirements to be invested via a compliant federal government registered vehicle and thus gain complete tax exemption.
- SMVCF Certified, confirming it has been agreed that the investment can be made through Lellco’s Self Managed VC Fund model.
Aust SME equity investment comparison
| Direct SME Investment | Angel Investment Tax Incentive Scheme | Standard Venture Capital Funds | Self-Managed VC Funds | |
|---|---|---|---|---|
| Minimum Investment | No Minimum | No Minimum | $2 million | $100,000 |
| Investment Selection | Investor selected | Investor selected | Manager | Collaborative selection |
| Investment management | Investor | Investor | Manager | Collaborative management |
| Investment range | Unlimited | Very limited | Within broad range | Within broad range |
| Investee types | Venture (speculative) & Enterprise (lower risk) | Venture (speculative) | Venture (speculative) | Venture (speculative) & Enterprise (lower risk) |
| Min & max investment hold period | N/A | 12 months – 10 years | 12 months – 15 years | 12 months – 15 years |
| Max Investee Entry value | N/A | Not prescribed but ESIC test sets a very low valuation | $50m | $50m |
| Investment Divestment | Nil | Nil | Tax benefits cease at $250m value | Capital tax benefits cease at $250m value |
| Income Tax | Yes | Payable | Exempt | Exempt |
| Capital Gains Tax | Yes | Exempt | Exempt | Exempt |
| Tax Offset | Nil | 20% of invested capital capped at $200,000 p.a. | 10% of invested capital, uncapped | 10% of invested capital, uncapped |
| Capital Loss | Yes | Disregarded | Exempt | Capital Loss Strategy |
SME Funding Objective
Regarding Australian SME Equity funding, we share the same objectives as the Federal Government:
1. To increase the level of capital available to SMEs;
2. To develop the skills and expertise of SME Equity investors; and
3. To encourage more investment into expanding enterprises and those commercialising new technology and innovations.
We do this by balancing the needs of all stakeholders; SME owners and managers, their advisers, the regulators and the investors.
In a simplified form there are two types of investors; passive (who do not wish to be active in the management of their investments) and active (who do wish to be actively involved, to some extent, in the investment decision making and management). It is actually much more nuanced than this, but this is the starting point.