UK Small Registered AIFM in the United Kingdom
Start Up & Emerging UK Fund Managers
Sturgeon Ventures helps to resolve problems faced by first time fund managers, created by the very substantial time that it takes the FCA to deal with applications. Telling institutions who are ready to commit to your fund and invest that they must wait for another 6 + months is likely to be a deal breaker.
There is no need for a Depositary within a UK Small Registered AIFM, if it is only marketing in the UK.
Using our Regulatory Umbrella, your fund can start investing and charging management fees in as little as 4-6 weeks. The FCA recently wrote to applicants saying that they wouldn’t even get round to allocating new applications to a Case Officer for four and a half months after having received it! Once you become directly authorised with the FCA, we will resign.
On-going Portfolio Management Services
When a fund is being organised, but the promoter group isn’t regulated and does not wish to be, Sturgeon Ventures Regulatory Incubation Team is able to step in and act as a permanent fund manager. The promoter group provides insight and advice to the Sturgeon Ventures Investment Committee to assist with the selection and review of investments.
The Sturgeon Ventures Investment Committee is made up of women who have more than 20 years financial services experience, bringing expertise in closed ended funds and diversity to your team. The Emerging Manager can be brought into the Investment Committee directly or brought within an Appointed Representative of the Principal Firm
Sturgeon Ventures regulatory hosting helps develop the experience and systems of new/emerging fund managers so that they are able to make more credible FCA applications, demonstrate to fund investors that they have a sophisticated approach to operating the fund, and have an investment committee with experience and substance.
How the Regulatory Umbrella Works
Using the regulatory umbrella is very simple:
Once your investment team has formed a new fund, Sturgeon Ventures LLP is appointed under an Interim Management Agreement to act as the fund manager.
Members of the Investment Team would usually join the investment committee of their fund.
Set out below are some further insights into how the umbrella works in practice.
Marketing the Fund
- Marketing the fund – Sturgeon Ventures will oversee the marketing of the fund – reviewing, approving and issuing information memorandum and fund marketing documents;
- Investor Due Diligence Questionnaires – investors will want to undertake due diligence and, where asked, we will assist in the preparation of Investor DDQ’s.
Managing the Fund
As the interim fund manager, we will need to build a proper investment process with you:
- Work in Progress – we will agree with you regular ‘Work in Progress’ meetings so that we stay up-to-date.
- Investment Decisions – we will establish a dedicated investment committee for your fund.
- Due diligence and deal sourcing – when investors chose to back a team they are backing its judgement, its track record and its ability to source, assess and create great investment opportunities. The investment team therefore uses its contacts to source deals, undertakes relevant due diligence and writes the necessary investment papers.
- KYC Checks – there is a legal obligation to undertake ‘Know your Customer’ checks before any investment is made (or sold).
- Draw-down notices – the fund administrator (if there is one) will send out draw-down notices to investors to ensure that there are adequate funds to complete a deal.
- Custody Share – loan note certificates etc will be registered in the name of your fund and held either by the fund or by its fund administrator (if one has been appointed).
- Managing the Investment – your investors are backing your skills at managing the investment post-completion, not ours. If the investment agreement includes rights to appoint a director we would expect to appoint one of the promoter’s team; if it includes the right to visit premises or hold meetings with a portfolio company management team we would expect that you attend them. In both cases however, we would expect that you share the notes within your area on our SharePoint Office 365 platform.
- Exiting the investment – if a purchase does emerge whilst we are still the interim manager, then we would expect that the investment team would evaluate any offer and prepare an investment paper recommending acceptance or rejection of the offer.
For Start Up fund managers, once you become FCA authorised we will resign, and you become the manager of your own fund. Where required the Fund Incubator can remain involved indefinitely.
Types of Ventures as Closed Ended Funds
Sturgeon acts as the Small Registered Authorised Investment Fund Manager (‘AIFM’) for UK Funds, whether UK Corporates or English or Scottish Limited Partnerships. This is a particularly popular model for UK Venture Capital Funds.
What is Venture Capital?
Venture capital investment provides finance to start-ups and early stage companies, forming an important source of long-term financing to young and innovative companies who believe in their new creations.
In order to promote new areas of growth and move towards an innovation-led economy, there is a need to strengthen new avenues of financing to support start-ups and innovative small and medium-sized enterprises (‘SMEs’). Since banks are typically less likely to provide this type of financing and start-ups require highly capital-intensive and specialised ongoing analysis and support, access to venture capital is key to financing the growth of this segment of the EU economy.
With an ongoing gap in funding to such entities, the UK continues to be a leading Financial Services Centre for Venture Capital.
Definition of Venture Capital from Wikipedia
What is Social Entrepreneurship?
Social enterprises are companies that have a positive social impact and address social objectives as their corporate aim, rather than only maximising profit. Whilst these enterprises often receive public support, private investment via funds still remains vital to their growth. However, such specialised social investment funds are rare or are not large enough, making cross-border investments unnecessarily complicated and expensive. Since BREXIT there have been no new structures created for such a development, now that the EEA Passporting has disappeared for UK Funds with the exception of the use of The National Private Placement Regime (NPPR).
Definition of Social Entrepreneurship from Investopedia
Real Estate Fund
Real Estate Funds can be set up in the UK as Small Registered Funds either through a UK Limited Partnership or as a Limited Company.
Registration of the Fund with the Financial Conduct Authority (‘FCA’)
All the above funds if marketed to a Certified or Self Certified High Net Worth need to be registered with the FCA – Sturgeon Ventures the Regulatory Umbrella will arrange for the registration.
Key Investor Document – KID
These Funds will also require a KID – the Regulatory Incubator will assist in its preparation and list on our website.
Routes to Market
Funds can be listed in the UK, a popular listing for smaller funds is Aquis https://www.aquis.eu/ where the fund still requires a Small Registered AIFM