Invest in unlisted shares

PdPaul

Once again, thanks for all them comments people, some good tips and certainly food for thought on a few. 
Point of note, this will be my first investment outside of the stock market. 

bostonerimus

Either a troll or an accident waiting to happen...private equity is a nightmare, even for the experienced companies that do it all the time. They expect 1 in 10 investments to pay off and want to own 51% of the shares, the biggest issue is how do you exit? 

PdPaul

A troll - sounds interesting, someone's got to live under the bridge. 
Good luck with whatever it is your doing, whilst I'm sure you all want to protect the other person from making possibly some of the mistakes you made or have heard about it does nothing to encourage a bit of entrepreneurship, if we're all too scared to take a risk then nothing would happen apart from lockdown 13.0 

steampowered

Angel investing into early stage companies does statistically have a better return than the public markets and there is plenty of potential to make a success of it.

However, it can also go badly wrong. If you want to dip your toes into the world of angel investing:

- The normal way of doing this would be to invest £10k into 10 companies, rather than £100k into one company. That's because the risk of investing into early stage companies is much higher than the risk of investing into mature listed companies.

- You would normally want to avail yourself of the very generous tax reliefs available to early stage investors (SEIS, EIS, VCT).

- If you do want to make a single "big bet", you have to be aware that you may never see any of that money back, and you cannot realise liquidity when it suits you. You would normally only get a pay-out if the company is sold or listed.

bostonerimus

PdPaul said:

A troll - sounds interesting, someone's got to live under the bridge. 
Good luck with whatever it is your doing, whilst I'm sure you all want to protect the other person from making possibly some of the mistakes you made or have heard about it does nothing to encourage a bit of entrepreneurship, if we're all too scared to take a risk then nothing would happen apart from lockdown 13.0 

The pendulum has swung towards troll.

Dead_keen

PdPaul said:

The plan is to split the investment between SIPP funds and cash investment, Ideally less cash for more equity, then majority of funds from the SIPP for them extra few % of equity. Meaning my SIPP is working for me now. 
Problem will be finding a firm who will let me use my money to carry out such a transaction in a shirt timeframe, 8 weeks. 

While it makes tax sense for you to get the sweet equity, splitting the investment between yourself and the SIPP on anything other than a pro rata basis will make it harder for the SIPP administrator to make the investment. They need to be very confident that there is no value shift going on (complying with the rules of the SIPP, unauthorised payments, scheme sanction charge, etc) and splitting investments doesn't make that easier.  In practice, I'd expect that they would want a more all singing, all dancing valuation report and that will take more time to prepare (and cost more).  

DT2001

JoeCrystal said:

And to consider what if the company goes bust? There is a reason why friends, family and money doesn't mix!

You tend to lose most if not all your money if the business fails.
It is a must to be clear, in writing, what you expect.
I invested in a business with 2 friends (1 ran it on a day to day basis). It came close to failing but we agreed to a timeline and it turned the corner. It then made good money and we planned an exit strategy which was overtaken by an outside offer.
No disagreements in over 15 years BUT I think we were the exception rather than the rule.

Good luck

PdPaul

Exactly DT! Thanks for bringing some positivity. Well it's full steam ahead, I've got another investor friend onboard and we've found a way to use the SIPP's to our benefit. Thanks all.