Bure Valley Group is an investment brokerage business which links successful investors with exciting, innovative UK startups seeking funding. This content is for information purposes only and should not be taken as financial or investment advice.

The idea of a fixed-income investment opportunity is fairly straightforward: you lend money to a borrower, who then makes fixed repayments to you over an agreed period of time (much like a bank loan). Yet what are the reasons to consider fixed income investments (e.g. property loan notes) over other assets, such as stocks?

Here, our investment team here at Bure Valley Group shares 7 advantages to fixed-income investments, for you to consider their inclusion within your portfolio. If you’d like to browse our loan note and other fixed-income investment opportunities after reading this guide, then please visit our portfolio page. For business owners seeking funding, you can reach us via:

+44 160 334 0827
[email protected]

#1 Income generation

Certain investments provide value to investors through capital gains. One nice feature of fixed-income investments such as bonds, property loan notes is the steady income stream they provide. These might take the form of coupon payments on bold holdings, for instance, and can be used to support the investor’s lifestyle or re-invest into assets in their portfolio.

#2 Protection from market risk

As equity investors will know all-too-well right now in light of the COVID-19 outbreak, the stock markets can be very volatile. They are sensitive to geopolitical events and macroeconomic risks. Fixed income investments are not immune, but they are widely seen as less sensitive to these kinds of shocks and fluctuations, allowing you to help offset losses in your portfolio.

#3 Capital preservation

If you are approaching retirement and looking to retain the absolute value of your investments, then fixed-income investments can be attractive for those who are primarily focused on the return of principal. The lower-risk profile of many fixed-income investors also makes them a compelling option for more cautious investors, as well as to investors who have a shorter time window to recoup losses. Be aware, however, that these investments are not risk-free and can be vulnerable to inflation, which lowers the real value of your investments over time.

#4 Potential returns

It is commonly believed that fixed-income investments carry lower potential returns compared to other asset classes, particularly equities. Whilst this is often true for “lower-risk” fixed-income investments such as UK government bonds (i.e. gilts), other investment opportunities such as property loan notes can match or even surpass the returns of many equities. Here at Bure Valley Group, for instance, many of our property loan notes have produced returns of 12-24% over their lifetime. For more information, visit our portfolio page of current projects.

#5 Priority during liquidation

Nobody wants their investment to fail, but even the most experienced investors know that this sometimes happens despite best intentions and due diligence. One advantage of holding fixed income investments is that they tend to get priority over other securities in cases of company liquidation. This is because, in such circumstances, businesses are usually obligated first to their lenders before their shareholders.

#6 Diversity

One of the maxims of sound portfolio management is to include a range of asset types and investments within your portfolio. Not only does this allow you to take advantage of opportunities which you would not otherwise have access to; it also helps to shield your portfolio from excessive exposure to risks associated with one particular asset.

Fixed income securities, for instance, allow you to ensure relative stability of your principal and avoid taking the needless risks involved with focusing purely on equities, property or commodities. Not only can you diversify across asset classes, however, but you can also diversify within fixed income securities too via gilts, corporate bonds and property loan notes.

#7 Safety of deposit

When you invest in stocks, cash or gold, you will have varying degrees of safety for your deposit depending on the nature of the investment. Fixed income securities, however, tend to come with a specified end-date; at which point the invested amount should be handed back to the investor. If the borrower fails to honour this obligation to the lender, then they will typically face judicial repercussions. Legal action could be justifiably taken against them to recover the original amount. Moreover, fixed income investments such as asset-backed property loan notes can add further peace of mind to the investor, that the principal will be returned by seizing the borrower’s assets in the future, if required. Variable income investments such as equities, however, do not offer this level of deposit safety to their investors. If you invest in a company which later dips in performance, for instance, then your stock value could dip or even be wiped out.

Summary & invitation

Fixed income investments offer a range of attractive benefits to investors, making them a valuable addition to many portfolios. Not only do they offer a valuable means to generate an additional income stream, but they also provide a useful shield against stock market volatility. Fixed income investors tend to get priority over shareholders during liquidation, and the safety of the invested deposit is heightened by legal protections and asset-backed schemes. Finally, some fixed income securities can even surpass the returns of other asset classes (e.g. equities), such as property loan notes.

If you are a successful investor looking for fixed income investment or property loan note opportunities, then we’d love to hear from you. Get in touch today to start a conversation with our team, and discuss some of the investment memorandums we have available:

+44 160 334 0827
[email protected]

Bure Valley Group is an investment brokerage business which links successful investors with exciting, innovative UK startups seeking funding. This content is for information purposes only and should not be taken as financial or investment advice.

Loan notes are a great option to consider if you are interested in investing in property. They can be described as legally-binding “IOUs”, between a property developer (seeking funding for a project) and an individual/institutional investor. The idea is that the developer gains access to much-needed funds to build an enterprise district or another property opportunity, and the investor gets their money back within a few years, with interest.

Property loan notes can be a great way for individual investors to gain access to property development opportunities which are normally restricted to large corporate investors, with the potential for high rates of return. Here at Bure Valley Group, for instance, we regularly offer loan note projects to our exclusive network of successful individual investors, following a thorough review of the opportunity to ensure maximal viability.

However, whilst there are considerable benefits for investors regarding property loan notes, it’s important to be aware of the risks and drawbacks as well.

We offer this short guide to help. If you would like more information about the EIS and loan note opportunities we offer here at Bure Valley Group, then please visit our portfolio. Alternatively, to request an official investment memorandum, please use our online form here.

Input investment

Developing a car park, commercial zone or transport area typically requires a large commitment of funds to get the project going. This is traditionally why such projects are usually only available to large businesses which have the capital ready to invest. Property loan notes essentially “democratise” this area of the property market by allowing multiple investors (including individuals) to invest smaller amounts.

This can be particularly compelling for people who want to invest in property, but who live in an expensive part of the country. Buy To Let property prices in London, for instance, are usually well over £600,000, requiring a large deposit and often involving minimal returns once the mortgage and upkeep costs are subtracted from tenants’ rent. Property loan notes can open the door to invest lower amounts of capital, over shorter periods and with higher potential returns.

Similar to other property investments, however, there are risks involved. There is a market risk, for instance; i.e. an economic shock could lead to a fall in property prices. In such a scenario, the completed property project could end up being worth less than the total outstanding value of debt secured against the project.

You can mitigate this risk somewhat, however, by ensuring you include your property loan notes within an appropriately diversified portfolio. This means that other asset classes can help protect your net worth should the property market fall.

Fixed returns

A Buy To Let property might offer varying returns over time. Your mortgage might go up, for instance, lowering your rent yield. Or perhaps you have to suddenly cover a large, unexpected cost (e.g. a boiler breakage) which eats into your profits. With property loan notes, however, your returns are more “fixed” since you agree an interest rate at the beginning with the property developer. This brings much more financial stability and predictability for the future.

Of course, you do need to weigh this against the risk of the property developer defaulting. After all, if the project is not completed due to developer insolvency, there is no guarantee you will get your money back. However, you can lower the risks here by looking for property loan notes which are properly backed/secured. This means that if the developer fails for whatever reason, you can recoup your losses from another one of their assets.

Freedom & clear exit

Buy To Let is arguably a good investment for some people, but one disadvantage is that it involves a high degree of management (e.g. overseeing tenants) and ongoing costs such as ground rent, mortgage payments and so on. It also rarely provides a clear exit for your investment, since a Buy To Let mortgage can tie you up for 25+ years.

Property loan notes, however, are much shorter in duration (possibly as little as 1-2 years) and require very little in the way of ongoing management. There are no tenants to deal with, repairs to be made or estate agent fees to manage. There is a clear exit in sight, giving you more flexibility to then turn to other loan note opportunities which may interest you.

These benefits do, however, need to be considered against the risk of late repayment from the property developer, which can be a headache for investors. You may need to wait longer than you expected for your returns, for instance, and chase the developer for an explanation for the delay. At Bure Valley Group, we minimise this risk in at least two ways.

First of all, we vet all of our property loan note opportunities before presenting them to our investor network. This process of review helps to whittle out businesses which are built on an ill-thought-out business plan. Secondly, penalty interest can incentivise property developers to ensure payments and projects are completed on time, and help to compensate investors for any delays they may encounter.

Invitation

If you are a successful investor and would like to know more about the exclusive property loan note opportunities we offer here at Bure Valley Group, then we’d love to hear from you.

Get in touch today to start a conversation with a member of our friendly team, and to discuss some of the great investment memorandums we have available:

+44 160 334 0827
[email protected]

Bure Valley Group is an investment brokerage business which links successful investors with exciting, innovative UK startups seeking funding. This content is for information purposes only and should not be taken as financial or investment advice.

With the 12th December UK general almost upon us, much speculation has been going on about the outcome and what the implications will be for the economy in 2020. Will Boris and the Conservatives prevail, leading to a potential Brexit at the end of January coupled with economic uncertainty throughout the rest of the year? Will Jeremy Corbyn’s Labour get into Number 10 (maybe with the help of other minor parties), possibly raising investor-friendly taxes and perhaps even abolishing schemes such as the Enterprise Investment Scheme (EIS)?

These are important questions, yet unfortunately, nobody can answer them with any certainty. Even in the hands of a majority Conservative government favouring low taxes, questions still hang over whether EIS will retain its current form in 2020. The purpose of this article is not to make definite pronouncements. Rather, our intention here at Bure Valley Group is to inform EIS investors of some different scenarios which might transpire as we approach the 2019-20 tax year. If you need financial advice regarding your own portfolio, then we recommend you consult a financial adviser.

If you are interested in finding out more about our exclusive network of EIS opportunities, please see our project portfolio or feel free to contact us on:

+44 160 334 0827
[email protected]

Current planned changes

Under the Budget plans drawn up by the Conservative government in 2018, the existing EIS structure is set to change from April 2020. Under these proposals, HM Revenue & Customs would create a new, “approved” structure for EIS which would focus the scheme more towards “knowledge intensive” companies. There was talk of bringing in a new relief on dividend tax or removal of capital gains tax, but these ideas were scrapped. Rather, the new structure is intended to look something like the following:

• HMRC is set to require that a minimum of 80% of raised funds go towards companies which it deems to be “knowledge-intensive”.
• Approved EIS funds are likely to be required to make investments over two years instead of one. Also, within the first 12 months at least 50% of the raised amount will need to have been invested, with any remaining amounts retained in cash.
• In the year prior to the fund’s closure, EIS investors will be able to set their relief against income tax liabilities through a new “carry back” rule.
• EIS funds will need to submit paperwork to HMRC every year to prove that they are still meeting the required conditions of the scheme.

EIS crackdown?

There is much evidence to suggest that the EIS scheme has brought huge benefits to the UK economy since its introduction in the early 1990s. Yet in recent years, there is also evidence to show the UK government cracking down on investors and companies who use EIS against the spirit in which it was intended. Hence some of the aforementioned, planned reforms for 2020.

Yet there seems to be little indication that the Conservatives, at least, are set to abolish the EIS scheme anytime soon. Certainly, there is no suggestion of this in their 2019 general election manifesto, at the time of writing, which mentions that both EIS and SEIS will be continued in 2020. The Labour Party’s main manifesto makes no mention of either scheme, although it does make passing reference to EIS in its “Review of Corporate Tax Reliefs” manifesto where criticism is levelled against how EIS disproportionately benefits those living in London.

What about Brexit?

Of course, the big question hanging over all of this concerns Brexit. Will it happen in 2020, and if so, what shape will it take? Will the UK leave the EU with a formal trade agreement (perhaps a Canada-style one which does not cover financial services), or will it perhaps leave the political institutions of the EU whilst remaining a member of the EU customs union?

Much of this hangs on what happens on 12th December. If the Conservatives win a majority in the House of Commons, they are likely to follow through on their manifesto commitment to leave the EU on 31st January 2020. From there, it also seems likely that the government would seek a free trade agreement by the end of 2020. Whether this timeline is realistic is up for debate, but it seems reasonable to assume that some kind of extension would be sought to thrash through the details of any potential trade deal. It seems unlikely, however, that the EIS and SEIS schemes would be sacrificed in any of these scenarios. If anything, it is conceivable that the government might make these schemes more attractive for investors, to stimulate growth in the UK economy to counter any potential Brexit turbulence.

If the Conservatives do not secure a majority or if Labour forms some kind of government next week, then a second EU referendum could be on the cards for 2020. Such a referendum would likely take at least 6 months to organise with the Electoral Commission, during which time it is unlikely that the EIS and SEIS schemes would the centre of much government attention. However, these are uncharted waters and anything could happen. A minority Conservative administration would likely spend its political capital mainly towards “getting Brexit done” rather than pushing any big changes to EIS or SEIS over the line. The same is likely to hold true for a non-majority Labour government, which would likely wish to score more political points by focusing on their manifesto commitments to try and change the income tax regime.

Invitation

If you are a successful investor and would like to know more about the exclusive property loan note opportunities we offer here at Bure Valley Group, then we’d love to hear from you. Get in touch today to start a conversation with a member of our friendly team, and to discuss some of the great investment memorandums we have available:

+44 160 334 0827
[email protected]

Bure Valley Group is an investment brokerage business which links successful investors with exciting, innovative UK startups seeking funding. This content is for information purposes only and should not be taken as financial or investment advice.

Are you thinking about investing in UK property, without wanting the hassle of managing the property yourself? Property loan notes can be an attractive option to consider. They can be particularly useful for individual investors who want to invest in larger-scale projects, alongside institutional investors (who might otherwise have had sole access to them). For businesses looking to raise funding for a development project, loan notes can be a great source of funding for their property plans.

Here at Bure Valley Group, we help successful investors gain access to a wide range of exciting, exclusive investment opportunities such as these – not only including loan notes but also EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme) projects as well. If you are interested in finding out more about our exclusive network, please see our project portfolio or feel free to contact us on:

+44 160 334 0827
[email protected]

How do property loan notes work?

Property loan notes have been around for thousands of years, dating at least as far back as ancient Rome. They work similarly to a bank which lends a loan to an individual; except in these cases, you are the one lender and the property developer is the borrower. As such, a property loan note is a type of fixed-interest security; it offers a set, regular rate of return (e.g. 12% per annum) and the eventual return of the principle.

The types of projects involved with loan notes might include converting commercial properties into residential ones, within areas of growing prosperity in the UK. The property loans might renew at different times, depending on the nature of the projects (e.g. 2 years). Property loan notes are classed as “alternative investments”, and offer some of the highest interest rates currently available to UK investors in 2019-20.

Do you pay taxes on property loan notes?

Under UK law, property loan notes are considered either to be “qualifying corporate bonds” (QCB) or “non-qualifying corporate bond” (non-QCB). Depending on this status of the property loan note, its tax treatment will vary. A QCB will be able to claim an exemption for capital gains tax (CGT) whilst a non-QCB cannot do this. For more information, we recommend that you check out Section 117 of the Taxation of Chargeable Gains Act and consult a reputable and qualified tax adviser.

What about the regulation status of property loan notes?

In the UK, investment opportunities are generally classed as either “regulated” by the Financial Conduct Authority (FCA) or “non-regulated”. Property loan notes are classes as non-regulated investment vehicles, but the companies offering them will often need to have their property loan note approved by a company is regulated by the FCA. It’s usually in the interests of the company to seek this approval as well, since it gives investors more confidence that the property loan note has been carefully examined before its issue. Here at Bure Valley Group, we always ensure that our property loan notes have gone through this important step beforehand.

Are there any risks involved with property loan notes?

As with any investment, property loan notes do come with certain risks. Most investments have the potential to go up or down in value, and you may get back less than you initially invested. Property loan notes are unregulated investments, which means that they are typically regarded as “higher-risk”; yet the benefit is that they also hold out the potential for higher investment returns. Property developers might also not pay you necessarily on time, if their project takes longer than scheduled to complete.

However, many of these risks can be mitigated with careful planning – particularly if you work with an experienced investment brokerage, who can help you vet the different property loan note opportunities in front of you. Late payment from the property developer, for instance, can be alleviated by ensuring a penalty clause is included in the loan note agreement. This helps ensure you will be compensated if the project runs over. Many property loan notes are also asset-backed, which means that if the borrower (i.e. property developer) fails in the project then their assets can be sold to repay their debts to you.

Who can invest in property loan notes?

Generally speaking, property loan notes are intended for people who are knowledgeable, interested and experienced when it comes to judging the merits and pitfalls of a property investment. Those who qualify as “Sophisticated Investors” will also usually meet the necessary requirements to invest in property loan notes, as well as High Net Worth individuals (i.e. those on incomes exceeding £100,000 pa and/or hold £250,000+ in assets). If you are unsure whether you meet the necessary qualifications to invest in property loan notes, please get in touch to speak with one of our specialist staff who will be able to assist you.

Invitation

If you are a successful investor and would like to know more about the exclusive property loan note opportunities we offer here at Bure Valley Group, then we’d love to hear from you. Get in touch today to start a conversation with a member of our friendly team, and to discuss some of the great investment memorandums we have available:

+44 160 334 0827
[email protected]m

The UK has made concerted efforts in recent years to attract, incubate and grow digital talent and innovation within the country. Consequently, we are witnessing a proliferation of new tech companies on a scale never seen before.

One aspect of this growth concerns cybersecurity. These startups are continuously breaking new ground in the sphere of online protection for consumers, companies and governments, Many of them have produced big returns for the investors who have funded them.

Here are just a few prominent examples…

#1 Darktrace

Recently valued at $1.65 billion and with the latest funding round raising $50 million, Darktrace has increased its valuation by 32% in the space of just four months.

Founded in 2003, Darktrace identifies and tackles cybersecurity threats as they appear using AI technology (artificial intelligence) and machine learning. The rapid expansion of the company has enabled it to increase its staff by 60% over 12 months, up to 750.

With prominent hacks in the recent news (e.g. the British Airways attack which compromised nearly 400,000 customer credit card details), investors should take note that the services of cybersecurity firms like Darktrace are likely to be in high demand for years to come.

#2 Garrison

The latest funding round for Garrison secured $30 million, one of the largest rounds by UK investors in 2018. It’s stated mission is to provide a secure web browsing experience for companies regardless of the content or links their staff click on.

Essentially, Garrison acts as a “gap” between web content and the company’s device, which the user is utilising to access the former. This means that malicious web content only comes into contact with the “gap”, rather than the company’s IT systems.

In the space of just 12 months, Garrison has almost doubled its staff numbers to over 50 people. It has now secured nearly £35 million in funding over the course of two rounds.

#3 Panaseer

This exciting and interesting UK cybersecurity business raised $10 million in its Series A funding in the middle of 2018, led by Evolution Equity Partners.

Founded in 2014, the Panaseer platform uses proprietary algorithms to “map out” a business’s various assets, and provide “cyber hygiene” by monitoring and cleaning the organisation’s digital estates. The system detects which aspects of the business’s technology are vulnerable to attack and provides software patches to address the threat.

#4 Hazy

A smaller story but a nonetheless impressive one, Hazy (formerly Anon AI and winner of “Best in Tech” at Elevator Pitch) raised $1.8 million in Seed Funding in the middle of 2018.

The business emerged from University College London about 2 years ago, with a ground-breaking AI system which can “hunt down” personal data buried away in datasets.

With the recent introduction of GDPR and the continual governmental concern and drive towards enhancing the protection of personal data, cybersecurity firms like Hazy have a promising future ahead of them.

LORCA & NCSC Cyber Accelerator

The UK government has recognised the vital role that cybersecurity will play within the UK economy over the coming decades. New technologies such as AI, quantum computing and blockchain are set to change the world whilst driving economic growth and innovation.

The inevitable rise of new technologies such as these, however, also poses new risks. One of these is the danger posed by hackers and online criminals. Indeed, if Britain’s digital economy hinges on the security of its systems then cybersecurity is arguably going to be indispensable for years to come.

In recognition of this, the government launched LORCA in June 2018 – the London Office for Rapid Cybersecurity advancement. This new initiative is designed to assist cybersecurity companies in the development of their business models.

This development should offer comfort to investors who are interested in cybersecurity startups. Initiatives such as these should help the latter refine their value proposition in order to grow into successful, profitable businesses.

The above isn’t the only initiative currently in operation, moreover. The government’s GCHQ Cyber Accelerator has also recently graduated 9 UK cybersecurity startups from its 9-month programme, which is designed to help such businesses refine their products and services in order to enhance UK national security.

Tips for investors interested in cybersecurity startups

Cybersecurity startups face many of the same opportunities and challenges as other firms when getting off the ground. That said, the examples cited above start to give an idea of the growth potential of fintech, cybersecurity and other SaaS startups.

Such firms are usually based around monthly/annual subscription models rather than one-time transactions with customers. As a result, many cybersecurity firms’ business models benefit from a higher degree of predictability and scalability compared to other startups.

Saas startups like these can be accessed anywhere from the cloud, even on mobile devices. They do not need to concern themselves with distribution, packaging or physical piracy. The software is also highly flexible, enabling cybersecurity startups to more quickly adapt to changes and threats in the market environment.

Moreover, as cybersecurity startups grow their cost per acquisition and cost per service for each customer tends to go down. This makes cash flow more predictable ad growth more secure – all reassurances for interested investors.

Finally, many cybersecurity companies offer the investor additional security through “economic moats”, which place high switching costs on the service subscriber. This gives these startups a more sustainable economic and competitive advantage once they have their foot in the door with a signed-on customer.

The above are just a handful of reasons to consider investing in SaaS companies such as cybersecurity startups. These are apart from the other tax benefits offered by such firms which qualify for EIS or SEIS status. For more information on this, please get in touch to speak with one of our specialists.