Technology specialist Mercia Fund Management is launching a fund offering tax-efficient access to the UK's digital economy.
The Mercia Digital Fund will utilise the hybrid structure of Mercia’s previous three tax-efficient funds, combining the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS), to invest in a diversified portfolio of digital companies with high growth potential.
The fund, which launches on 11 August and requires a £25,000 minimum investment, targets a compound annual growth rate of up to 50% (excluding tax advantage) and investors can expect to realise their portfolios in between years three and seven.
The Mercia team will be aided by its long-term partnerships with eight universities to identify investment opportunities.
Its hunting ground will comprise four sub-sectors - financial technology, the internet of things, E-commerce and gaming and gamification.
Mercia managing director Mark Payton highlighted a number of compelling arguments for launching the fund in the current climate.
'First and foremost, digital is the UK’s fastest-growing sector and is already the third biggest contributor to the nation’s economy, Payton said.
'The sector boasts three times higher employment growth than the wider economy, with 25% greater revenue growth than traditional firms, and a Gross Value Added (GVA) per employee of £83,000, the output within digital is nearly twice the UK average for all sectors.
'[And finally] Figures from 2010 to November 2013 show investment returns in digital technology dwarfed other sectors, with 17 UK tech flotations with an average return of 101.7%, compared with 1.8% across 256 listings on the London Stock Exchange.'