INVESTMENT TERM 4 - 5.5 Years 10 - 12 Years
ASSET TYPE Fixed Interest Capital Gain
RETURN TYPE Yield: paying monthly or quarterly. Paid on investment exits (i.e. towards the end of the investment pool's life).
BLUESKY POTENTIAL Moderate: Although each investment is made as if debt, i.e. on fixed interest and payment terms, it includes a small residual equity stake giving some upside potential. Moderate: VC/PE investments are intended to be about high risks offset by high returns, however this is not proven out with Australian averaged return over the long-term.
INVESTMENT CONTROL For SPVs Investor selects underlying investments. Fund Manager makes all investment decisions.
RISK Moderate; franchisees are only from pre-approved tier 1 and 2 franchise systems with proven models. Very High; these are highly speculative investments working (for VC) on the premise of 6 in 10 failing, 3 breaking even, and 1 being a big success.
DIVERSIFICATION Low to High: the investor can select across industries, geography, or even focus with the single franchise system. Low: Australian VC/PE products mostly focus on a single industry and will have less than 10 investees.
INVESTMENT LIQUIDITY Moderate: Being on a unit basis investors may be able to on-sell all or some of their units to other investors. Nil: Being on a contributing partnership basis investors have no ability to exit early.
FEES Low: 1% Entry, 1% of payments from investee/s, and 1.25% - 2.5% residual capital holding. High: Management Fee 2% p.a. Carried Interest 20%.
EASE OF ENTRY High: The ability to issue new classes of units, and there being no upper limit to a VCLP means the EFF1 can remain open to new investment over a prolonged period. Access will soon be possible via the Franchise Marketplace (www.franchisefundingmkt.com.au) Low: Due the to the contributing partnership structure other funds need to open, raise investor commitments, then close before starting to place investments.