When you do a bit of digging on EIS funds in the UK, you learn there are two types:

1. Great firms helping retail investors access high-quality early-stage investments in companies with genuine potential for venture scale and impact. They're helpful to founders. They’re excellent organisations to have on your cap table.

2. Systems designed to extract cash fees from both the investors and the founders.

It is astonishing how many fall into the second category. They charge setup fees, management fees and carry on the investor side plus “advisory fees" (ongoing) on the founder side. Investors get their tax relief, and aren't too fussy about how the manager is making money.

But if you're a founder, it makes little sense to take money from these firms. They're not aligned with your success. Their aim is to get cash in the short term.

As a result, these firms never access the best founders.

Warren Buffett famously charged 25% carry and no management fees on his first fund.

As Naval says, play long term games with long term people.

“Patience" - James Berger

P.R.

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