From Idea to Investment
We’ve developed the following brief guide to the successful launch of a fund as an unregulated collective investment scheme. StypersonPOPE offers a variety of services throughout this process and these are noted below:
1. Idea – As with all investments, a fund must have a good idea behind it. It doesn’t have to be clever (the simpler the better!) but it does have to be well thought through and capable of delivering returns which will attract investors.
2. Initial Regulatory Options – depending on what you want to achieve, you will either have to understand the regulations you will be working within or plan how you can operate without undertaking regulated activity. In either case, it’s vital to understand the potential investment structures, how they are regulated, and how each is viewed by investors.
If what you have in mind could be described as a ‘fund’ then it is likely that you have come up with a Collective Investment Scheme. In that case, you need to have early discussions with an operator but, more importantly, you need to understand the rules which apply to make sure that your advisors keep focused on what you want to achieve and don’t just throw up regulatory roadblocks.
Often, it is helpful to have one person coordinating all of the advisors and this is familiar territory for StypersonPOPE. We work with a number of experienced operators and solicitors to whom we can introduce you if you don’t already have strong relationships.
3. Market Research – after your initial discussions with advisors, and before you start spending too much money, you must make sure that your idea will work. As ever, it’s vitally important that you know you customer (the investor); who are they, what are they looking for, what else is on offer to them. Your fund must be able to deliver suitable financial returns to investors, it must be something for which investors have an appetite, and you must carefully consider the competition and existing best practice in your market. Most of what is produced in the research will feed directly into the Information Memorandum so it’s also important to make sure that the conclusions are well supported.
StypersonPOPE can carry out much of this research and will produce three important documents:
A clear indication of whether the investment opportunity is likely to be attractive to investors.
A ‘business and marketing plan’ which addresses the remaining steps to launch and run the fund.
A ‘due diligence pack’ which records the sources of facts, opinions and assumptions.
(This final document will be important for ensuring that the Information Memorandum can be approved without unnecessarily duplicating effort.)
4. Information Memorandum – this is by far the most important document and must be produced within rules laid down by the FSA. Ultimately, your Operator will approve this (or otherwise!) so you must write it in a way with which they are happy. You must also remember that its principal purpose is marketing – if it doesn’t sell the investment, you may as well not bother! Solicitors and Operators don’t always have marketing at the forefront of their minds, so you need to find somebody to coordinate the efforts, who understands the rules and regulations you must observe and the most effective way to market to investors.
StypersonPOPE will draw on experienced marketers, designers and writers who know what investors want to see and who thoroughly understand the limits imposed by regulations.
5. Legal & Regulatory Approval – having prepared the IM, it must be approved by your Operator and they may require a legal review. The IM should have been written with the regulations in mind and the facts, opinions and conclusions must be properly supported by documented evidence and assumptions.
By involving StypersonPOPE from the very beginning, this sometimes difficult process can be made very straightforward. We have often become involved at this stage at the request of one or other party but it’s much better (and cheaper) to get it right first time rather than try to put right what has already gone awry.
6. Design for print, e-mail and web – once approval has been obtained, the final documents can be prepared. Often these will include a printed IM and Executive Summary and their e-mailable equivalents and possibly a web site from which investors can download copies. Each of these must comply with the regulations and because the circulation will be heavily restricted, web sites in particular must be carefully planned to ensure that relevant information reaches only those for whom it is intended.
By drawing on print and new media design skills, and with a deep understanding of the rules surrounding the distribution of Unregulated Collective Investment Schemes, StypersonPOPE can create a suite of compliant and effective marketing documents as well as clear procedures for ensuring that they are distributed appropriately.
7. Marketing – there are several routes to market for this kind of collective investment scheme and these will have been planned at an early stage. One of the most common routes to market is through financial advisors.
StypersonPOPE can assist with marketing whether it be compiling a target database for an e-mail campaign or hosting nationwide roadshows for financial intermediaries. Where allowed, we can also manage campaigns to individual High Net Worth Investors whether through respected (non-IFA) intermediaries or through direct mail.
8. Receiving Applications – dealing with applications for investment can itself be a regulated activity (“receiving and transmitting orders”). Often the Operator will handle this directly but in some cases, particularly if the Operator is based outside the UK, it may make sense for somebody else to receive, check, complete, and forward on the applications as this can involve a process of ‘to-and-fro’ with the investor’s advisors.
StypersonPOPE can help find an authorised person to perform this service or, where appropriate, manage a variation of permissions to allow you to do this yourself.
As you have seen, StypersonPOPE’s broad range of services can assist throughout the process of establishing a fund whether it is still just an idea or whether it is seeking further rounds of investment. To discuss how we can help in your particular circumstances, please call or e-mail Simon Webber and we can begin our discussions.
