As with all investments, our products place capital at risk. Investors may not get back the full amount invested. Our products invest in unlisted or smaller company shares which are likely to have higher volatility and liquidity risks than quoted shares. Any reference made to past performance or forecast performance of our products is not a reliable indicator of future results.
Any tax reliefs referred to may be subject to change and tax treatment will depend on the individual circumstances of the investor. Earthworm Limited does not provide investment or tax advice, and information on this website should not be construed as such. Potential investors should seek specialist independent tax and financial advice before investing. Nothing on this website constitutes an offer, or invitation to treat, or inducement for you to engage in any investment activity.
The key risks of investing in an EIS Fund
EIS Funds make higher risk, long-term investments in early-stage companies and will not be suitable for all investors. Investee companies are unlisted and their shares are accordingly illiquid. Smaller companies often have limited product lines, markets and financial resources and face a greater risk of insolvency leading to loss of shareholder value.
We do not offer advice on our products and we recommend that you speak to an independent financial adviser with experience of advising on unquoted investments before taking any investment decision.
EIS is one of the UK Government’s tax advantaged venture capital schemes that is used by small or medium-sized companies to raise funds, by providing tax reliefs for investors.
The tax reliefs available under the EIS are subject to change and tax treatment will depend on the individual circumstances of the investor. If an investee company fails to maintain its EIS qualifying status, investors may be subject to clawback of initial income tax relief received and other reliefs may cease to apply.
Investment values may go down as well as up. You may not get back the full amount your invested. This Investment offers no capital protection against market risk and therefore you can lose all the capital.
If one or more of our investee companies fail, investors may be able to claim share loss relief against income or capital gains. Earthworm Limited will provide investors and advisers with the necessary information to help with any loss relief applications in such circumstances.
Timing of investments
We cannot guarantee that investments will be made within specific timetables or within a particular tax year. Certificates allowing investors to claim their relief will only be dispatched once underlying investments are made by the Fund and the relevant forms processed by HMRC which may take considerable time.
Whilst we target a spread of at least three investee companies in each investor’s portfolio, this cannot be guaranteed and so the level of diversification achieved by the Fund may be limited.
Investments in EIS Funds are long-term in nature. In order to retain initial tax relief received on making an EIS investment, you must hold you shares for at least three years from the date of their issue or, if later, the date on which the investee company commenced trading. However, you should expect to hold your investment for longer than this in most cases before a liquidity event occurs.
You should always consult an independent financial adviser before committing to tie up your capital in an illiquid investment product.
The past performance of Earthworm investee companies or of Earthworm Limited itself is not a reliable indicator of the future performance of an investment.