Benefit from a tax reduction on its investments is not the only attraction of investments in SMEs and other innovative start-ups. Some even believe that the tax benefits of local investment funds (FIP) and mutual funds for innovation (FCPI) are not necessarily a gift, given their performance compared to other investment funds in SMEs without tax carrot.
The FCPI and FIP provide tax reductions, in return, they must be kept for at least five years. However, their performances are often disappointing. Those maturing have lost 5.9%, on average, after nearly ten years of capital immobilization. By comparison, other types of SME investment funds without tax cuts have proven to be much more profitable.
General-purpose and "development capital" funds (targeting already profitable companies) have yielded 45% gains to their subscribers, and 95% for "transfer capital" funds (return of profitable companies), according to the last balance sheet at the end of 2017 published by France Invest, the association bringing together the managers of this sector.
In these conditions, it may be more interesting to invest in SME funds without tax reductions. These are generally venture capital funds (FCPRs) intended for institutional investors, pension funds or insurance companies. Some funds of this type are nevertheless accessible to individuals. Here are three examples.
A fund of unlisted shares, itself listed on the stock market.
NextStage AM, a well-known management company in the FIP and FCPI niche, created a venture capital company (SCR), which was listed on the stock market at the end of 2016 at a price of 100 euros. This SCR operates as a "closed" fund, investing in around fifteen SMEs. It is bought on the stock market as a share, by placing an order with its ISIN code (FR0012789386), on a securities account or a stock savings plan (PEA).
Although it attracted savers during its IPO, this fund of around 200 million euros is supported by large private and institutional investors (71%), including the Bettencourt family and that of François Pinault (around 10% each). The advantage of this fund is that the money is not blocked. On the other hand, its price suffers a discount of 15% compared to its assets which "Can be explained in particular by the lack of history of the performances of the participations", said Jean-David Haas, managing partner of NextStage.
A five-year SME loan fund.
Entrepreneur yield 3 is the sixth venture capital investment fund specializing in SME loans, launched by Entrepreneur Venture, with a fixed term of five years. A portion intended for individuals is accessible from 1,000 euros by direct subscription to Entrepreneur Venture. "Loans are more suitable than investing in SME capital when we want to repay investors at maturity," assures its president, Frédéric Zablocki.
The fund's strategy is to make convertible bond loans to SMEs. Another asset: "These loans benefit from an EIB guarantee, unique in Europe"continues Zablocki. In case of bankruptcy of an SME to which the fund would have lent 1 million euros, the European Investment Bank (EIB) repays half, which reduces the risks. The method has proven itself. "Our previous FCPR of this type, Entrepreneurs and Families, is in the process of being reimbursed as planned at the end of its five years, with an average gain of about 5% per year"says Frédéric Zablocki. Another particularity, these FCPR are the only bond funds eligible for the PEA-PME.
An unlimited-term SME fund in life insurance.
Isatis Capital Life and Retirement is an FCPR launched in the spring of 2017 by Isatis Capital in partnership with insurer Generali, which offers it in certain life insurance contracts. Faced with the liquidation difficulties encountered by many FIP and FCPI, this SME fund has an unlimited duration, with a recommended investment period of at least eight years. Eighteen months after its launch, this FCPR has invested in a dozen SMEs representing 60% of its assets.
The lack of a liquidation prospect could weigh on its valuation, depending on its ability to sell its unlisted investments. On the other hand, its liquidity is guaranteed by Generali under the life insurance contracts that offer it as a unit of account. Isatis Capital Life and Retirement is available in the Himalia and Xaélidia contracts, and in the contracts provided by Generali from various online brokers, such as Kapital direct from Placement-direct.fr or Altaprofits Vie.