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Partners:
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Disclaimer
Please note, company introductions through SFC Capital Ltd ('SFC') are only suitable for ‘High Net Worth Individuals’, or ‘Sophisticated Investors’ as defined by the Financial Services & Markets Act 2000 (FSMA) who are familiar with and willing to accept the high risk associated with private investments. Any investor requesting to contact a company through SFC Capital does so at his/her own risk and is solely responsible for conducting any legal, accounting or due diligence review. There has been no investigation to the accuracy of any information or terms contained herein and we strongly suggest that you seek advice from a person authorised under the FSMA who specialises in advising on investments of this kind prior to commencement of any potential transaction. All content provided by SFC Capital is strictly for informational purpose only and does not constitute business, financial, investment, hedging, trading, legal, regulatory, tax or accounting advice or services. SFC Capital is an appointed representative of SFC Capital Partners Ltd which is authorised and regulated by the Financial Conduct Authority (‘FCA’) in the United Kingdom (FRN 736284). This website is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. SFC Capital does not sell or offer to sell any securities and no information provided by SFC Capital is intended to constitute or to be interpreted as any such offer. SFC Capital simply provides an introductory service where potential partners of all sorts can meet.
The SFC Angel Fund is managed by SFC Capital Partners Ltd (‘SFCCP’) which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, firm reference number 736284. Information on the Fund is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell the securities mentioned herein. The SFC Angel Fund (the ‘SFC Fund’ or the ‘Fund’) is defined as an ‘unregulated collective investment scheme’ (‘UCIS’) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently, this document is only directed at professional clients and eligible counterparties as defined by the FCA and also to persons of a kind to whom the Fund may lawfully be promoted by an authorised person by virtue of Section 238(5) of the Financial Services and Markets Act 2000 and COBS 4.12.4R. Any decision by an investor to buy shares in a fund must be made solely on the basis of the information and terms contained within the Fund’s offering memorandum. Investment in the Fund is made entirely at the investor’s own risk and professional advice should be sought in case of doubt.
SFC Capital Partners Ltd (‘SFC’) is authorised and regulated by the Financial Conduct Authority (‘FCA’) in the United Kingdom, firm reference number 736284. This document is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell the securities mentioned herein. The SFC Angel Fund (the ‘SFC Fund’ or the ‘Fund’) is defined as an ‘unregulated collective investment scheme’ (‘UCIS’) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently, this document is only directed at professional clients and eligible counterparties as defined by the FCA and also to persons of a kind to whom the Fund may lawfully be promoted by an authorised person by virtue of Section 238(5) of the Financial Services and Markets Act 2000 and COBS 4.12.4R.
The SFC Angel Fund is managed by SFC Capital Partners Ltd (‘SFCCP’) which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, firm reference number 736284. Information on the Fund is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell the securities mentioned herein. The SFC Angel Fund (the ‘SFC Fund’ or the ‘Fund’) is defined as an ‘unregulated collective investment scheme’ (‘UCIS’) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently, this document is only directed at professional clients and eligible counterparties as defined by the FCA and also to persons of a kind to whom the Fund may lawfully be promoted by an authorised person by virtue of Section 238(5) of the Financial Services and Markets Act 2000 and COBS 4.12.4R. Any decision by an investor to buy shares in a fund must be made solely on the basis of the information and terms contained within the Fund’s offering memorandum. Investment in the Fund is made entirely at the investor’s own risk and professional advice should be sought in case of doubt.
The SFC Angel Fund is an SEIS/EIS fund which raises money for early-stage businesses by investing in SEIS and EIS eligible ventures with the aim of returning a profit for investors in the fund. Investment in early-stage companies involves risks such as illiquidity, lack of dividends, loss of investment and dilution. Investment in SEIS/EIS funds should be considered as part of a diversified portfolio. The availability of tax relief depends on individual circumstances and may change in the future. The availability of tax relief depends on the company invested in maintaining its SEIS/EIS qualifying status. There is no assurance that the investment objectives of any investment product will be achieved or that the strategies and methods described herein will be successful. Past performance is not necessarily a guide to future performance and the value of an investment may go down as well as up. Investors may not get back the full amount invested. No warranties or representations of any kind are expressed or implied on this website.
Risk Warning
Don’t invest unless you’re prepared to lose all your money invested. This is a high-risk investment. You could lose all the money you invest and are unlikely to be protected if something goes wrong. Take 2 mins to learn more.
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
If you are interested in learning more about how to protect yourself, visit the FCA’s website.
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At SFC Capital, we want founders to focus on building their business — not deciphering legal jargon. That’s why we’ve created this page to explain our standard investment terms in straightforward, everyday language.
Below, you'll find a table that outlines the key terms you’ll come across if you receive investment from SFC.
For each item, we explain:
This is designed to help you feel confident and informed before you sign anything. If you’re unsure about something or want to chat it through, we’re here to help.
The information being presented here is subject to change and might not be up-to-date. This page is designed to help you feel confident and informed. If you’re unsure about a specific clause or want to chat it through, please consult your contact in our investment team.
| Term | Explanation | Industry Standard Comparison | Comments |
| Investment Amount | SFC will invest up to £250k from its SEIS Fund and up to a further £100k from its BBB Fund. The BBB Fund is managed directly by SFC and is not SEIS or EIS. The amount will be clarified following a decision from the Investment Committee. | 🔄 Similar | Standard structure for early-stage funding rounds. |
| Valuation | The company's valuation is agreed before the investment (pre-money), and the price per share is based on the total share count, including options and convertible instruments. In other words, SFC will not be diluted by any existing agreements for shares or options. | ✅ Same | Fully diluted valuation basis is typical market and BVCA practice. |
| Type of Shares | The company will issue ordinary A shares, which are SEIS-eligible and HMRC approved. Beyond this, they rank Pari-Passu with Ordinary shares and they are standard equity shares with no special preferences. | 🔄 Similar | BVCA defaults to preferred shares; ordinary shares are common in SEIS/pre-seed. |
| Use of Proceeds | Funds must be used to grow the business, not to repay old loans or pay high salaries. Salaries must be reasonable based on cash position. | 🔄 Similar | BVCA doesn't detail this, but it's aligned with early-stage investor expectations. |
| Option Pool | An options pool will be set aside for future team hires. This is included in the agreed fully diluted valuation, so current investors aren't diluted later. The options are for the Board to allocate at their discretion and they do not need investor approval to allocate the options. | ✅ Same | Including pool in the valuation is consistent with BVCA norms. |
| Shareholder Rights | Standard protections like the right to sell shares alongside others (Tag-Along), agree a sale (Drag-Along), or buy new shares before outsiders (Pre-emption). | ✅ Same | Standard in both SFC and BVCA templates. |
| Exit Provisions | If the company is sold at a lower valuation than this round, SFC and the other investors on the round would get their money back first before ordinary shareholders. In a higher-value exit, this clause does not apply and the investors shares are treated in the same way as other ordinary shares. | ✖️ Different | SFC avoids liquidation preference unless it's a down round - more founder-friendly than BVCA. |
| Good/Bad Leaver | If a founder leaves within 12 months or commits fraud, they have to give back their shares at nominal value. This is designed to protect the company so that the shares go back to the company. The definitions of good and bad leaver will be clearly defined in the long-form legal documents. | 🔄 Similar | Definition of 'Bad Leaver' is harsher than in BVCA which allows more nuance. |
| Founder Vesting (Reclaimable Shares) | To be clear the founders will own all their shares from day one. This is simply a mechanism to ensure that if a founder leaves the company within the timeframe, then some or all of their shares must be sold back to the company. This does not benefit investors directly and is designed to protect the company. | ✅ Same | Monthly vesting over 3 years aligns with industry standard (48 months total). |
| Governance | There must be at least two directors listed at Companies House, and a non-executive director should be added within six months of the investment. The NED is for the company to appoint and this is good corporate governance. | ✖️ Different | NED requirement is unique to SFC and not industry standard. |
| Bank Balance Clause | The company should always try to keep at least £30,000 in the bank. If it drops below this, the board must meet to plan next steps. This does not prevent the company from spending the money. | ✖️ Different | Bank cash floor is unique to SFC to ensure sustainability. |
| Directors' Loans | Any outstanding founder loans must be converted into equity to clean up the balance sheet. This is to align the founders with investors. | 🔄 Similar | Common clean-up clause in early-stage deals. |
| Arrangement & Success Fees | SFC charges a 10% fee on their Fund investments (SEIS, EIS and BBI). These cover fund costs and are deducted from the round. This is a one-off fee and SFC does not charge any further fees. If the company raises from the SFC Angel network, which is a separate process and would follow the Fund investment, then we would charge 6%. | ✖️ Different | There is no clear industry standard for arrangement fees. |
| (S)EIS Obligations | The company must maintain SEIS/EIS compliance for a period of three years to ensure tax relief is maintained. They must use SFCs service providers to submit forms for their investors. The admin fee for this is taken from the round. It is important for SFC to do this as we have multiple investors in the nominees who all need individual certificates. | ✖️ Different | Not standard for early-stage deals but necessary for SEIS/EIS processes. |
| Legal Documentation | Legal documents will be prepared by SFC's lawyer, with costs deducted from the round. The company's own legal review costs are capped as SFC do not make any changes to the documents, except in the case of corrections or additional investor requirements. We are always happy to explain or clarify any of them at the appropriate time. | 🔄 Similar | BVCA provides templates, but SFC takes a managed approach with cost limits. |
| Warranties | The company and its directors will confirm in writing that the key information shared with investors is accurate (warranties). | ✖️ Different | BVCA now excludes founders from warranties - this is stricter. |
| Investor Reporting | The company must send quarterly updates with key metrics (revenue, costs, cash, etc.) or risk missing future follow-on investments. In practice this involves completing a simple form through SFCs online portal. | 🔄 Similar | Investor updates are encouraged under BVCA, but SFC enforces with consequences. |
| Financial Monitoring | SFC will get view-only access to your accounting software for 18 months to monitor financials directly. | ✖️ Different | Unique to SFC - BVCA does not mandate accounting access. |
| Investor Board Rights | SFC can appoint a board observer (which is non-voting), and the investor majority can appoint a board director collectively. In practice, SFC would only seek to appoint a Director should the company be acting in a fraudulent manner. | ✅ Same | Consistent with BVCA norms for board participation. |
| Investor Majority Consent | Big decisions (e.g. issuing shares, selling the company, raising debt) need approval from investors holding at least 51% of the shares. In most instances this would simply require an email outlining the consent being sought and SFC will respond typically within a few days. There is also a snooze you lose clause meaning that investors do not respond with 10 business days then their consent is deemed to have been given. | ✅ Same | Typical of BVCA-style investor consent rights. |
| Jurisdiction | The agreement is governed by the laws of England and Wales. | ✅ Same | Standard governing law clause. |
DISCLAIMER:
SFC Capital Ltd (SFC) is an appointed representative of SFC Capital Partners Ltd which is authorised and regulated by the Financial Conduct Authority (‘FCA’) in the United Kingdom (FRN 736284). This website is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell any securities.
Investment in early-stage companies involves risks such as illiquidity, lack of dividends, loss of investment and dilution. Investment in SEIS/EIS eligible companies should be considered as part of a diversified portfolio. The availability of tax relief depends on individual circumstances and may change in the future. The availability of tax relief depends on the company invested in maintaining its SEIS/EIS qualifying status. There is no assurance that the investment objectives of any investment opportunity will be achieved or that the strategies and methods described herein will be successful. The investment products cited herein may place capital at risk and therefore investors may not get back the full amount invested. Past performance is not necessarily a guide to future performance and the value of an investment may go down as well as up. Investors may not get back the full amount invested. Companies’ pitches for investment are not offers to the public and investments can only be made by members of SFC Capital. SFC Capital takes no responsibility for this information or for any recommendations or opinions made by the companies. Neither SFC Capital nor any of its employees provide any financial or tax advice in relation to the investments and investors are recommended to seek independent financial and tax advice before committing. This website is not directed at or intended for publication or distribution to any person (natural or legal) in any jurisdiction where doing so would result in contravention of any applicable laws or regulations. No warranties or representations of any kind are expressed or implied herein. This material is confidential and is the property of SFC Capital.
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