Two weeks ago, a Dublin-based private company called BusterBox raised €200,000 from new investors at a share price of €1.88, Chris Burge, chief executive of Spark Crowdfunding, said. “For a monthly subscription of €20 BusterBox will send you (or your dog) a box of tasty treats and toys.”
Covid has been very good to BusterBox because more people are spending time at home with their dogs and this is one of the few things on which people can spend disposable income at the moment.
“That BusterBox recently raised funds at a share price of €1.88 is meaningless until you learn that they last raised funds in October 2020 at a share price of €1 on the Spark Crowdfunding platform,” Burge said. “Even those of us who struggle with maths can see that this is an 88 per cent increase in the value of the shares over a 12-month period. Not bad when you consider that the bank would have paid you zero per cent on your funds over the same period.
“For the 82 private investors who collectively invested €166,000 in BusterBox at a share price of €1 last autumn, this 88 per cent return on investment puts them in the Warren Buffett category of investors.”
Spark Crowdfunding charges investors no commission, so there are no hidden costs eating into your returns.
If an 88 per cent return on investment over 12 months wasn’t enough to start popping the Champagne corks, there was even better news for Irish taxpayers, said Burge. “Before reading this article any further, why not have a guess at how much a 40 per cent EIIS tax refund on an investment in BusterBox would improve the already 88 per cent return on investment. The figures might surprise you.”
Burge demonstrated with an example: “Let’s say you invested €10,000 in BusterBox at a share price of €1. If the share price moves to €1.88 that means your €10,000 is now worth €18,800. Nothing difficult there.”
BusterBox is an EIIS qualifying company. “That means if you invest €10,000 in BusterBox you are entitled to a 40 per cent tax refund on your investment. In other words, you are only really investing €6,000, but you still get €10,000 worth of shares.
“Now look what this does to your return on investment. The €6,000 that you have invested is still worth €18,800, so your real return on investment is now 213 per cent, not the 88 per cent you would have achieved in the absence of the EIIS tax refund.
“What this simple but real life example demonstrates is that the impact of EIIS on real investment returns is phenomenal. It moves the investor from the Warren Buffett category to the Gordon ‘Greed is Good’ Gekko category.
“The beauty of EIIS is that it doesn’t just turn an 88 per cent return into a 213 per cent return. It also protects you in the event that an investment in an early-stage business turns out to be a lemon.”
Returning to the BusterBox example: “What would happen if things didn’t go according to plan for BusterBox and the shares actually fell in value? When you invest in any share, you have the potential to lose 100 per cent of the value of your investment, obviously, if the share price goes to zero. That’s not great in anyone’s language but it happens and it’s best to be prepared for it.
“With an EIIS investment opportunity, like the ones presented on the Spark Crowdfunding platform, the maximum you can lose is 60 per cent of your investment, because 40 per cent is recovered in the form of a tax refund. “Losing 60 per cent is still not good, but in the long run this 40 per cent saving can make an exponential improvement to the performance of a portfolio that includes many shares.”
Over the last three years, Spark Crowdfunding has uniquely provided Irish investors with 25 carefully selected EIIS investment opportunities, like the BusterBox one articulated here. Many of these companies are also supported by Enterprise Ireland.
If you would like to get access to opportunities like these, you can join the 8,000+ investors at Spark Crowdfunding for free at SparkCrowdfunding.com The minimum investment size to qualify for the EIIS is €250.