MICAP has divided the tax-advantaged universe into two key investment objectives, defined in relation to the underlying assets.

Note that where an investment manager seeks to provide an income to investors (e.g. a VCT seeking to pay regular dividends or a BR investment with an income option) “& income” will be added to that offer’s investment objective.

With the introduction of the “risk-to-capital” condition introduced for all SEIS, EIS and VCT investments made on or after 15 March 2018 (when the Finance Act 2018 received Royal Assent), businesses with significant contractual income streams or which have a high level of asset backing are no longer expected to qualify for these reliefs after this date.

Capital Preservation & Growth

Investments designed with capital preservation in mind are often backed by contractual income streams, with one or more of an identified medium-term earning streams, low technology risk and a counter-party of high credit worth . Energy generating companies will often meet these criteria, but with effect from July 2014, these are no longer available to use in conjunction with SEIS, EIS or VCT. Another example is in the media sector where pre-contracted revenue such as tax credits and pre-sales of distribution rights can be negotiated up front to mitigate the high initial investment risks.

Another popular alternative investment category contains predominantly asset backed investments. These frequently include consumer businesses with significant tangible assets, such as pubs, bars and restaurants, which can benefit from modest annual growth in eating out, even in recessionary periods. Ultimately, if the business fails, the bricks and mortar can eventually be used for a different purpose, potentially providing downside mitigation.


Investments comprising small companies run by entrepreneurs that can identify high growth niches in areas of a business where they have long experience and a good track record. They have ambitious prospects to corner a high, even dominant, share in the early stages of a potential new market segment, and can enjoy returns well above sector averages. They may seek rapid expansion, and accelerated sales to take their business to the next level. Funding for such enterprises is not necessarily cheap or easy to obtain, hence the generous tax incentives offered by the government to attract private funding for small companies. While generally considered high risk, investment in the right companies can yield attractive returns.

Target investments may be established and profitable business seeking funding for expansion in an existing rather than a new market segment, perhaps even with limited asset backing. At the other end of the spectrum, it may be a younger pre-profit company seeking growth capital.

For further details of the investment risks please see the Key Risks section of this website.