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Investor Overview

Alternative Investments Explained

An increasingly attractive option for investors looking to build wealth, alternative investments are renowned for their ability to target superior returns, reduce volatility and contribute to a diversified investment portfolio simultaneously.

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What are Alternative Investments?

While the traditional diversified investment portfolio typically includes equities, bonds and cash, today many experienced investors are increasingly looking to bolster their asset allocation with investments that fall outside of these categories, also known as alternative investments.

On this page, we offer an introduction the alternative investment landscape, explore some of the most popular alternative asset classes available, outline the key benefits and risks associated with the space and explore how investors can access alternative investment opportunities.

Please Note:
The value of investments and any income from them can fall and you may get back less than you invested. Please note that this article has been prepared as a general guide only and does not constitute tax or legal advice.

1. Introducing
Alternative Investing

A Growing Demand


A long established space, alternative investments in their true sense have existed since the mid 19th century, but over the last two decades especially, have formed increasingly larger portions of investor portfolios.

Alternative investments are financial assets that do not fall into the categories of traditional equities, bonds or cash investments. Some examples of alternative asset classes include private equity (PE), venture capital (VC) and property investments.

Due to their lack of correlation with traditional markets, alternative investments are - by nature - associated with a range of investor benefits, generally not shared by traditional asset classes. These range from reduced correlation to external volatility to a wider scope for portfolio diversification and enhanced potential to generate financial returns.


Bar chart showing the growth in AUM of alternative investments from 2004 to 2025

 
Over recent years, an increase in the availability and accessibility of alternative investment opportunities - alongside a growing awareness of the space's benefits - has seen the popularity of alternative investments soar.  Looking towards 2025, PwC forecasts over $20 trillion will be allocated to alternative asset classes, more than double the figure recorded less than a decade earlier in 2016, as illustrated in the above graph.
Though consistent across almost all investor profiles, this growth in demand has been no more apparent than in high-net-worth and ultra-high-net-worth investors, who in 2022 allocated on average 26% and 50% of their portfolio to alternative investments respectively.

2. Main types of
Alternative Investments

From Property to Private Equity


From property to private equity and venture capital, investors can access a broad range of alternative investments, varying in asset class, risk/return profile and investor suitability. Whilst the aforementioned remain three of the most popular options available to investors, recent years have also seen the rise of numerous emerging routes.

Venture Capital
Venture capital (VC) involves investments into early stage businesses, typically possessing high-growth potential. Whilst displaying a potentially high level of risk due to investments being made into smaller, unquoted businesses, the higher potential for growth and subsequent returns associated with VC makes it an a popular route for experienced investors. UK investors can further minimise the risk and maximise the returns of VC when accessed via tax efficient investment schemes such as the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS).

Private Equity
Private equity (PE) involves investing into mature companies that are not publicly traded on a stock exchange. Target returns for PE investments tend not to be as considerable as with VC due to comparatively less capacity for potential growth, but can possess a lower level of risk due to companies generally being more established.

 
Property
A long sought-after asset class for experienced and high-net-worth investors especially, property investments provide access to a market largely uncorrelated with traditional assets. Subsequently, this gives property the ability to act as a hedge against inflation, and with the average UK house price having risen by 45% since 2015, also the potential to generate considerable capital growth. From buy-to-let to joint ventures, a range of property investment methods exist for UK investors, varying in their level of involvement, growth potential and risk profile. 

While the traditional cornerstones of any diversified portfolio typically include equities, bonds and cash, these days Institutional Investors and Private Investors are increasingly looking to ‘alternative’ investments to bolster their asset allocation.

Norman Peterson
Chief Executive Officer, Growth Capital Ventures



Peer-to-Peer Lending
A form of direct lending to individuals and/or businesses, peer-to-peer (P2P) lending is often completed via online platforms that match lenders with potential borrowers. This occurs without an official financial institution participating as an intermediary in the deal, indicating potential for high risk, but also higher  returns and greater flexibility. One scheme that supports investors in maximising upside via P2P loans is the IFISA, which can enable investors to target inflation-beating interest rates on products such as property bonds, tax-free.
Collectables
Collectables are assets that most often hold value due to popularity or rarity. Most often pursued by investors that hold a specilialist knowledge or personal interest in a specific field, collectables are one of the oldest and most diverse alternative asset classes. Whilst some of the most popular examples of collectable investments have long included fields such as classic cars, art, wine and jewellery, recent years have seen a rise in popularity of less traditional areas such as digital collectables, or NFTs (none-fungible tokens).
Cryptocurrency
An alternative asset class that has witnessed a particular growth in popularity and notoriety in recent years, cryptocurrency is a digital currency designed to function as a medium of exchange without governance from a central body. Investors in cryptocurrency can invest in a range of 'coins', the most renowned being 'Bitcoin'. Though recent years have seen the emergence of a number of cryptocurrency success stories, crypto is a notoriously volatile and difficult to predict asset class, and so is still classified as particularly high risk.

3. What are the benefits?

Superior Returns, Reduced Volatility


From generous tax reliefs to reduced market volatility, alternative investments, by nature, can provide investors with a range of additional benefits, generally not shared by their traditional counterparts.

Superior Returns
Whilst returns cannot be guaranteed, on the whole alternative investments have the potential to target considerably higher returns than their traditional counterparts. In part a result of their lower correlation to market fluctuations, less centralised nature and often more long term focus, this can make alternative investments especially attractive to experienced investors with less of a reliance on liquidity. 


Reduced Portfolio Volatility
Largely due to their less centralised structure, alternative investments often display reduced sensitivity to traditional market fluctuations. As a result, alternatives can be more resilient when faced with external shocks, such as periods of inflation and recession.


Eligibility for Tax Efficient Investment Schemes
Another benefit able to be accessed via the alternative investment space is the UK's range of tax efficient investment vehicles. In the case of venture capital, these come in the form of the EIS, SEIS and VCTs, and can provide investors with up to 50% income tax relief, capital gains tax exemption,  inheritance tax exemption and loss relief. Combined, these tax reliefs help to minimise the risk and maximise the returns associated with early stage investments.

The below table illustrates three potential outcomes of a £50,000 SEIS investment for an additional rate taxpayer, in which the hypothetical company fails, breaks even and triples in value. 

 

Company triples in value

Company breaks even

Company fails

SEIS investment

£50,000

£50,000

£50,000

Income tax relief

- £25,000

- £25,000

- £25,000

Net investment

£25,000

£25,000

£25,000

Proceeds on disposal

£150,000

£50,000

£0

Income tax loss relief

-

-

- £11,250

CGT payable

-

Nil

Nil

Net profit/loss including income tax relief

+ £175,000

+ £25,000

- £13,750


Portfolio Diversification
Naturally, due to a vast range of asset classes existing in the alternative space in comparison to just cash equities and bonds in the traditional category, alternative investments allow for much broader, deeper level of portfolio diversification than traditional portfolios. Combining with this the range of sectors, geographies and levels of growth that can be targeted across the alternative space, this diverse nature of alternative investments allows for a more even and effective distribution of risk and returns in contrast to the comparably restricted limits of traditional investments.


Investing for Impact

Whether it is by backing transformative startups or contributing to the development of regional property projects, alternative investments can allow investors to contribute to significant social, economic and environmental impacts whilst building their wealth. Certain, schemes such as the EIS, also offer investors enhanced limits for investments into knowledge intensive companies (KICs), furthering the potential for positive impact and returns.

4. What are the risks?

Balancing Risks and returns


Though often associated with a range of benefits, equally, a number of risks are typically linked with the alternative space that should be considered prior to any investment.  

Lower Liquidity
Many alternative investments may require a comparatively longer investment period before any return is realised. As a result, investors are likely to experience reduced liquidity. It is therefore crucial that sufficient funds are available to withstand this possibility.



Less Regulation and Transparency

Regulations differ for many alternative asset classes, meaning that navigating and understanding the relevant rules and restrictions can become a complex task. In addition, the underlying assets of alternative investments are often difficult to value, which can lead to challenges in pricing and price transparency.

Greater Complexity
With the alternative investment space accompanying a much broader range of asset classes, schemes, and vehicles - all of which possess their own set of rules and requirements - investing in alternatives can initially appear more complex than traditional investments. In turn, investors should ensure they conduct detailed research into the rules and structure of the investment route they follow before parting with capital. 

Coloured bubbles showing the greater complexity of alternative investments compared to traditional investments

 



Potential Loss of Capital
As with all investments, the risk of losing capital is present. Whilst investors can mitigate this possibility with thorough due diligence into opportunities and providers, and by mitigating risk with the reliefs and exemptions available under tax efficient investment schemes, the loss of capital is an eventuality every investor should consider prior to investing.

Higher Minimum Investments
Some alternative investment platforms aimed at more experienced investors possess higher minimum capital requirements and additional qualifying criteria then traditional routes. Though this has led to alternatives being perceived as less accessible than traditional markets by some, in recent years alternative platforms on the whole have been made more accessible to private investors than ever before.

5. How can I Invest?

Four Popular Routes


Alternative investments can be accessed via a range of routes, varying by asset class, investor experience and portfolio goals. Some of the most common methods are explored below. 

Direct Investment

One approach to investing in alternative assets is via direct investment. This involves investing into an opportunity directly from the source, without any intermediaries. This approach, for example, can often be selected when a company approaches an investor or informal angel network to pitch for investment. This route is most-used by experienced investors who possess a strong background in the given field.


Co-investment Platforms
Unlike direct investments, co-investment platforms often source a number of opportunities for investors to select from at their will. Whilst platforms vary in their level of due diligence, more sophisticated platforms will employ a defined set of internal processes and benchmarks to qualify opportunities for growth potential and suitability. Co-investment platforms are usually fee-free.

Three different investment pathways including direct investment, co-investment platforms and funds



Funds
An investment fund pools investor capital to invest in a set portfolio of predetermined companies/opportunities, decided by a fund manager. This route can be attractive for investors seeking less research-intensive, minimal-involvement investments. Funds charge additional fees for this service.

Online Marketplaces

An online marketplace, or online auction, is an e-commerce website built to connect sellers with buyers. Within the alternatives space, this is most relevant for collectables, such as art, wine, whisky and jewellery, or more recently virtual collectables such as NFTs (non-fungible assets).

Free Investor Guide Download

An Investor's Guide to Alternative Investments

For investors keen to enhance returns, reduce volatility and diversify their portfolio using alternative investments, this free guide offers an end to end overview of the space, exploring:

  • What the term 'alternative investments' means and the history of the market
  • Some of the most popular and profitable alternative asset classes available, from venture capital to property
  • The risks and rewards typically associated with alternative investments
  • The routes investors are able to access to invest in alternatives
GCV guide to alternative investments

Portfolio Diversification.
Superior Returns.

What we offer at GCV Invest

Alternative Investments with the potential to deliver superior returns.

GCV Invest is a private investor network and sophisticated co-investment platform, formed with the goal of connecting experienced investors with high-growth, impact-driven alternative investment opportunities that can form part of a diversified portfolio.

Join our Private Investor Network.

GCV CEO, Norm Peterson, speaking at an investment conference

Our Latest Opportunities

Alternative Investment Opportunities

Residing in our three core asset classes of venture capital, private equity and property, below you can find GCV Invest's latest growth-focused, impact-driven alternative investment opportunities.

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Right Arrow
Round 3
Seed
Open For Investment

n-gage.io

Sector: SaaS
Target Sought: £ 500,000
Funds Raised: £ 336,030
Round: Round 3
Investment Type: Equity
Tax Schemes: EIS
Learn More about n-gage.io
Round 3
Growth
Open For Investment

Growth Capital Ventures

Sector: Fintech
Target Sought: £ 1,000,000
Round: Round 3
Minimum Investment: £ 5,000
Investment Type: Equity
Tax Schemes: EIS
Learn More about Growth Capital Ventures
Round 1
Completed

Hive.Hr

Sector: HR Tech
Target Sought: £ 150,000
Funds Raised: £ 303,000
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about Hive.Hr
Round 1
Completed

Intelligence Fusion

Sector: SaaS
Target Sought: £ 400,000
Funds Raised: £ 556,800
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about Intelligence Fusion
Round 2
Completed

Hive.Hr

Sector: HR Tech
Target Sought: £ 300,000
Funds Raised: £ 1,150,000
Round: Round 2
Investment Type: Equity
Tax Schemes: EIS
Learn More about Hive.Hr
Round 1
Completed

QikServe

Sector: Fintech
Target Sought: £ 2,500,000
Funds Raised: £ 2,624,694
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS
Learn More about QikServe
Round 1
Completed

n-gage.io

Sector: SaaS
Target Sought: £ 150,000
Funds Raised: £ 170,000
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about n-gage.io
Round 1
Completed

Business Finance Market (trading as Finance Nation)

Sector: Fintech & Banking
Target Sought: £ 150,000
Funds Raised: £ 225,000
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about Business Finance Market (trading as Finance Nation)
Round 1
Completed

Growth Capital Ventures

Sector: Fintech
Target Sought: £ 500,000
Funds Raised: £ 561,000
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about Growth Capital Ventures
Round 2
Completed

Growth Capital Ventures

Sector: Fintech
Target Sought: £ 1,000,000
Funds Raised: £ 1,290,410
Round: Round 2
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about Growth Capital Ventures
Completed

Cathedral Gates

Sector: Property
Target Sought: £ 400,000
Funds Raised: £ 2,000,000
Investment Type: Equity & Debt
Learn More about Cathedral Gates
Completed

Middleton Waters

Sector: Property
Target Sought: £ 2,200,000
Funds Raised: £ 7,000,000
Investment Type: Equity & Debt
Learn More about Middleton Waters
Completed

The Langtons

Sector: Property
Target Sought: £ 700,000
Funds Raised: £ 3,000,000
Investment Type: Equity & Debt
Learn More about The Langtons
Completed

Thorpe Paddocks

Sector: Property
Target Sought: £ 1,000,000
Funds Raised: £ 6,000,000
Investment Type: Equity & Debt
Learn More about Thorpe Paddocks
Completed

CoreHaus

Sector: Advanced Manufacturing
Target Sought: £ 2,000,000
Funds Raised: £ 1,000,000
Investment Type: Equity
Learn More about CoreHaus
Round 1
Seed
Completed

Atom Bank

Sector: Fintech & Banking
Target Sought: £ 1,000,000
Funds Raised: £ 1,100,000
Round: Round 1
Investment Type: Equity
Learn More about Atom Bank
Round 2
Super Seed
Completed

Business Finance Market (trading as Finance Nation)

Sector: Fintech & Banking
Target Sought: £ 1,000,000
Funds Raised: £ 800,000
Round: Round 2
Investment Type: Equity
Tax Schemes: EIS
Learn More about Business Finance Market (trading as Finance Nation)
Round 1
Growth
Completed

Finexos

Sector: Fintech & Banking
Target Sought: £ 500,000
Funds Raised: £ 695,456
Round: Round 1
Minimum Investment: £ 500
Investment Type: Equity
Tax Schemes: EIS
Learn More about Finexos
Round 3
Series A
Completed

Business Finance Market (trading as Finance Nation)

Sector: Fintech & Banking
Target Sought: £ 250,000
Funds Raised: £ 278,855
Round: Round 3
Minimum Investment: £ 1,000
Investment Type: Equity
Tax Schemes: EIS
Learn More about Business Finance Market (trading as Finance Nation)
Growth
Completed

CoreHaus

Sector: Advanced Manufacturing
Target Sought: £ 2,000,000
Minimum Investment: £ 5,000
Investment Type: Equity
Tax Schemes: EIS
Learn More about CoreHaus
Round 2
Pre A
Completed

Finexos

Sector: Fintech & Banking
Target Sought: £ 500,000
Funds Raised: £ 680,462
Round: Round 2
Investment Type: Equity
Learn More about Finexos

FAQs

Find out more about investing with GCV

Should you have any further questions regarding the alternative investment opportunities we offer at GCV, and how to invest with us, you can contact our Investor Relations Team at any point - but we have provided a selection of frequently asked questions below.

  • The central investment hub and co-investment platform for the GCV private investor network, GCV Invest brings together a cohort of online and offline, private and institutional investors who all share one common mission - to access growth-focused, impact-driven alternative investment opportunities.

  • GCV Invest was launched to help experienced investors build a more diversified growth-focused investment portfolio.

    The GCV Invest co-investment platform has been built for clients that meet the following criteria:

    Is a Family Office, Institutional Investor, HNWI or Sophisticated Investor, seeking to invest alongside like-minded individuals and connect with the alternative investment ecosystem. Is looking to deploy over £10k in alternative investment opportunities per annum.

  • You can sign up to the GCV Invest co-investment platform directly here, but if you have any further queries, or would like to register your interest first person with our Director of Investor Relations, Dan Smith, you can contact him via this email - dan.smth@growthcapitalventures.co.uk

  • At GCV Invest we target growth-focused, impact-driven alternative investment opportunities that reside across the three core asset classes of venture capital, private equity and property. We source, vet and select opportunities via a number of strict internal processes, ensuring each has the potential to deliver growth, impact and tax efficiencies where possible. Ultimately this allows us to provide our investors with a convenient and effective route to building their wealth and diversifying their portfolio.

  • Yes, we specialise in sourcing carefully selected SEIS and EIS Eligible Investment Opportunities.

     

    We look for companies that have the potential to transform an industry.  Our Investment Team will assess over 300 opportunities per annum and only select those we believe have the potential to create significant value.

     

    These are ambitious, agile businesses led by talented and highly-motivated teams, who can demonstrate a clear vision, mission and credible growth strategy, alongside a differentiated and competitive business proposition.

  • GCV uses its embedded presence in the key UK corporate finance regions to access a range of investment opportunities in private companies with significant potential for growth. These are often introduced on an off-market basis, on the strength of longstanding personal relationships, or by professional advisers who are aware of our expertise and ability to work constructively with an entrepreneurial management team to accelerate business growth.

  • Our free Guide to Alternative Investments provides an end-to-end insight into the alternative space. Answering some of the most frequently asked questions and covering the core topics surrounding the field, you can download the guide here.

Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
Risk Summary

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?

  • You could lose all the money you invest
  • Most investments are shares in start-up businesses or bonds issued by them. Investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail.
  • Checks on the businesses you are investing in, such as how well they are expected to perform, may not have been carried out by the platform you are investing through. You should do your own research before investing.

You won't get your money back quickly

  • Even if the business you invest in is successful, it will likely take several years to get your money back.
  • The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
  • Start-up businesses very rarely pay you back through dividends. You should not expect to get your money back this way.
  • Some platforms may give you the opportunity to sell your investment early through a 'secondary market' or 'bulletin board', but there is no guarantee you will find a buyer at the price you are willing to sell.

Don't put all your eggs in one basket

  • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.

The value of your investment can be reduced

  • If your investment is shares, the percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
  • These new shares could have additional rights that your shares don't have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

You are unlikely to be protected if something goes wrong

  • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker.
  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA's website here.

For further information about investment-based crowdfunding, visit the crowdfunding section of the FCA's website here.

Driving Growth.
Creating Value.
Delivering Impact.

Backed by

Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.