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The spreadsheet on Dr. Brian Moretta's – Head of Tax Advantaged Research & Investment Analyst at Hardman & Co – screen showed another promising EIS fund, the third he'd reviewed that week. But after analysing thousands of funds over eight years, he knew that impressive marketing materials often masked fundamental flaws. "There's two things I'm focused on," he explains during our conversation. "Is the fund kosher? Do they have the proper structures in place? And what differentiates it from other funds in the market?"
Today, Dr. Brian Moretta has become the go-to independent voice for EIS fund analysis, helping investors navigate a market where tax benefits often overshadow investment fundamentals. His systematic approach to fund evaluation has revealed patterns that separate genuine opportunities from what he calls the industry's "cottage industry" approach to venture capital.
Brian's path to becoming Britain's leading EIS fund analyst wasn't linear. Starting as an actuary at an insurance company, he returned to academia for a PhD before spending a decade as a fund manager in Ireland, focusing on quoted equities with occasional forays into more esoteric investments. The transition to the "sell side"– producing investment research for investors – brought him into contact with the EIS and VCT space eight years ago.
"What I'm aiming to do is try and help investors make better investment decisions," Brian reflects on his mission. His background in actuarial science provides the mathematical rigour needed to assess venture capital returns, while his fund management experience gives him insight into what actually works in practice. The combination has proven invaluable in a sector where, as he puts it, many fund managers were historically "very bad at using technology themselves."
The challenge facing EIS investors runs deeper than most realise. With tax season driving investment decisions, too many people approach EIS funds as one-off tax mitigation exercises rather than serious venture capital investments. "This is one area that I think the EIS industry is shooting itself in the foot," Brian observes. "In years two, three, four, you've got all the failures and all the successful exits are coming in years seven, eight, nine, and beyond."
The mathematical reality is stark: while funds market seven-year horizons, money-weighted returns suggest decade-long investment periods. Meanwhile, investors often select funds based on headline fees or impressive-sounding technology focus areas, missing fundamental structural issues that could derail performance entirely.
"It would be very easy for some people to come up and say 'we're a technology fund' when there are 20 or 30 technology funds out there," Brian explains. "If a fund can't differentiate from everybody else, then really, where is its place in the market?"
Brian's analysis methodology begins with what he considers the most critical filter: the investment process itself. After reviewing hundreds of funds, he's developed a systematic approach that reveals whether managers truly understand their market or simply hope to recognise good deals when they see them.
"Usually, I would look at the investment process first," he explains. "Can they articulate the sort of companies they're looking for? Can they articulate what characteristics those companies have? Can they articulate what would make a good investment?" The difference between funds that can provide specific, detailed answers and those that rely on vague "I'll know it when I see it" responses often predicts long-term performance.
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The sourcing capability comes next. Most successful managers receive strong deal flow from established networks built over years in the market. "They've been working in this area for a while, they know a lot of people, people will send them deal flow, and generally that's quite good quality deal flow," Brian notes. However, competition is intense, with most managers now building relationships with accelerators to access deals before demo days.
Brian is a venture capital investment specialist, and has undertaken significant research and analysis that informs his personal views on how to structure a portfolio.
Brian's research has challenged conventional portfolio construction wisdom. His analysis suggests that venture capital can improve expected returns without changing overall portfolio risk—but only with proper allocation strategies. "It suggested that you should have roughly a low teens percentage in venture capital," he explains, referring to his portfolio optimisation research.
The counterintuitive finding: to maintain constant risk while adding 15% venture capital exposure, investors should take even more out of equities and move into bonds.
"You're adding a risky asset and reducing the middle-risk asset," he clarifies. For a traditional 60/40 portfolio, this means moving to approximately 35% traditional equities, 50% bonds, and 15% venture capital.
This allocation strategy can add "roughly half percent to one percent a year to your expected return without changing the risk profile of your portfolio," making venture capital what Brian calls "a diversifying asset" that enhances rather than complicates portfolio construction.
Venture Capital investing is inherently risky and no risk-return profile can ever be guaranteed.
The post-investment support capabilities of fund managers reveal crucial differences in their ability to add value beyond capital. "Most managers, or almost every manager, will say 'yeah, we support companies after investment,' but that can vary quite widely," Brian observes. The key lies in specificity of support offered.
Generic promises to attend board meetings pale compared to managers who can articulate exactly how they help companies develop finance functions, find CFOs, or navigate specific growth challenges. "If they say, 'well actually, what we find is that companies typically need to develop a finance function, we typically find CFOs,' that's quite specific and tells you how actively they are involved."
The depth of management teams becomes critical when supporting 30-40 portfolio companies. Small teams face inevitable capacity constraints, though some address this through advisory boards or angel investor networks that provide distributed support capabilities.
Fee analysis represents one of the trickiest aspects of fund evaluation, partly due to lack of transparency around how fees are charged. "There's a little bit of lack of transparency—fees get charged to direct investors, fees get charged to the companies," Brian explains. "All other things being equal, you'd rather have lower fees than higher, but it still should be a second-order effect relative to the returns you're getting."
Beyond headline management fees and carry, investors must navigate setup fees, annual management fees, escrow account fees, processing fees, and certificate fees. Some funds charge companies arrangement fees and monitoring fees, potentially affecting deal flow quality. "Companies, if they have a choice, they will pick the cheaper deal for them," Brian notes, meaning investors in fee-heavy funds may face reduced performance due to higher entry prices.
The complexity requires careful reading of full Information Memorandums rather than relying on marketing summaries that highlight only the most attractive fee components.
Unlike public markets, where passive strategies have gained dominance, Brian argues that active management remains viable—even necessary—in venture capital. "The case I would make is that active is a much more viable approach in the venture space than it is in the quoted markets," he explains.
The fundamental difference lies in market efficiency.
Public markets feature constant price discovery, standardised information disclosure, and broad accessibility. Venture markets operate differently: "There is no quotation of prices, there is no standard information disclosures. If somebody's got privileged deal flow, then a deal could happen and I will never see it."
This creates persistent opportunities for skilled active managers to add value through superior sourcing, selection, and support capabilities—advantages that don't exist in efficiently priced public markets.
Perhaps Brian's most important message for first-time EIS investors concerns realistic time horizons. Industry marketing around seven-year exit expectations masks the mathematical reality of venture capital returns. "There's a really good blog article by Fred Wilson, a VC in New York, and he said he doesn't know why it takes 10 years to build a company, and that's on average."
The timing distribution heavily skews toward longer holding periods for successful investments. While failures tend to occur in years two through four, successful exits cluster in years seven through nine. This means money-weighted returns—what investors experience—stretch significantly beyond marketed timeframes.
"I'm a first-time investor in an EIS fund, I read this thing about year seven—disregard it," Brian advises. "Think about it as your kind of 10-year investment. Investing in an EIS fund is a decade-long investment."
The EIS fund management industry is undergoing technological transformation, though Brian suggests it's overdue. "Someone a couple of years ago on my podcast described the EIS fund management industry as a cottage industry full of people who were investors that were very bad at using technology themselves," he recalls.
Recent improvements include sophisticated CRM systems built on platforms like Salesforce, better client reporting through dedicated portals, and streamlined administrative processes. However, the efficiency gains may not translate to lower fees for investors. Given the scale constraints of £5 million investment limits and modest annual management fees, most fund managers rely on performance fees (carry) for profitability.
"If you're getting one per cent on £500,000 investment, that's £5,000 a year," Brian calculates. "You're saying that funds a fifth of a per cent of a decent person to support your performance."
Looking toward his legacy, Brian envisions a fundamental change in how the sector positions itself. "If I had one legacy that I would like, it's where this sector becomes investment-led, not tax-led," he explains. "There is an investment case to be made and it's lost behind the tax reliefs."
This philosophical shift would transform how investors approach EIS funds—from tax mitigation vehicles toward legitimate venture capital investments that happen to offer tax benefits. Such a change would likely improve fund quality, investor outcomes, and industry reputation.
His upcoming research papers promise to reveal "radically innovative" insights that could further advance investor education and decision-making in the sector.
Brian's single most important advice for first-time EIS investors directly challenges common approaches: "Don't think of it as a one-off. You need to be thinking this is my investment philosophy over a period of time, not a one-off where I am today."
This long-term perspective affects everything from fund selection to portfolio allocation to return expectations. Rather than chasing immediate tax relief, successful EIS investing requires building positions over multiple years, accepting decade-long investment horizons, and focusing on fund managers with proven track records rather than compelling marketing materials.
The shift from tax-driven to investment-driven thinking separates sophisticated EIS investors from those who treat venture capital as elaborate tax planning. Given the mathematical realities of venture capital returns and the complexity of fund evaluation, Brian's systematic approach offers a roadmap for investors serious about building wealth through early-stage company investments.
Why does rigorous EIS fund analysis matter beyond individual investor returns? Brian's work addresses a fundamental challenge in democratising venture capital investment. By providing independent, analytical evaluations of fund managers, he's helping create more efficient capital allocation in the UK's innovation economy.
When investors make better fund selection decisions, capital flows to the most capable managers, who in turn support the most promising early-stage companies. This virtuous cycle strengthens the entire entrepreneurial ecosystem, from university spin-outs to scale-up companies seeking Series A funding.
The transformation from the cottage industry to the professional investment sector benefits everyone: entrepreneurs gain access to more sophisticated capital providers, fund managers compete on performance rather than marketing, and investors build wealth while supporting innovation. Brian's analytical framework provides the foundation for this evolution, one fund review at a time.
Dr. Brian Moretta's research and fund analysis can be found at Hardman & Co's website under their tax-advantaged services section. His podcast and ongoing research continue to shape how investors evaluate EIS and VCT opportunities in the UK market.
