London-based Stellar Asset Management has launched a technology EIS fund which will actively invest in UK technology companies, seen as being starved of new capital for expansion. These companies will have an established revenue stream and proven technology.

Founded last year by former Close Brothers staff, Stellar believes that demand for Enterprise Investment Schemes will increase both this year and next as high earners seek alternative tax efficient investments. Valuations of technology companies are seen as currently depressed with few experienced providers of capital actively investing in this sector.

The EIS aspect means that investors can benefit from 20 per cent income tax relief, up to 40 per cent capital gains tax deferral and the shares are 100 per cent exempt from inheritance tax after two years.

To manage the fund, Stellar has joined forces with Accretion Capital, set up in 2007 to focus on technology companies, the particular area of investment and management expertise of founders Mike Bourne and Stephen Bellamy.