Redemptions & Rollovers
As a result of dispositions of our investments in various companies, WUTIF may, from time to time, offer redemption and re-investment opportunities to its investors. The proceeds that are received when our shares in an investee are sold, are made available to investors who wish to, and are eligible to, redeem their shares. Next-in-line investors are notified by email. Exit proceeds are not re-invested nor are dividends paid. This allows investors to cash in if they so choose.
Normally, in order to receive the 30% refundable tax credit, investors must commit their capital for a minimum 5-year period. This is because it normally takes at least 5 years for an investment in a startup company to mature and pay off. In fact, it usually takes much longer than 5 years. In fact, early investors in WUTIF waited much longer than 5 years before WUTIF received a cash payout in order to offer redemption opportunities. However, due to the large portfolio of maturing companies, exits are occurring more frequently now and the hold period is closer to 5 years and could even be less than 5 years.
WUTIF’s policy is to notify all of its shareholders whenever it is possible to offer share redemptions. Any shareholders requesting a redemption will processed on a first-in first-out basis. The number of shareholders that can be accommodated will depend on the amount of cash received from any specific investment payout.
Those investors that have held their shares for the longest time, will be able to redeem first. Some investors may choose to re-invest, i.e. rollover, their proceeds in which case they will again receive another 30% refundable tax credit from the B.C. Government. Some investors may decide not to rollover because they do not want to commit to another 5 years. They may decide to simply continue holding their investment. In this case, they will not lose their redemption priority. They will be first in line for the next redemption window. When shareholders choose not to redeem, the funds that would be available to them are now made available to the next-in-line shareholder.
Opting for a roll-over can be very attractive. Some investors have done so multiple times and have recouped more than their original investment by receiving multiple tax credits.
If an investor bought shares over a period of time, it is each share purchase date that determines redemption eligibility. That is, investors may not be able to redeem all their share purchases – only those in priority date order.
When exit proceeds are received, Investors are offered these choices:
Rollover all or a portion of your investment
- Redeem and re-invest and receive a second (or third) REFUNDABLE Tax credit of 30% on the redemption share price.
- By re-investing your capital, you will be able to take advantage of the growth of other promising companies in the portfolio.
Redeem all or a portion of your current investment
- Any shares redeemed will be immediately paid out with no further participation.
Hold and neither redeem or rollover
- You will not lose your position in the redemption lineup on shares not redeemed. You will be at the top of the list when the next redemption opportunity comes up. This may be preferred by investors who may wish to redeem in the near future without committing to another 5 years.
After the cash available for redemptions is depleted, investors will have to wait until WUTIF achieves another investment payout at which time this process will be repeated starting with the next-in-line investor (starting with those that passed up previous redemption opportunities).
Proceeds received from rollovers must, according the B.C. regulations, be used to make new investments in startups. This will allow us to build new companies and to grow the Fund’s value over time.
Determining Redemption Price
The share price for redemptions and rollovers will be based approximately on the Fair Value per share at the date on which redemptions are offered. The actual price will be determined by a resolution of the Company’s Board of Directors. The price may be less than the Net Asset Value per share to allow for various contingencies and liabilities.
When will my turn come up?
Investors often wonder where they are in the line-up for redemptions. As a guideline, investors should allow 5 years from the date of their investment. While it may take less than 5 years, it typically takes longer especially when market conditions are such that acquisition transactions are not occurring frequently. Investors may inquire as to how many shares are ahead of them in the redemption queue which will then tell them how much cash has to be received from exits before they can redeem. Remember that the whole idea behind the tax credits is to reward investors for being patient and willing to commit their capital for 5 years. Investing directly in a company rather than through a VCC such as WUTIF, will almost certainly mean a hold period of more than 5 years – maybe 10 or 20 years. Some WUTIF companies took well over 10 years before paying out.
Redemption History
The first tranche of redemptions occurred in 2013 at $10.50/share. Approximately $500K was available and a limited number of investors were able to rollover their shares. The second opportunity occurred in October, 2017 at $13.00/share. Approximately $3 million was redeemed. The third round of redemptions took place in August, 2018 at $14.50/share. Approximately $1.3 million was redeemed. In May, 2019, a fourth round was completed at $19.50 per share for $3.17 million. In November, 2019, a fifth round was completed at $21.00 per share for $1.1 million. In November, 2020, a sixth round was completed at $22.00 per share for $1.6 million. In November, 2021, a seventh round was completed at $25.00 per share for a total of $1.19 million in redemptions. In December, 2022, an eighth round at $27.00 per share was completed for $397K. In December 2023, a ninth round at $27.00 per share was completed for $824K. In November 2024, a tenth round at $27.50 was completed for $1.278M. In November 2025, an eleventh round was completed for $864K.
Because the Fund has a number of investments that it has held for as much as 10 years, regular exit opportunities are expected to occur. As they arise, investors will be notified if they are in line to redeem shares. In summary, redemptions are driven by exits!