The Seed Enterprise Investment Scheme (SEIS), designed to help small, early stage companies raise equity finance, has helped over 1,100 companies to raise the money they need to grow or expand, the government has announced.
Launched in 2012, SEIS offers tax reliefs to individual investors buying shares in small companies at a very early start up stage. New analysis released today reveals that companies have raised over £82 million of funding through the scheme.
Our infographic explains the scheme and breaks down some of the key figures
On average, £1.3 million of SEIS funding is raised by 19 companies every week through the scheme. The average amount of investment raised by a company is £72,000.
SEIS allows companies to raise up to £150,000 of equity finance – funding in return for an agreed share in the company – through the scheme in their lifetime. This can provide vital early stage funding and offers an additional or alternative to bank lending, as well as potential access to angel investors that can provide invaluable business experience.
The new figures come as HM Revenue & Customs publishes research into the entrepreneurs and investors’ knowledge and experience of the scheme in the early stages of its operation.
The research showed that users and their agents felt the companies would not have been able to realise their achievements without SEIS and some admitted they would not have been able to raise the funding elsewhere.
Ahead of a visit to Extremis, a company in East Anglia that has secured funding through SEIS Chancellor of the Exchequer, George Osborne, said:
I want the UK to be the best place in the world to start, finance and grow a business. That’s why I’ve put in place a scheme that rewards people who get behind entrepreneurs – and am delighted that over 1000 start ups have already taken advantage of the scheme.
The UK is full of budding entrepreneurs who have struggled to realise their ideas because of problems accessing finance. The Seed Enterprise Investment Scheme along with Start Up Loans and The Business Angel Co-Fund – are designed to financially back start ups. And next year we are going further by introducing an employment allowance – cutting up to £2000 off every business and charity’s National Insurance Contributions bill.
These measures will help start ups that create jobs, opportunities and wealth in Britain and are a key part of our economic plan.
Investors can invest up to £100,000 a year in SEIS qualifying companies and will in turn receive 50 per cent of their investment back as income tax relief. Investors using capital gains realised in 2013-14 and investing that gain in that same year or the following year will receive 50 per cent capital gains tax relief on the amount invested when investing in an SEIS qualifying company.
SEIS builds on the long-standing Enterprise Investment Scheme (EIS) which provides tax reliefs for investors in small, high-risk companies.