SEIS funding nearly doubles year-on-year

The UK’s small and medium-sized enterprises (SMEs) raised £163.5 million through the Seed Enterprise Investment Scheme (SEIS) last year; almost double the £85.9 million figure raised in the scheme’s inaugural year (2012-13).

Almost two-thousand (1,995) SMEs secured funding through SEIS last year, according to the study from Radius Equity.

Latest figures from HM Revenue and Customs (HMRC) show that the number of businesses raising funds from private investors through the Enterprise Investment Scheme (EIS) has increased year-on-year by 10 per cent – up from 2,465 to 2,710.

Gary Robins, director, Radius Equity, believes that SEIS and EIS are becoming increasingly popular amongst private investors, as the number of government-backed investment schemes with attractive tax breaks begins to dwindle.

“The tax breaks the government has put in place are attracting huge numbers of start-ups and investors which is encouraging growth and proving a boost to the economy,” said Robins.

“These figures highlight the growing investor interest in small business investing.

“Investors are also benefitting from a wider choice of businesses to invest in, with private investors able to pick and choose from the businesses they think are most likely to deliver them the best returns.”

Robins believes that EIS is succeeding where so many other lending initiatives have failed – to gain increased funding to the UK’s small business community.

“[It is] a vital part of the economy that has seen its funding through bank loans fall dramatically and continuously since the credit crunch,” added Robins.

However, the Institute of Directors (IoD) has called on the Government to promote EIS and SEIS further to make it easier for people keen to invest in new and growing businesses.

Jimmy McLoughlin, deputy director for policy, IoD, said: “Rapid growth in the take-up of both EIS and SEIS by companies and investors shows they have the potential to unlock billions of pounds in business investment.

“More than 100,000 people invested in a company through the schemes last year, but there is no reason that number cannot be ten times as high, particularly as companies raised only £150m through SEIS, which was introduced in 2012.

“With Britain leading the European alternative finance market, entrepreneurs in the UK can raise funds in more ways than ever before.”

Date published 3 Aug 2015 | Last updated 3 Aug 2015