Start-ups continue to embrace Seed Enterprise Investment Scheme

The government’s Seed Enterprise Investment Scheme (SEIS) has attracted almost 3,000 start-up businesses in 2014/15 as fledgling entrepreneurs continue to seek early stage support.

According to new data from EIS and SEIS investor, Radius Equity, 2,905 start-ups utilised the scheme in 2014/15; up marginally from 2,845 in 2013/14 but significantly higher than 1,729 in 2012/13.

Launched in 2012, the SEIS encourages investors to invest in start-ups in exchange for tax reliefs, which are more generous than the Enterprise Investment Scheme (EIS) launched back in 1994.

Start-ups applying for SEIS must have been in operation for less than two years with less than 25 employees, assets below £200,000 and are seeking up to £150,000 of investment.

According to Radius, more entrepreneurs than ever view SEIS as a viable alternative to traditional bank lending with banks still struggling to lend to SMEs.

Gary Robins, director, Radius Equity, said: “SEIS has been one of the most important innovations in business finance since the financial crisis – as shown by its continuing popularity.

“Funding is vital to early stage businesses – SME owners need to focus on their operations rather than worrying about securing an initial investment and sufficient working capital to grow.

“That hi-tech start-ups in particular are benefitting from SEIS shows how new businesses are a key contributor to the dynamism of the UK economy.

“For the UK to continue to lead the world sectors such as FinTech there needs to be the right financial and tax environment for them to get off the ground.”

A recent eBay study also found that two-thirds of SMEs feel banks aren’t lending as much as they should, while leaders also voiced a lack of trust for traditional finance lenders.

“Small businesses are increasingly confident about their prospects, with two-thirds of those that we’ve spoken to predicting an increase in sales over the next 12 months,” said Tanya Lawler, vice president, eBay UK.

“However, this confidence in the economy is not translating into confidence in the banks, as reflected by the high proportion of SMEs no longer reliant on banks for funding.”

Date published 29 Sep 2015 | Last updated 29 Sep 2015