The Seed Enterprise Investment Scheme (SEIS) has assisted over 1,100 startups by giving them access to investment to help them grow and expand since it was launched last year, the UK Government has announced.
Since 2012, companies have raised over £82m ($130m) through the scheme, which offers individual investors buying shares in startups at early stage tax relief on their investments. This equates to an average £1.3m of SEIS funding raised by 19 companies every week through the scheme, with the average amount raised by a company standing at £72,000.
One direct beneficiary of the scheme has been the University of Cambridge, which noted new record for the institution investing in its own spin-outs for the 2013 fiscal year. The University invested £2.3m through its Enterprise Fund, managed by Parkwalk Advisors, over the course of the year. The Enterprise Fund is now in its second year following the establishment of SEIS.
George Osborne, the Chancellor of the Exchequer, said: “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 startups. 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 startups that create jobs, opportunities and wealth in Britain and are a key part of our economic plan.”
The fund allows eligible companies to raise up to £150,000 in equity financing as part of SEIS. Investors can put up to £100,000 a year into those companies, and receive 50% of their investment back as income tax relief.
Mark Payton, managing director at venture fund managing firm Mercia Fund Management, told Global University Venturing that he had seen an increase in startups seeking investment thanks to SEIS.
He said: “As one of the first manager’s to provide a discretionary investment hybrid (EIS/SEIS) fund available to private investors, we too have noted a noticeable increase in startup and early stage businesses seeking seed investment with some 300-400 business plans being received by us in the last year,” adding, “In our experience, it is the quality and not quantity of startup businesses that are seeking early investment that counts for our investors, and this too is a growing a number – a testament to the quality of entrepreneurs coming through an improving economic environment and to the government for providing such compelling and legitimate tax efficient investment structures such as SEIS and EIS.”
