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Quick Insights: using SEIS/EIS to attract investors

Securing investment is a pivotal step for any startup, and leveraging the SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme) can make your company significantly more attractive to investors. In this Quick Insight, we’ll explore how SEIS/EIS can be a game-changer in your fundraising efforts.

Why SEIS/EIS Appeals to Investors

Tax Reliefs and Incentives

One of the primary reasons SEIS/EIS is appealing to investors is the generous tax reliefs and incentives. Under SEIS, investors can claim up to 50% income tax relief on investments up to £200,000 per tax year. EIS offers 30% income tax relief on investments up to £1 million, or up to £2 million if the investment is in “knowledge-intensive” companies. These tax benefits reduce the financial risk for investors, making it easier for them to commit funds to your startup.

Capital Gains Tax (CGT) Exemption

Investors can benefit from CGT exemption on the disposal of SEIS/EIS shares, provided they hold the shares for at least three years. This exemption further enhances the attractiveness of investing in your company, as it offers significant potential for tax-free returns on their investment.

Loss Relief

If the investment doesn’t go as planned, SEIS/EIS provides loss relief. Investors can offset losses against their income tax, reducing the downside risk. This feature adds a layer of security, making it more likely for investors to take a chance on your startup.

Crafting Your Pitch with SEIS/EIS

Highlighting the Benefits

When pitching to investors, make sure to highlight the SEIS/EIS benefits prominently. Emphasise the tax reliefs, CGT exemption, and loss relief, explaining how these features make their investment safer and more rewarding. Use clear, concise language to make these points stand out.

Real-World Examples

Provide real-world examples of startups that have successfully leveraged SEIS/EIS to attract investment and grow. Case studies can be powerful in illustrating the tangible benefits and outcomes of investing under these schemes.

Show Your SEIS/EIS Approval

If your startup has already obtained SEIS/EIS advance assurance, make sure to showcase this in your pitch. Advance assurance reassures investors that your company qualifies for the schemes, giving them additional confidence in your eligibility and compliance.

Building Investor Confidence

Transparent Financial Projections

Investors appreciate transparency and solid financial planning. Present detailed financial projections that demonstrate how the SEIS/EIS funds will be utilised to drive growth. Outline your milestones and how the investment will help you achieve these goals.

👉 Simplify your financial planning with our downloadable Financial Model template!

Long-Term Vision

Articulate a clear, long-term vision for your startup. Show how the SEIS/EIS investment fits into your overall strategy and how it will contribute to sustainable growth and success. Investors are more likely to commit if they see a well-thought-out plan for the future.

Strong Management Team

Highlight the strengths of your management team. Investors invest in people as much as they do in ideas. Showcase your team’s experience, skills, and passion, demonstrating that you have the right people to execute your business plan and drive growth.By effectively leveraging SEIS/EIS in your pitch, you can make your startup more appealing to investors, increasing your chances of securing the funding you need to grow and succeed.Next, we’ll delve into “Financial Planning with SEIS/EIS Funds,” exploring how to strategically plan and manage these funds to maximise growth and sustainability. Stay tuned! 

Ready to make the most of SEIS/EIS for your startup? Let’s chat! Whether you’re seeking clarity on eligibility, benefits, or advance assurance, we’re here to guide you through the process. Book a no-obligation consultation with Elliott Gaspar, Standard Ledger’s Founding UK Director, and unlock the potential of these valuable investment schemes for your startup.