Archive

Category Archives for "Raising investment"

Crowdfunding: A useful tool for navigating sources

Screen Shot 2013-05-21 at 22.17.22With a new crowdfunding platform emerging seemingly every week, it has become increasingly difficult to keep track of them – let alone their particular business model, approach and fee structure.

NESTA has released a timely online platform that provides a useful summary of the key features of the various crowdfunding platforms available right now.

There are some useful filtering tools plus some high level tips and additional information for founders seeking funding and potential investors. It may have been helpful for the site to list a little more info on SEIS / EIS funding opportunities given the extra kick starter this can provide for UK businesses.

Overall, I hope this site is maintained as it should prove to be a useful resource.

Click here to access the platform.
[contact-form-7 404 "Not Found"]

Enhanced by Zemanta

EIS & EMI – Happy marriage or grounds for divorce?

Incentivising key employees by giving them an equity interest in the company not only makes sense from a motivational and employee retention perspective but it also makes good financial sense when cash is tight and tax can bite nastily on cash bonuses.

Many UK growing companies will qualify for the Enterprise Management Incentive Scheme (commonly referred to as EMI) which is a tax favoured share option scheme which allows qualifying companies to allow selected employees to share in the success of the company, perhaps on an exit.

Growing companies that qualify for EMI may also qualify for EIS (a similarly confusing tax acronym which stands for Enterprise Investment Scheme!). EIS is a tax break available to business angel investors in the sorts of growth companies typically favoured by EMI share option schemes.

There is normally no problem in a company acquring funding under EIS whilst incentivising key management or employees using EMI, however, one crucial point to watch is that EIS is only available in respect of new ordinary shares which do not carry preferential rights.  Care must therefore be taken to ensure that shares issued under an EMI scheme do not contain restrictions that might, by default, make the EIS shares preferential within the three year EIS qualifying period. If the the ordinary shares issued to the EIS business angel investors “become” preferred to the shares over which the EMI options are granted within the 3 year period then EIS status could be lost along with the tax breaks that go with it.

Ouch.

Although both EIS and EMI can form a happy marriage for most fast growing entreprenerial companies, they both contain strict conditions that must be adhered to if you are to avoid a potentially unsavoury divorce from your investors.

Enhanced by Zemanta