business angel

GF002 – Why should SEIS matter to my startup?

Get funded!In Episode 2 of the Get Funded! podcast we cover:

  • why and how SEIS is becoming so popular?
  • why many business angels and seasoned investors will expect you to have considered SEIS?
  • an outline of the tax benefits that SEIS provides for investors
  • why you might be at a disadvantage pitching for investment without SEIS?

Leave us any comments or questions in the comments section.

Seed EIS (SEIS) match-making conundrum

Six months in, we are starting to see increasing activity in relation to the fantastically generous Seed EIS (SEIS) funding tax-break for early stage companies.

Investors can, in effect, be ‘subbed’ £78,000 by the Government for a £100,000 investment into a qualifying SEIS company – which is fairly staggering when you take into account the added benefit that, should the investee company become a roaring success, the investor can sell their shares ‘tax-free’ after three years!

Given these hugely valuable tax breaks, why aren’t we seeing more Seed EIS activity?

I am coming across a few reasons:

  • Lack of awareness – in fairness, this tax break has only been available since 6 April 2012
  • Confusion between SEIS and EIS – I have had a few instances where companies have already received funding under EIS so cannot then follow on with SEIS
  • Biggest reason – difficulty matching investors / business angels with qualifying promising investee companies.

I am unsure whether this experience is mirrored across the country but this is certainly something that I am seeing in the north west. Meanwhile, more savvy entrepreneurs are utilising this tax break to help subsidise offshoot ventures.

We need to provide more support for early stage companies (Note: early stage / seed for SEIS means a company that has been trading for less than two years) and – although I am aware there are regulatory issues – I would be interested in exchanging ideas for how we can improve the process of matching Business Angels with potential SEIS qualifying companies across the north west and UK more widely.

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