A record number of small businesses are expected to raise money through the Seed Enterprise Investment Scheme (SEIS) this year, according to Symvan Capital.
The company says that a record 3,030 companies asked HMRC for approval to raise money through SEIS in the 2015/16 tax year, up 6 per cent on 2014/15, suggesting a record number would actually raise that money through SEIS in the following year.
The increase should mean that more companies than ever are approved for SEIS funding in 2016/17, as SEIS and EIS (Enterprise Investment Scheme) growth continues.
SEIS and EIS are government schemes designed to encourage private investment in smaller unquoted companies, offering investors generous tax relief on Income Tax, Inheritance Tax and Capital Gains Tax.
A growing number of companies ask HMRC for permission for SEIS investment is an encouraging sign for both investors and companies.
Companies joining the SEIS this year will all be more growth oriented businesses.
Symvan Capital is currently raising a fund which will invest in UK technology companies that have already proven their commercial viability.
Symvan Capital says that its unique due diligence significantly de-risks its investments, by themselves investing in companies at SEIS stage, before offering them as EIS investments. Their approach ensures that by the time companies reach commercial maturity, they have already undergone a lengthy period of ‘hands-on’ due diligence and support.
Kealan Doyle, CEO of Symvan Capital, says, ‘We should see more companies than ever using SEIS for investment. The market is in rude health.
‘Low growth companies like solar generators have been removed from EIS and SEIS investing, and the market is increasingly focusing on high-growth businesses, which can be defined as those that can provide robust short-to-medium term returns for investors.
‘That’s what these schemes were originally intended for – to create employment in fast growing industries that can benefit the UK economy, rather than just providing low-risk income to investors. If an investor would not conceive of investing in a company in the absence of tax relief, why should public money be available to subsidise them?’
Doyle adds, ‘There is ground-breaking technology in the UK that needs investment, and SEIS is helping them to get off the ground.
‘Small and medium sized companies are finding it harder than ever to access vital funding to ensure growth, so the fact that more and more are being exposed to potential investors can only be good for UK business.
‘Our unique business model allows us to reduce the risk of investing in high-growth technology companies. All the companies in our fund have shown they are worth investing in, as we did at an early stage.’
More companies than ever are expected to be raising money through SEIS this year as a record number seek to enter scheme