Where are all the start-ups funded through SEIS?
On the face of it the SEIS scheme is a fantastic incentive for investors and entrepreneurs alike.
Neither private individuals nor Venture Capital want to invest in start-ups simply because they are very high risk, by taking away as much as 78% of the capital risk through SEIS funding should get people excited. So why aren’t we hearing more about all the start-ups and investors taking advantage of the SEIS scheme.
As the maximum investment is only £150k, this means that it’s not worth professional fundraisers getting involved. You have to find the “Angel investors” yourself as the entrepreneur, which is difficult unless you are wired in with a high earning network, and even then it’s by no means a given that you will raise the funds.
The EIS has had its only problems recently with certain EIS funding for films being reversed, and investors being hit with a tax bill they thought had been written off. So, investors are not completely convinced that a company with EIS or SEIS approval will actually conclude with HMRC giving the full rebate.
I think HMRC needs to be more conclusive with their approvals or pre-approvals of EIS and SEIS compliant firms. This would give investors the confidence that the tax rebates will come through.
But are there any early stage business’ out there that are worth funding?
As an entrepreneur and someone who has worked with many start-ups I am only too aware of the percentages of failures versus successes, but this is often judged only on the initial business concept. As an optimist (which you have to be if you take the entrepreneur route) I believe that nearly all entrepreneurs can succeed if they have enough time at the coal face tweaking the machinery and working out in the end what can become a successful business.
You are backing people as much as ideas, so even trying to over analyse the probability of success is fruitless. Backing an Entrepreneur often ends up being a long term relationship where plans often change on the way.
Investing in a start-up is making an investment in the future of this country. The SEIS should be enough of an incentive to provide a cultural shift so that everyone is talking about the start-ups they have backed.
If you’ve enjoyed this post, why not follow me on Twitter