More start-ups seek private investment

The number of start-ups asking for permission to raise funds through a tax-efficient private investment scheme increased by more than 1,200 in the 2013/14 financial year, research by Radius Equity has found.

The government’s Seed Enterprise Investment Scheme (SEIS) is designed to stimulate investment in start-ups by offering tax breaks to private equity investors. Lenders can claim relief from capital gains and income tax on SEIS investments, up to specified limits.

The research by Radius Equity found that:

  • 2,852 start-ups applied to HMRC for permission to raise funds through the SEIS during 2013/14
    • this is an increase of 73% on the 1,644 applications applied the previous year.

The Enterprise Investment Scheme (EIS) is similar to the SEIS but is aimed at boosting investment in small business growth as well as start-ups. Radius Equity found a 16% increase in the number of applications to raise EIS investment in 2013/14.

Stephen Norton, director at Radius Equity, said:

“The fantastic tax breaks the government has put in place are attracting huge numbers of start-ups and investors. This funding encourages growth and provides a real boost to the economy.

“Start-ups and early stage businesses have found it very difficult to borrow from the banks since the financial crisis because the banks have been under significant pressure from the regulators to rebuild their balance sheets. The introduction of the SEIS provided a new option to start-ups looking to finance their growth plans that was not available before.”

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