Originally written by Alistair Marsden on Small Business
As an entrepreneur, it’s crucial that you understand the scope of the funding landscape. You wouldn’t start your business without knowing the market and your customers inside out, and the same approach should be taken to investment.
Often, entrepreneurs can become so preoccupied with chasing funding that they lose sight of the bigger picture. They don’t fully consider which funding source is the best fit for their business in the long term.
What is SEIS/EIS investment?
The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are a huge part of that funding landscape. They are designed to encourage investment into startups and early growth-stage companies through offering tax incentives to investors.
Investors can place a maximum of £100,000 (SEIS) or £1,000,000 (EIS) per tax year in return for equity.
Tech startups in particular can snap up a lot of this investment – the higher startup failure rate in the tech sector means that these businesses can easily prove that investor capital has to be at risk for both SEIS and EIS.
Some organisations that provide operational support to help found startups – for example through mentorship and the provision of a team and other resources — have