If you are an entrepreneur looking to raise money for your brand-new business, there is a Government scheme in the United Kingdom that might be useful. The scheme in question is called The Seed Enterprise Investment Scheme (SEIS) and it works by allowing investors to get income tax relief on their investments in qualifying SEIS companies. Small companies and early-stage start-up companies can struggle to find the investment to launch their businesses. Often traditional loans from banks and venture capital schemes are simply not available for early-stage companies. Therefore, other means of investment are needed.
For an entrepreneur looking for investment, a new business can obtain up to £150,000 through SEIS investments. There are of course some restrictions to this- such as you need to follow the SEIS fund rules for at least three years after you have gained investment, to ensure that your investors do not meet a tax liability and their investments remain eligible for SEIS tax relief. These investments are not completely tax free but there is a lot of tax relief available for investors.
It should be noted that there are some exemptions to the SEIS scheme. To be a qualifying company your business must not be listed on the stock exchange or have a plan to do so. A business must not have gross assets over £200,000 at the time of investment or have had some kind of investment from the Enterprise Investment Scheme (EIS scheme) or from a venture capital trust.
Another key point is that the money that you raise through SEIS shares should be spent within three years of issue on a new trade. It should be noted that the money raised must be used on qualifying trades (or activity surrounding this) so it is important to understand what sort of trades and business activity fall into this category.
For individual investors looking for investment opportunities SEIS ordinary shares can be an attractive option since they can get both income tax and capital gains tax (CGT) relief.
Entrepreneurs and Investors who want to learn more about the SEIS investment scheme can visit the UK HMRC web site for further information.
For companies that do not qualify for SEIS funding an alternative option is to use angel investment. This is a great option to help fund a new business as it is a way to get money for your business to help it grow. Angel Investors are types of investors that look for early-stage companies to invest in. Often, they will also provide mentorship and advice alongside their financial commitment. Generally, the way angel investment works is that the company in question releases a part of the business equity to the angel investor and in return they receive a financial contribution.
The way the Angel Investment Network works is that entrepreneurs and investors can connect through our global network. Investors can search for new businesses, start-ups, and ideas that they want to invest in and can connect with entrepreneurs that have uploaded their business information into our database. Because the Angel Investment Network is a global enterprise, entrepreneurs can find an investor from all over the world. In the same way, investors can search for businesses to invest in located all around the world.
It should be noted that early-stage start-up businesses offer a higher risk investment, as well as a potential higher reward. Investors should examine the business plan for the enterprise to ensure that they fully understand what investment decisions they are making.
AIN helps investors and entrepreneurs build lasting and profitable relationships to build better businesses and brighter futures.