Record number of start-ups secure finance through Seed Enterprise Investment Scheme
Scheme thought to be driving growth in the ‘flat white economy’ of tech, catering and service businesses
Between 2014 and 2015 a record 2,905 start-ups applied to raise funds through the Seed Enterprise Investment Scheme (SEIS), according to Radius Equity.
The figure, up from 2,845 last year and 1,729 the year before, shows that SEIS is an essential source of growth finance for businesses struggling to access traditional funding.
In total, 94% of applications to HMRC for SEIS were successful last year, a slight improvement on the 93% from the year before – evidence that most companies are submitting robust and detailed business plans for consideration.
The government-backed initiative is thought to be responsible for the growth of the ‘flat white economy’, with technology, restaurant, catering and service firms accounting for more than 65% of the businesses securing funding.
Earlier this year, Radius Equity revealed that the amount of funding raised by start-ups through the scheme in 2014 topped £163m.
Introduced by chancellor George Osborne in 2011, SEIS promotes entrepreneurship by offering tax incentives to investors that invest in early stage British businesses.
Gary Robins, director at Radius Equity commented: “SEIS has been one of the most important innovations in business finance since the financial crisis – as shown by its continuing popularity.
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“Funding is vital to early stage businesses – small business owners need to focus on their operations rather than worrying about securing an initial investment and sufficient working capital to grow.
“That hi-tech start-ups in particular are benefitting from SEIS shows how new businesses are a key contributor to the dynamism of the UK economy. For the UK to continue to lead the world sectors such as financial technology there needs to be the right financial and tax environment for them to get off the ground.”