The Seed Enterprise Investment Scheme (SEIS) has changed the landscape of startup entrepreneurship for good. Where the lack of potential investment and funding opportunities often resulted in a raft of new businesses folding in the first two years, the investment scheme enables stand-out new enterprises to source investment during the critical initial stages.
By offering invaluable tax incentives to anyone willing to take a calculated risk on one of the country’s fledgling outfits, the Government have actually helped a number of start-ups develop into a major presence within their respective sectors.
As more entrepreneurs become aware of the SEIS, competition is getting intense. Many make the mistake of thinking that once they have their Advanced Assurance from HMRC, they will automatically be able to source investment. Advanced Assurance essentially states that at the time of issue, the business qualifies for the tax breaks earned through investment. But although this is certainly advantageous to have, it’s never going to be enough to attract serious investment.
Through SEIS, companies are able to source up to £150,000 cumulatively in their first 12 months, but to get this level of investment, an attractive business plan with projections and strategy must be in place as well as the Advanced Assurance from HMRC. Although investors are attracted to SEIS-qualifying companies due to the reduction in risk of the initial investment, there are such a wide-ranging number of opportunities for investment now that they can be selective with those that tick all the right boxes.
For a new business, qualifying for the scheme is the relatively easy part. You must have been in operation for under two years, must have under 25 staff and should not have gross assets in excess of £200,000. This is the easy part, the challenge comes in attracting investment through the viability of your business plan.
Tips for Business Plan
It may seem obvious, but so many start-ups come up short when pitching their business, as their plan unravels in scenes reminiscent of some of the hardest-to-watch pitches from BBC 2’s Dragon’s Den.
If your business plan covers off the following, there is no reason why you shouldn’t be attractive as a proposition to most investors:
Determine your target market and identify at least five core reasons why this audience would want to buy your service or product from you.
What is it that makes your business unique? There are probably a whole host of rival companies out there, already established, doing what you do. What makes you think you can get a slice of the action?
Identify your speciality. By carving yourself a niche and honing that, you are able to stand out as being a credible and attractive service relating to that one area.
Being OK at everything is not attractive to investors. Being the best at one specific thing is very attractive to investors.
For more information on SEIS and the best approach to source investment, a comprehensive guide to the scheme can be found at SEIS.co.uk.
