Technology startups switched on to the Seed Enterprise Investment Scheme (SEIS) by grabbing a third of the £117 million cash offered by eager investors.
SEIS investment statistics released by HM Revenue & Customs (HMRC) for the 2012-13 tax year, highlight how much money entrepreneurs denied by the banks are seeking.
More than 1,100 companies shared the £117 million staked by 5,000 investors.
But the government clearly has more to do as the cash and entrepreneurs benefitting from the investment are clustered around London and the South East.
The HMRC SEIS data revealed a third of the cash went to the capital and Home Counties.
Tax benefits for investors
Investors still viewed startups as risky despite generous income tax and capital gains tax reliefs offered by the government.
Although the top limit for investment is £100,000 in a SEIS company, two-thirds of investors bought an equity stake worth £20,000 or less in a startup.
The average startup company picked up £75,000 from SEIS.
SEIS was introduced by Chancellor George Osborne in Budget 2012 as an alternative method to finance startups after banks closed their doors on entrepreneurs following the slump.
| SEIS: Investor and investment distribution | ||
|---|---|---|
| Investment (£) | Number of investors | Amount invested (£m) |
| £500 | 255 | £0.1 |
| £1,000 | 170 | £0.2 |
| £2,500 | 305 | £0.6 |
| £5,000 | 600 | £2.6 |
| £10,000 | 885 | £7.6 |
| £15,000 | 500 | £6.6 |
| £20,000 | 405 | £7.6 |
| £25,000 | 365 | £8.7 |
| £50,000 | 860 | £33.5 |
| £75,000 | 250 | £15.9 |
| £100,000 | 350 | £34.0 |
| Totals: | 4945 | £117.4 |
| Source: HMRC | ||
| SEIS: Investment by company | ||
| Investment (£) | Number of companies | Amount invested (£m) |
| £10,000 | 95 | £0.6 |
| £25,000 | 160 | £3.0 |
| £50,000 | 220 | £8.4 |
| £100,000 | 305 | £24.7 |
| £150,000 | 340 | £47.1 |
| Totals: | 1120 | £83.8 |
| Source: HMRC | ||
| SEIS: Investment by industry | ||
| Industry | Number of companies | Amount invested (£m) |
| Technology | 380 | £26.5 |
| Business services | 245 | £18.6 |
| Distribution and catering | 165 | £12.3 |
| Leisure activities | 125 | £10.9 |
| Manufacturing | 95 | £6.8 |
| Other services | 40 | £2.6 |
| Energy and water supply | 35 | £2.9 |
| Transport and communication | 20 | £1.1 |
| Construction | 15 | £1.0 |
| Agriculture | 10 | £1.0 |
| Totals: | 1130 | £83.7 |
| Source: HMRC | ||
| Notes: HMRC points out some of the data is provisional and totals are rounded up | ||
