Raising £600k with SEIS/EIS: How Tech Companies Can Leverage Investment Schemes

Meta Description: Discover how tech companies can successfully raise funds through SEIS/EIS investment schemes. Learn strategies, benefits, and insights to leverage these opportunities effectively.

Introduction

Securing adequate funding is a critical milestone for tech startups aiming to innovate and scale their operations. Startup investment schemes like the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) have become pivotal tools for these companies to attract investors while offering significant tax reliefs. This article explores how tech companies can effectively leverage SEIS/EIS to raise substantial capital, exemplified by Roam Local Limited’s successful £600k fundraising effort.

Understanding SEIS and EIS

What Are SEIS and EIS?

The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are UK government initiatives designed to encourage investment in early-stage companies. These schemes offer tax reliefs to investors, making them attractive avenues for funding.

• SEIS: Targets startups in their initial stages, allowing investors to claim up to 50% income tax relief on investments up to £100,000 per tax year.
• EIS: Aimed at slightly more mature companies, offering investors up to 30% income tax relief on investments up to £1 million per tax year.

Benefits for Tech Companies

For tech startups, SEIS and EIS provide a dual advantage:

• Attracting Investors: The tax incentives make investing in startups financially appealing.
• Raising Capital: These schemes facilitate access to essential funds without diluting ownership excessively.

Case Study: Roam Local Limited’s £600k Raise

Roam Local Limited, a digital high street marketing app company, successfully raised £600,000 through SEIS and EIS. Here’s how they achieved this:

• Equity Stake Offered: 20% equity at a £3 million pre-raise valuation.
• Tax Reliefs:
• The first £250,000 was offered under SEIS, providing 50% income tax relief.
• The remaining £350,000 fell under EIS, offering 30% income tax relief.
• Investor Incentives: Minimum investment of £3,000 with a 3% commission for introducers.
• Use of Funds: Funding the national and international rollout of their app, which had already seen success in the north of England and Northern Ireland.

Roam Local Limited’s approach demonstrates the effectiveness of SEIS/EIS in attracting significant investment by combining attractive equity offers with substantial tax reliefs.

How Oriel IPO Facilitates SEIS/EIS Investments

Oriel IPO stands out as an innovative online investment hub dedicated to connecting investors with entrepreneurs through SEIS and EIS opportunities. Operating out of the UK, Oriel IPO democratizes investment by making it accessible to both experienced and novice investors through a transparent, commission-free platform.

Key Features of Oriel IPO

• Commission-Free Investment: Reduces the cost barrier for investors, making it easier to participate in startup funding.
• Comprehensive Support Tools: Includes tax calculators, EIS/SEIS guides, and community blogs to empower users.
• Secure Marketplace: Ensures safe transactions and reliable connections between investors and startups.
• Community Support: Fosters a strong network through insights, blogs, and events, enhancing investor and entrepreneur engagement.

By addressing the gaps in accessibility and transparency, Oriel IPO provides a robust foundation for success in the SEIS/EIS investment landscape.

Benefits of Leveraging SEIS/EIS for Tech Companies

Tax Reliefs as a Magnet for Investors

The primary appeal of SEIS/EIS lies in the tax reliefs they offer. Investors can:

• Reduce Personal Tax Liability: SEIS offers 50% income tax relief, while EIS offers 30%.
• Tax Deferrals and Exemptions: Capital gains tax exemptions and deferrals make these investments financially attractive.

Enhanced Investment Appeal

Offering SEIS/EIS options can significantly enhance a startup’s appeal to potential investors, providing them with financial incentives to invest in high-risk, high-reward ventures.

Strategic Growth and Expansion

Access to substantial funds enables tech companies to accelerate their growth, expand their market presence, and innovate further, creating a positive feedback loop for business development.

Risks and Considerations

Non-Regulated Status

Platforms like Oriel IPO operate without FCA regulation, which may deter risk-averse investors who prioritize regulated environments for their investments. It’s essential to:

• Highlight Transparency: Clearly communicate the platform’s independence and the inherent risks associated with SEIS/EIS investments.
• Build Trust: Engage in partnerships with industry experts and maintain a reputation for reliability.

Investment Risks

While SEIS/EIS offers significant tax benefits, investing in startups remains inherently risky. Investors should be aware of:

• Potential Loss of Capital: High failure rates in startups can lead to total loss of investment.
• Illiquidity: Early-stage investments may lock up funds for extended periods without guaranteed returns.

Strategies for Successful Fundraising Using SEIS/EIS

Building a Strong Community

Fostering a vibrant community of investors and entrepreneurs enhances networking opportunities and investment potential. Platforms like Oriel IPO facilitate this by providing forums, events, and support resources.

Providing Educational Resources

Educating both investors and startups about the benefits and risks of SEIS/EIS ensures informed decision-making and fosters confidence in the investment process.

Ensuring Transparency and Reliability

Maintaining transparency in operations and consistently delivering on promises builds trust, making the platform more attractive to potential users.

Leveraging Modern Technology

Utilizing advanced data management, user-friendly interfaces, and efficient investment tracking systems creates a seamless user experience, setting the platform apart from competitors.

Conclusion

SEIS and EIS investment schemes offer a powerful avenue for tech startups to raise essential capital while providing substantial tax benefits to investors. By leveraging platforms like Oriel IPO, companies can navigate the complexities of these schemes, access a broader investor base, and accelerate their growth. As the demand for accessible and transparent investment opportunities continues to rise, embracing SEIS/EIS can be a game-changer for tech companies aiming to scale and innovate.

Ready to take your tech startup to the next level? Connect with investors through Oriel IPO today!