Are SEIS and EIS the same thing?

No. Although both schemes aim to draw investment into high-growth potential, smaller and younger UK companies, there are significant differences between the programmes. Additionally, entrepreneurs and investors should understand that neither SEIS nor EIS are a source of venture capital. They are incentives. The Government does not provide cash in either programme. Instead, SEIS and EIS provide tax relief to investors who buy shares in qualifying businesses. This should make it easier for those companies to attract the investment they need.

The key difference between SEIS and EIS is that SEIS is explicitly targeted at start-ups and early-stage businesses, whereas EIS can be used by larger companies.

• Seed Enterprise Investment Scheme; SEIS targets investment for early-stage companies – those with less than two years trading history and 25 employees. Individual investors (no companies) can invest up to £100,000 in an SEIS business per tax year. SEIS companies can accept no more than £150,000 SEIS funding total
• Enterprise Investment Scheme: EIS supports larger and more established businesses – those with up to seven years trading history and 250 employees. Individual or corporate investors can invest up to £1 million per tax year. The company can accept up to £5 million per tax year and no more than £12 million EIS funding total. Corporate investors in EIS do not receive tax relief on their investment.  

EIS has different criteria for Knowledge Intensive Companies (KIC) – which are typically those with high research/development costs and requirements. These companies can accept EIS funding within ten years of trading and may have up to 500 employees. They can also accept up to £10 million per tax year and up to £20 million EIS funding total. 

EIS:

• Be new or trading for less than seven years, (ten for KIC)
• Be a qualifying trade or business (see more here)
• Be established in the UK
• Not trading on a recognised stock exchangeat the time of the share issue
• Not be preparing to become a quoted company or a subsidiary of one at the time of the share issue
• Not be in control of another company unless that company is a qualifying subsidiary
• Not be controlled by another company or does not have more than 50% of its shares controlled by another company
• Not have gross assets over £15 million when the shares are issued
• Have less than 250 full-time equivalent employees in total when the shares are issued (500 employees for KIC).

While it can be a valuable source of funding for eligible companies, there are also some potential drawbacks to applying for EIS funding:

• The application process can be Complex for EIS funding and time-consuming, requiring a significant amount of documentation and compliance with various regulations.
• Make sure you are aware of the funding limits before applying: The amount of funding available through EIS is typically limited, and companies may not be able to raise as much money as they need through this program alone.
• Only certain types of companies and investments qualify for EIS funding, and companies may not be eligible if they don’t meet the requirements.
• There is a Risk of share dilution as issuing new shares to raise funds, may dilute the ownership of existing shareholders.
• Investors who participate in EIS rounds may have certain rights and control over the company, which may result in limited control for the management team.
• exit opportunities for EIS investments are limited and might not be as attractive as other forms of investments.

It is also important to seek professional advice to understand the full implications of EIS on the company and the investor.

Innovationly is a company that helps entrepreneurs and startups to raise funding through the Enterprise Investment Scheme (EIS). They can help companies in the following ways:

• Eligibility assessment: Innovationly can help to assess a company’s eligibility for EIS funding and provide guidance on how to meet the requirements.

• Business plan development: Innovationly can help companies to develop a solid business plan that clearly outlines the company’s goals, strategies, and projected financial performance, which is important for attracting potential investors.

• Pitch deck development: Innovationly can help to create a visually appealing and well-structured pitch deck that highlights the key elements of the company’s value proposition and financial projections.

• Investor relations: Innovationly can help companies to build a strong investor relations plan, including preparing for and managing investor communications.

• Networking and marketing: Innovationly can help companies to network and market themselves to potential investors, including attending events, reaching out to potential investors, and leveraging social media and other online platforms.

• Legal and compliance: Innovationly can provide guidance on legal and compliance requirements for EIS fundraising and assist in the preparation of all necessary documentation.

• Expertise: Innovationly have an experienced team of experts who can provide guidance on all aspects of EIS fundraising, including market analysis, financial projections, and legal and compliance requirements.

• Referral Program: Innovationly can also help to create referral programs for companies to encourage existing investors to refer their