We’ve looked at why people may decide to become investors, and we’ve even looked at some of the forces those investors are balancing when they decide whether to invest in your business or not.

In this article we’re going to look at the same thing, but from a different perspective.

We’re going to look at some of the reasons an investor might choose not to give you their money.

Firstly we’re going to look at the basic figures, that gives us a little context for the rest of the article.

For the purposes of this I am assuming that you are based in the UK, and that your business is in some way in the tech sector.

You’ve done the maths and have come to the conclusion that you need to raise £150k. That’s a pretty typical amount for a company in the early stages of development, but finding that money might be trickier than you think.

Typically UK angels seem to put in somewhere between £5k and £25k as their first investment in an early investment round. This isn’t set in stone, I have seen investors put in £50-100k as a first investment, but it’s a good working assumption.

What that means is that you will need a lot of luck to source your £150k from fewer than 5-6 investors.  Don’t get me wrong, you could hit all the right notes for a wealthy individual and bag the lot in one go. But this would be the exception rather than the rule (It may also not be as great, getting all your money from one investor, as you think, Ed.)

In reality it’s quite possible you will need to convert 10-12 investors in order to get your £150k. More if you’re unlucky!

And the number of potential investors you will need to speak to in order to get those 10 on-board is likely to seem a little dispiriting.

A good business plan, with a proven team and a convincing pitch might get a conversion rate of 10% out of the gate, but it might be a lot less than that. You’ll get better as you go but it could easily take 20 or 30 meetings and speaking to hundreds of people in order to get those 10 signed up.

So let’s do what I said we would at the beginning and explore some of the reasons people might not be interested in your pitch.

The first is that they might simply not understand what it is you are putting in front of them.  If that is the case then they probably won’t admit it and ask you to clarify.  At least not in a way that isn’t making it clear they aren’t interested.  Investors know they are smart, even when they might not be.  And so you need to make sure you aren’t making them feel stupid.

They may simply disagree with the assumptions you have made. Perhaps they don’t think the problem you describe is actually a big issue, perhaps they do but don’t agree with your solution. Perhaps they agree with both but can’t see a potential market.

Perhaps they have simply already invested in a similar business, or just a business in your sector.  Perhaps they have a quota to keep their portfolio diverse, or perhaps they don’t want to help the competition.

It’s possible they have invested in something similar in the past and it hasn’t worked out well for them.  If they have been stung before they are not likely to want to jump in again without some serious convincing. But will they tell you this?

Maybe they missed their last meal and they are struggling to concentrate on what you are saying? It’s been proven that parole hearings that come before the board just prior to lunch are far less likely to be successful. Investment pitches probably aren’t going to fare much better.

Maybe they are bored? You didn’t grab their attention and all they are doing is waiting for you to stop talking and go away. Maybe they hate your shirt, maybe they can see a loose thread on your jacket, maybe they don’t like the shape of your ears.  Sometimes the simplest things cause negative reactions in people and there is nothing you can do about it.

Maybe they are just having a really bad day. Perhaps their dog died that morning, or perhaps they had a screaming row with their spouse.

It could simply be that they think someone else is likely to invest who has more funds available, or someone they don’t want to be associated with.

In reality the list of reasons someone may choose not to invest in your company is practically endless, and there is very little you can do to predict or mitigate those reasons.

So what is the point of this article I hear you ask? 

It’s pretty simple.

You are likely going to have to do a lot more work than you think to get your money.  You will have to talk to more people, attend more meetings, and answer more questions than you thought. You need to be prepared for that.

But it isn’t all doom and gloom. There are start-ups out there that have walked away with everything they need after one good pitch.  Carrie Rose, the founder of Rise at Seven states she got all the funding she needed to create a truly international multi-million pound company from one conversation.

So if you do everything you can to address the forces investors are balancing, and show you are offering a brilliant opportunity to be part of a genuinely innovative, high growth, high profit business you might surprise yourself.

Just don’t rely on it.

We talked recently about why an Angel Investor might decide to put some of their hard earned cash into your business. If you haven’t read that one yet then you probably should - it’s here - because this one follows on quite nicely.  In this article we’re going to look at what is going on in their head when they consider that decision in more depth.

In effect the previous article is looking at why a business might be of some interest, this one is why your business takes them from mild interest to (hopefully) a decision to invest.

The first thing your investor is going to be wondering is whether this opportunity is too good to miss.

There is a lot to unpack here, so bear with me while we try to work through it all.

The first thing we need to address is the way that question is phrased.  It’s really important that it is framed the way it is.  They aren’t wondering whether what you are asking is reasonable for what you are prepared to give away. In fact this first unspoken question is very clearly about the fact that you are presenting them with an opportunity.

You are not asking them for money.

I can’t stress this enough.  You are offering them an opportunity to be part of something.

It may be that the opportunity is clearly financial.  That they can see that what you have is a genius solution to a common problem and that the potential monetary gains are simply too good to pass up on.  But as we mentioned before, pure money is rarely the driving force behind Angel Investors.

Perhaps your proposed business is going to change the world and they simply want their name to be part of that.

Perhaps they are still kicking themselves about missing out on something amazing recently and you are allowing them an opportunity to correct that mistake.

Perhaps your personal story simply fits with exactly their driving mission in life.

Perhaps they have listened to your pitch, they have taken on board all you have said, and they can see a level of possibility that you haven’t even considered.  They can see that your idea could be big, and with their help it will be even bigger.

But please remember that opportunities to invest are pitched to potential investors constantly. There is almost no risk to them to pass on something.  So while serendipity always plays a part, the more you can frame the opportunity you have for them as too big to pass up on, the more likely they are to want in.

One of the biggest driving forces here is FOMO (Fear Of Missing Out). If someone has already invested this will make the deal so much more appealing, especially if that person is someone the potential investor knows and will have to speak to about this in the future. 

Investors are people too.

However that is not all there is to it. Even if you have the best idea in the world and have pitched a truly brilliant solution to a global problem to an investor, they aren’t going to give you a penny if you haven’t managed to persuade them that you are able to deliver.

A plan is nothing more than insubstantial words if you don’t have the ability to deliver. So assuming that you don’t have a product at this point, you have no customers, and you have generated no revenue they can only judge this on you and your (proposed) team.

It’s fair to say that part of this will be a gut feel on their part.  Every investor out there prides themselves as being a great judge of character and they will likely have decided whether they trust you within minutes of meeting you, but even if this first impression isn’t favourable it can be changed with clear and concise evidence that you have previously delivered on what you have promised, and if you have taken any money in the past that you have used it sensibly and effectively.

The third question that is likely to be buzzing around in an investors head when you pitch your idea to them, is how much money does this need to be successful?

All things being equal, an investor would prefer to own more of a successful business than less, and so they will be quickly trying to estimate how much money you are going to need, how close that is to what you are asking for, and how much of that they are willing and able to provide themselves.

If they feel that they are staring down the barrel of multiple rounds of funding, each with some pretty hefty dilution, then that is likely to make them less keen. (Unless of course the opportunity is truly great - Ed). If you are pitching a digital product that you already have the ability to build then they are likely to be very interested. A truly online business selling an online service is very cheap to run, and the most expensive cost - hosting - is scalable. You only pay for more when you are already making money.

If however you are looking to set up your own manufacturing plant here in the UK and want to hire thousands of people then they are much more likely to consider the potential dilution a deal-breaker.

So in essence you need to present a great opportunity, you need to make it clear it is an opportunity you can deliver, and that in doing so you won’t exclude them from the future profits.

If you can do all of those things, then you may well be in with a chance.

Creating a winning pitch is part science, and part art, and demonstrating that pitch in the right deck is tricky at best.  If you’d like to talk to someone who has been involved in many winning pitches please give me a shout.  I’d love to hear from you.

For the purposes of this article when I talk about investors I am talking very specifically about Angel Investors.  The type of person who has their own money, and is considering investing it into a start-up.

Venture Capital works in a very different way in that it tends to take that form of a single large fund comprised of several people’s, or organisation’s money.  It may be managed by a single person, but the person making the decisions is not the person who has provided the initial pot of money. The figures tend to be significantly bigger as well.

We’ll look at this difference in more detail in a future article. It’s quite interesting how this distinction can have such a massive effect on what success looks like for the investor.

Anyway, I digress…

So an Angel investor has got some money.  Probably not a vast Bill Gates like fortune, but certainly enough that they aren’t worried about paying the bills and so their decisions are not usually driven by a deep seated need to make money.  They already have money. But they’re certainly open to the idea of having more. So if they aren’t in it for the money then what are they in it for?

In reality the reasons people invest are as varied as the people themselves, but in my experience over the last decade or so you can roughly clump them together into different categories of similar driving forces.

The first, and arguably the most common is that the sort of person who is willing to invest their money into something wants to do some good.  Perhaps they made their money through their own company and were helped themselves in the past. They want to pay it forward and help someone else achieve the success they have had. Perhaps they have achieved all the goals they originally had - the nice house, the holiday home, paying the kids through school, university, and helping them get started in the world and they are left wanting to do some good somewhere.

It’s perfectly feasible that an angel is simply looking to be part of something they can be proud of.  Maybe that’s cleaning plastic from the oceans, maybe it is reducing the effect of climate change, maybe it is providing clean water for people around the world who don’t have it.  Philanthropy is very real, and the desire to do something impactful is often what causes an angel to decide to invest their own money.

The second possibility is very similar, but tends to come from a different starting point. The end goal is the same, the angel is looking to do something positive in the world.  But the reason is a little darker.  That is guilt.

Many people get rich doing things they’re not terribly proud of. In some cases that might be through businesses which are exploitative. Plenty of people have inherited money, and some of that may have come from exploitation of cheap labour or things that are environmentally damaging. Anyway the point is that a little “scrubbing of the soul” is a possible reason for someone to be looking for good businesses to invest in.

The third reason is simply that over the years the investor may have developed their own personal mission in life.  Perhaps they come from a farming family and have seen the damage the widespread destruction of bee colonies has done?  Perhaps they love to sail and know only too well the damage that has been done to our oceans?  Perhaps a beloved family member suffered from a specific type of disease or a traumatic accident. You should never underestimate how much a person can be driven to do by a genuine mission. If a company matches their personal crusade then they are already halfway there.

It may simply be that the investor comes from a background that is traditionally less well supported and wants to change that.  Whether that is female founders, Black or Asian founders, or even people with neurodivergent characteristics like dyslexia or ADHD. For this type of investor the business you are running may not be as important as the person you are.

The last category of investor is surprisingly common, and it is the person driven by boredom. Creating a business, scaling it up, running it, and making it a success can take a huge amount of your life (You aren’t kidding - Ed) and while the dream of selling up and retiring early with a small fortune is extremely attractive, the reality is that the sort of person who is willing to do the former, is rarely content to then do the latter for very long. So a new business that they can get as involved as they want to in, that provokes their interest, can be a lot more appealing than the idea of making a little bit more money.

None of this is to say that investors aren’t interested in money, clearly they are.  But they don’t view it in the same way as those people who don’t much themselves. It is a way of keeping count, and for the more competitive, of keeping score. They are looking to invest smaller amounts, and they may well not be looking at being involved for the long haul.

But what we can honestly say is that a business that fits their personal criteria, or a founder that matches their demographic of choice, is much more likely to get the attention of an angel investor than a well crafted financial plan.

Obviously you’re gonna need one of those too, but that’s for a different day. The lesson to take away from this, is that a business that is looking to do good in the world is much more attractive to investors than one that simply sets out to make money.  Simon Sinek would be proud.

The cost of starting a business will differ for every new start up. There’s a delicate balancing act at play here, given that over half of businesses established fail to survive past their first five years. You want to minimise startup costs to reduce the length of time it takes for you to break even and start being profitable, but, at the same time, you mustn’t underestimate the costs of starting a business - as unexpected costs can lead to stunted company growth, and therefore, lower profits. So, how are you meant to work out exactly how much it costs to make your business idea a reality? 

Why Do You Need to Calculate What it Will Cost?

Once you’ve thought of a business idea, it’s tempting to jump straight in. Is there really any benefit to planning how much things will cost? Why not just get started and cross each bridge as you come to it? Well, unless you have unlimited funds, budgeting and calculating costs before getting started are important to ensure your business doesn’t end up as part of that statistic we mentioned earlier - the one where over 50% of startups fail to get past their first five years in business. 

Once you sit down and start working it out, you might be surprised by just how much there is to pay for when starting a business. Calculating the costs is the most realistic way to learn if you can afford to start the business at all. After all, those profits won’t come in immediately. First, there’s a lot of work to do, and a lot of things to pay out for. Unexpected costs can lead to smaller profits and can prevent business growth as you have to stop and deal with the problems. If you can reduce these unexpected costs, and prepare for all outcomes from the start, your long term profits will benefit. 

On top of this, calculating your costs before starting your business helps you to plan where your funding will come from - particularly if you know you won’t be able to afford it all yourself. If you’ve read our article on investment, you’ll know just how many places you can look for funding. But, in order to get this help, most investors will want to see a solid understanding of where their funds will be going, and exactly how it’s going to grow your business. No one wants to see their money going straight down the drain! So, not only do you want to calculate your total costs, but you also want to decide the best allocation of funds, including where you can afford to cut back if possible. 

How Do You Work Out How Much Money You Will Need?

To work out how much money you’ll need to start your business, it can help to make a list. Jot down everything necessary to get your business up and running; all of the initial one time costs to get the ball rolling, like equipment, business registration, and so on, but also all of the long-term recurring costs, such as offices, equipment, and staff. To make an accurate list, you’ll need to know exactly how your business is going to run. At this stage, it doesn’t hurt to be over-prepared.

In general, it’s a good idea to overestimate what you need. This way, you’re less likely to be affected negatively when an unexpected cost appears. No matter how prepared you are in calculating your costs, there’s always the chance that something will take you by surprise, or that you will have forgotten to include something in your initial estimates. Let’s take a look at some of the most common startup expenses to help you minimise this risk.

What Are the Standard Start-Up Expenses?

Once you start looking into start-up expenses for a new business, you might realise there’s a lot more to pay for than you first thought. And, it’s important to consider all areas to be sure you’re avoiding those unexpected costs later down the line. Here are some of the standard expenses you might encounter when you’re trying to start your own business.

Research Costs 

First up, you have any research costs. This isn’t something that everyone will have to, or want to, pay for. In fact, a lot of market research can be done for free. But, investing some budget into target-audience research is important for some startups. The price of market research through official firms can vary a lot, so it’s something that can fit into a surprising amount of budgets.

Registration Fees

The cost of business registration fees will vary depending on the structure of your business. No matter how much it costs, this is a one time fee, it won’t be part of your rolling costs. Registering as a sole trader is free, but it can cost between £10 and £100 to register as a limited trader, limited partnership, or limited liability partnership in the UK. 

Business Premises

If your business is just going to be you then by and large you’ll probably start working from your kitchen. But most businesses don’t stay one person for long and that brings up the question of where you are going to work.

It’s possible to setup a fully remote company with everyone working from home but it may also make sense to have access to an office. In this case a co-working space can be a great starting point as they tend to be flexible in terms of use of head count and need for facilities and are a lot cheaper than leasing office space directly.

The downside of co-working spaces is that, as your headcount grows, they tend to get less convenient (for example access to meeting rooms is often hotly contested) and more expensive. At that point you will probably want to look into a space of your own. A guide that it up to date as of this writing is: https://osome.com/uk/blog/what-to-know-before-renting-office-space-uk/

Product

Are you creating a digital product from scratch?  If so you need to have a decent idea how long it will take to get to the point where you actually have something to sell. Development costs are notorious for spiralling out of control if you don’t have a firm grip on them.

Are you planning on employing your own dev team or using freelancers?  Are you looking to employ an agency to do the build for you?  Each option comes with its own unique set of financial challenges. And we’ve written a lot on how you can ensure you get the right people on your team.

Website

In today’s age, a website can be make or break for your company. A good website is important for securing an online customer base and even for online sales. It can be an excellent marketing aid, and a great tool for business growth. A bad website will cause potential customers to go elsewhere, especially in the world of SaaS products as your website is your sales team, at least in the early days of the company.

The type of website best suited to you will depend on your specific product, the problems you are solving, and the niche you intend to sell into. It’s tricky to put a price on a good website here, but depending on what you need your site to do you could be looking at tens if not thousands of pounds.

And then there are the things like hosting, data storage and so on that all come with their own costs.

Marketing and Branding

Once you have a product to sell you need to in a position where you will actually be able to attract customers.  There is no point in relying on hope to market your business.

You may with to bring marketing in house, or you may wish to use an agency to do it for you.  But you will likely find yourself spending a lot of time learning all about SEO, PPC, CRO, and lots of other three letter acronyms (You mean TLAs right? - Ed)

Office Supplies

We all want to work in a paperless environment, but it is rarely 100% possible.  So you’re going to need stationery. You’re going to need computers, if you’re working remotely then laptops, if your plan is to be office based then you may prefer desktops.  But remote working is unlikely to go away, so the hybrid approach is likely to be the best suited to a new tech start-up. In that case you’re going to need to look at docks for laptops.

And that’s to say nothing of desks, chairs, break-out areas, conferencing equipment, a boardroom table and much much more.

Will you be cloud based or using on premises servers to store your data? It’s typically a simple decision to run cloud based and comes with few downsides. However, wherever your data lives, you need to consider the sort disaster recovery systems you will need. Considering this after the disaster has happened will leave you doubly unhappy!

If you go down the route of cloud based systems then which stack are going to work on? Typically this means choosing either Google or Microsoft. What kind of software will you need? What operating systems are you planning on using?  Windows? macOS? Linux? Will everyone be using the same, and if not how will you share files and work on code?

Professional Services

Professional fees are also be something you should include in your calculations. This could be fees for accountants, solicitors, IT assistance, financial advisors, business consultants and more. These services might not seem vital, but getting professional help at an early stage can be a great way to increase your growth speed. It is all too easy to find yourself spending several days fixing a problem it would take an expert a couple of hours to sort.  Is that actually a good use of your time?

Business Insurance

Another expense to consider is insurance. This is vital for protecting your business, but also for protecting your assets and customers if anything goes wrong. There are several different types of business insurance available, so make sure to research which one is going to be right for you. 

Payroll and Recruitment

In the initial months, your company may be quite small, but, if your business grows as planned, you will find yourself needing extra staff. 

Run the numbers beforehand.  If you are expecting to recruit five people in year one then you’re likely going to need to interview three times that. In a multi stage recruitment process that is 30 interviews as an absolute minimum. To get a person to interview you are probably going to have to read through ten CVs.

Are you able to dedicate that time?  Or do you need to get some help?

Take into account potential recruitment costs, if you’re sourcing talent through temp agencies, payroll fees, including pension contributions and national insurance contributions, and variable rates for freelancers. 

What Are The Different Types of Expenses?

We’ve listed some of the main expense areas you’ll need to consider when starting your own business, but each of these also fall into various categories that will impact your spending. Here are some types of expenses to consider when calculating your costs:

• Sunk costs: These are usually your initial costs, that get your business up and running. They are one time costs that you won’t get back, but are vital for your company’s performance and growth in those early months. 

• Fixed or ongoing costs: These are the funds paid on a regular basis. They will rarely fluctuate and are often written into contracts. Fixed costs include things like interest fees on loans, rent, utilities, and so on. 

• Variable costs: Unlike fixed costs, variable costs will… well, vary. This will be things like seasonal spikes in business, such as higher demand in retail businesses before Christmas. 

• Essential costs: This is anything that is absolutely necessary for your company to continue in business, or to develop and grow. 

• Optional costs: In contrast, optional costs aren’t essential for your company’s existence. But, they can be beneficial when you have excess funds. Optional costs can include things like increasing your advertising budget, or investing in website upgrades. 

Should You Try to Minimise Costs?

Since the goal of any business is to profit, it is a good idea to minimise your costs when first starting out. But it’s really important to understand where you get caught in a false economy.  Holding back on hiring the right CTO may save you money in the short term, but cost you a lot more in the long run.

If you are developing a product from scratch then you can’t even begin to think about profitability until you have something to sell.  And so getting to that poi9nt quickly may well be a good idea.  But that mean more people, and therefore more expense.

What Will You Inevitably Forget?

There are some things that will always take you by surprise. For instance, many people forget to consider expenses like the travel costs of getting to business meetings, whether this is when finding investors, or meeting with clients and customers. That may not be a big deal if it is a case of jumping on a train to London, but if a potential investor wants to see you and they are based in San Francisco that is going to be a lot more expensive.

In order to be prepared for any expenses that you inevitably forget, it’s a great idea to establish an emergency fund. Replenish it if you ever have to spend the money, and don’t use this fund for things like the optional expenses we mentioned earlier! This should be kept for emergencies and unexpected essential costs only, so you have something to fall back on.

Where Do You Find the Money You Will Need? 

Once you have a good idea of what it will cost you to get your business up and running you need to look at where you are going to get the money to do it.

Unless you are extremely lucky you are likely to have to generate some kind of investment, but that is a subject all of its own which we looked at briefly here.

How Much Does it Cost to Start Your Own Business? 

The costs of starting your own business will vary depending on your product, your location, the skills you bring to the table, and more. Whether you’re trying to figure out your startup costs, or you’re trying to find the best place to secure investment, get in touch for further help! 

Anyone raising money for their startup quickly bumps into the SEIS (Seed Enterprise Investment Scheme) and it’s bigger sibling EIS (Enterprise Investment Scheme) which are schemes the UK government created in 2012 to help support developing businesses with a need for capital.

The schemes offer income tax relief to investors in risky, early-stage, businesses. While Covid has laid waste to the past couple of years and caused havoc to many businesses, investment has remained buoyant partly because of the benefits of these schemes to investors.

As long as your business qualifies using SEIS & EIS is a no-brainer, indeed most UK investors will require it, so it’s important to understand how the schemes work and what you need to know to apply. 

What is SEIS?

SEIS is designed to help new companies raise their first £150,000 of equity investment. When an investor puts money into an SEIS based investment round they get an immediate income tax relief of 50% of the amount they have invested. Further, they get an exemption from capital gains on share earnings and even more tax relief if the company fails within 3 year. The income tax relief alone is a pretty good deal for higher-rate taxpayers, which is most angel investors.

The requirements for getting SEIS relief are not onerous. Essentially, be a UK company that is fully-independent, have less than 25 staff, less than 200k of assets, not be listed on the stock market, and not have one of the disqualifying trades (like coal mining, steel production, or exporting electricity) be more than 20% of your activities. I don’t think I’ve ever met a legitimate startup that didn’t qualify.

What is EIS? 

Under EIS a business can raise up to £12m in total and up to £5m in any given year as long they are within 7 years of their first commercial sale. The benefits of EIS are similar to those of SEIS, although not quite so generous towards investors. For individual investors the income tax relief is slightly lower, at 30%, but still potentially a substantial benefit. Funds also benefit from capital gains tax relief on sums invested.

The principles that govern whether you qualify for EIS are very similar to those that govern SEIS, with some additional flexibility since it is anticipated that a growing company is, for example, more likely to have subsidiary companies. The rules around capital gains tax and transfer of losses are more complicated, and beyond the scope of this article, but the main thing you need to understand is that

Investors benefit a great deal from EIS.  

But, this development can’t rely on your investor’s continued support, it must be permanent. 

It should be pretty obvious to you that SEIS and EIS are, assuming you aren’t mining coal or running a hotel, a slam dunk and if you weren’t already planning to, you should definitely go sort it out.  

How Do You Qualify? 

At first glance, they seem pretty similar, right? Both the EIS and SEIS offer individual investors tax relief when they buy new shares in your company. And under both schemes, the money must be spent either on a qualifying trade, preparing for a qualifying trade, or work that will lead to a qualifying trade. Any shares you issue must meet the same requirements, whether you’re using the EIS scheme or the SEIS scheme. So which one is best for your business? 

The answer mostly depends on the size of your company. To receive SEIS tax relief, your company must not be in a partnership, must have fewer than 25 full-time employees when shares are issued, and any gross assets must total below £200,000 when shares are issued. The SEIS tax relief can be used if your UK-established company carries out a new qualifying trade, isn’t trading on any recognised stock exchange, is not set to become a subsidiary or quoted company, and controls no other companies (except qualifying subsidiaries).

Similarly, to qualify for EIS, your company must have a permanent UK-based establishment. It mustn’t be trading on recognised stock exchanges, be controlled or owned by another company, have plans to close after any project completion, nor control any companies aside from qualifying subsidiaries. Company size limitations for EIS tax relief are a little more relaxed than those of the SEIS. For this scheme, your gross assets must be worth less than £15 million before shares are issued, and less than £16 million immediately afterwards. When shares are issued, your company must also have fewer than 250 full-time employees. 

There are also limits on your company’s age when it comes to receiving EIS tax relief. Investment must be received within 7 years of your company’s first commercial sale, or that of any subsidiaries. To receive investment after those first 7 years, you must show that the money is necessary to enter a new market, and that it is over half of your company’s annual turnover for the past 5 years. 

How Has Covid Changed Things? 

Although the number of new startups in the UK has experienced huge growth, reaching 672,890 new registrations in the tax year of 2018/2019, Covid had an inevitable impact for a lot of companies. Both large and small. Progressively through 2020, investment into companies that qualify for the SEIS and EIS schemes has fallen, particularly when compared to the previous year. The impact of the pandemic has also undeniably deepened the equity gap, particularly between northern England and the midlands compared to London. Which is all pretty daunting for anyone in a new startup, or in the early stages of their business. 

However, there is some light at the end of the tunnel. The Government is currently set to review company age restrictions for the EIS in 2025. But, this date is being challenged, for instance by the Enterprise Investment Scheme Association, who are calling for the review to be brought forward and to widen opportunities for other areas to benefit from the EIS’s incentives, such as pension funds. 

And, given the global impact that Covid has had, particularly on the digital world, there’s a growing demand for startups to provide solutions to new problems that have emerged. The time has never been better for investors looking to capitalise on fast-growing, young startups. So, if you’re looking for investment, and wonder if you might qualify for either the SEIS scheme or the EIS scheme get in touch!