2023/24 EIS, SEIS and VCT investments: through good times and bad

Investments into Enterprise Investment Scheme (EIS) qualifying companies fell to £1.6 billion in the 2023/24 tax year, down 20% year-on-year.

Investments into Seed Enterprise Investment Scheme (SEIS) qualifying companies hit £242 million in the 2023/24 tax year, up 51% year-on-year.

Investments into Venture Capital Trusts (VCTs) fell to £873 million in the 2023/24 tax year, down 17% year-on-year.

Nicholas Hyett, Investment Manager at Wealth Club said, “These numbers cover a tough period for the UK venture capital industry – with the two main venture capital investment schemes, VCTs and EIS, showing large declines in funds raised.

“Coming after a period of significant market volatility and in a higher interest rate environment that is no surprise – higher interest rates are bad news for younger businesses looking to raise capital and investors naturally take a dim view of higher risk asset classes like venture capital when the outlook is uncertain.

“However, the schemes continue to be a vital source of funding for UK start-ups. That’s especially true when other sources of funding dry up. Beauhurst research shows that total investment into UK private companies fell 42%  in 2023 – well ahead of the decline in tax advantaged venture investments.

“SEIS is a bright spot in these numbers, with the significant increase in funds raised driven by changes to the amount money companies can raise and the amount investors can invest. In particular, the amount companies can raise went from £150,000 to £250,000, making SEIS more effective and driving an increase in the number of companies seeking SEIS funding as well as the amounts raised.

“The SEIS changes are an excellent example of how supportive and considered government policy can help innovative UK companies get off the ground – creating a set of incentives that works for investors and for founders. Together, the government’s venture capital schemes can support a core source of domestic funding through even the toughest market conditions – the value of that should not be underestimated.”