Figures out today from HMRC show that the amount of investment made through the Governmentโs flagship Enterprise Investment Scheme (EIS) has fallen by 15% from ยฃ2.3bn to ยฃ2bn in the year ended March 31 2023..
Ian Zant-Boer, CEO of private equity firm Growthdeck, which raises money for businesses through EIS, says that the next Government should consider expanding EIS to help the UKโs tech sector compete with those of other economies.
Says Ian Zant-Boer: โA bigger, better EIS could help the UKโs tech sector compete with the US. Itโs no secret that raising equity in the US is much more attractive for a lot of tech companies. EIS should play a major part in redressing that balance.โ
โWhoever wins the next election should be looking at what it can do to help EIS supercharge growth in the small business sector. This scheme has proven itself over the last 30 years and there is so much more it could do if more businesses had access to that vital equity funding.โ
โEIS only covers companies less than seven years old. It would be great to see the next Government provide similar support for businesses outside the current scope of EIS. An eight or ten year old business can have just the same funding needs and potential to grow exponentially. The fact that they canโt get EIS funding means they some arenโt able to deliver the growth they could.โ
โAnother simple step to take would be raising the EIS investment limit of ยฃ1m per investor. That has been in place since 2012. If it had kept pace with inflation it would now be ยฃ1.6m.โ
โEIS does a great job of addressing the funding gap that scaleup businesses in the UK face โ the ones who need more finance than their banks can provide but arenโt yet big enough for larger PE funds to back.
โFast-growing SMEs can be the engine that powers the UK economy back to growth. That means more jobs and more tax revenue. Getting them the investment they need is a critical part of making that work.โ
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