6 June 2012

Seed investment scheme 'losing its appeal', say experts

Interest in the Government's Seed Enterprise Investment Scheme (SEIS) is waning, according to recent press reports.

Some experts have criticised the scheme for failing to match up potential investors with start-up businesses.

First announced in the Chancellor’s Autumn Statement, the SEIS offers a range of incentives to smaller, early stage companies carrying on, or preparing to carry on, a new business in a qualifying trade.

The scheme provides a 50% income tax relief for those investing up to £100,000 in new start-ups, together with a one year freeze on capital gains tax. The relief applies to investments made on or after 6 April 2012.

However, the Telegraph suggests that the scheme may be losing its appeal, partly because there has been a mismatch between investors and companies.

Commenting on the scheme, Reshma Sohoni, a partner at technology investors Seedcamp, said: ‘I’m worried this will get horribly wasted. Entrepreneurs don’t know who’s raising seed funds and the seed funds are being raised by finance people who don’t know the [technology] sector.’

Meanwhile David Watt, co-founder of venture capital firm Oxford Capital, said: ‘We’ve had an odd experience of [SEIS].

‘Everyone got very excited by the tax reliefs on offer at first but enquiries have died off. Finding the companies is proving too difficult. We’ve had lots of private bankers expressing an interest in it for their clients but then they can’t find the opportunities’.

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