The success of the UK’s crowdfunding industry has been driven by the Government’s tax efficient investment schemes, such as the EIS and SEIS, shows research from Growthdeck, the recently-launched equity crowdfunding platform.
Some 96% of all investment opportunities on crowdfunding platforms are in the Enterprise Investment Scheme (EIS) or the Seed Enterprise Investment Scheme (SEIS) that offer significant tax breaks to investors in exchange for funding SMEs.
Growthdeck explains that the high proportion of crowdfunding opportunities that are compliant with the EIS and the SEIS also underlines the importance of these Government-backed schemes to the UK start-up and FinTech economies.
As businesses must have less than £15m in assets to comply with the EIS (and just £200,000 for SEIS), Growthdeck explains that its research illustrates that crowdfunding is focused on the smallest segment of the SME market.
‘A vital conduit’
Gary Robins, Co-founder and CEO of Growthdeck, explains: “Crowdfunding platforms have become a vital conduit for small businesses to access they funding they need to exploit their growth potential, providing a much-needed boost to the UK’s SME sector.”
“These start-ups and microbusinesses are exactly the type of companies that have found it the most difficult to access bank lending – the crowdfunding industry is making great strides to fill this gap.”
“The rise of crowdfunding has led to a wave of private investment into SMEs across a variety of sectors and increased access to funding can only be welcome news for UK businesses. Crowdfunding platforms appeal to a large pool of investors attracted not only by the exciting opportunities on offer to back SMEs they really believe in, but also the generous tax breaks available.”
“Government schemes such as the EIS and SEIS offer investors attractive tax breaks which remain vital in facilitating growth of UK SMEs.”
“With bank lending remaining in short supply for many start-ups and early stage businesses, the EIS and SEIS schemes are vital in encouraging investment to ensure that SMEs can implement their growth plans and their ambitions for success have a chance of being turned into reality.”
With some companies eligible for both, Growthdeck’s survey data suggests that two thirds (66%) of all investment opportunities promoted on crowdfunding platforms claim to be EIS- eligible, while 39% claim SEIS eligibility.