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Government must play its part to unleash start-up investment

30 Jul 2015

Enterprise investment schemes have the potential to unlock billions of pounds in business investment and create a new generation of investors

The Institute of Directors have today (30 July 2015) called on the government to promote the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) to make it easier for more people across the country to invest in new and growing businesses.

Updated figures released this week showed that more than £1.5 billion was invested in at least 2,700 companies through the schemes in 2013/14, with more than 100,000 investors taking part.

The Institute of Directors will be releasing a report next month detailing how the government can expand these schemes to tap in to the great appetite for investing and growth in the UK’s alternative finance markets.

Jimmy McLoughlin, Deputy Director of Policy at the Institute of Directors, said:

“Rapid growth in the take-up of both EIS and SEIS by companies and investors shows they have the potential to unlock billions of pounds in business investment. More than 100,000 people invested in a company through the schemes last year, but there is no reason that number cannot be ten times as high, particularly as companies raised only £150 million through SEIS, which was introduced in 2012.

“With Britain leading the European alternative finance market, entrepreneurs in the UK can raise funds in more ways than ever before.  As traditional bank finance dried up, businesses in search of capital and investors hungry for returns looked elsewhere, and avenues like crowdfunding and peer-to-peer lending boomed. Now is the time to open up the nascent ‘equity economy’ beyond the wealthy and well-connected in the South East, ensuring businesses and investors across the country can benefit from these focused incentives.

“Investing in a business should be as easy as opening an ISA. But for millions of people this isn’t the case. The process is excessively complicated, time-consuming and daunting. The government needs to play its part in encouraging a step-change in the way investment schemes are regulated. EIS and SEIS should be actively promoted and made as simple as possible to invest through. If the government is serious about helping small businesses scale up, then these are vital first steps.”

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