The Seed Enterprise Investment Scheme (SEIS) has been introduced to help encourage investment in small companies. Up to £150,000 can be raised through SEIS.
SEIS offers tax relief to individuals who acquire new (fully paid) ordinary shares in qualifying trading companies. The trade has to be new (not begun more than 2 years before the shares are issued) and the company mustn’t have gross assets of more than £200,000, or more than 25 employees.
To qualify, the individual must not be an employee or control more than 30% of the share capital. However, relief is available to company directors as well as individuals who are not resident in the UK.
If the shares are held for more than 3 years, the tax breaks for investors are:
- a tax reduction equal to 50% on an investment of up to £100,000;
- exemption from capital gains tax on sale of the shares; and
- the ability to ‘rollover’ gains on other assets sold in 2012/13 if the proceeds are reinvested in SEIS shares before 6 April 2013.
After an initial investment under SEIS, incentives for further investment may also be available under the existing Enterprise Investment Scheme (EIS).
For more details of the scheme and how you might benefit please contact firstname.lastname@example.org
When contrasted with 10 years ago, digital media is now an area where substantial value can be created with minimal cash investment due to the low set-up costs. A few talented individuals (perhaps using their own laptops) can get a business up and running without the need for much capital outlays and expensive R&D.
In light of this, an alternative strategy for funding technological start-ups has been evolving; the “Lean Start-up”. Low overheads coupled with scalable growth means that founders can keep dilution to a minimum by seeking less external investment.
Beyond the lean model, start-ups are finding more opportunities for attractive exits, often in relatively short timescales. Any investment which involves minimal capital and a quick exit is likely to offer a good IRR to investors. These exits often take the form of trade sales to big technology companies looking to make strategic acquisitions to enhance their own organisations by acquiring early at a good price before such companies become large.
So what does this mean? It means that lean digital media start-ups have the potential to offer healthy exits for founders and investors alike in a shorter timescale than might be available in other sectors.
Corporate and Intellectual Property
MBM Commercial LLP