So – you’re looking for investors?
The Seed Enterprise Investment Scheme (SEIS) is an excellent way to help your company raise money when you start trading. In a nutshell, it offers tax reliefs to individual investors who buy new shares in your company.
Capital Gains and Income Tax breaks are a pretty good incentive for investors. After all, who doesn’t like R.O.I? Signing up to SEIS is a smart move for eligible businesses, whether you’re at Seed level or further along the road.
Who Can Apply For SEIS/EIS?
SEIS is designed for small companies and start-ups, while EIS (Enterprise Investment Scheme) focuses on larger companies. To find out whether your company qualifies, you can check out this guidance from the UK government.
Full SEIS/EIS eligibility can only be granted by HMRC after an investment has been made. Fortunately, there’s a way you can guarantee investors your SEIS or EIS application will be approved. This is called EIS and SEIS Advance Assurance, and it’s issued by HMRC. Think of it like an Agreement In Principle for a mortgage. As long as your information checks out, you’re good to go.
TOP TIP: Eligibility for SEIS/EIS is granted on a case-by-case basis for each investment. Only specific investor profiles will qualify, so make sure you check up in advance.
How do I get SEIS/EIS Advance Approval?
Applying for advance approval isn’t as simple as an online form. HMRC will want to know things like:
- how much you hope to raise
- the business plan and financial forecasts
- a copy of the latest accounts if available
- which companies will use the investments
- details of all trading and activities to be carried out, and how much you expect to spend on each activity
For a full list of HMRC’s need-to-knows, head over here.
Before you panic, think about it this way: a lot of this will be information you already have, or information that you’ll need for your investor pitching anyway. So while getting a deck together might be a bit daunting, it’ll definitely be worth it.
We’ve helped companies from all industries create pitch decks that dazzle. Read on for some practical tips on what to include in yours.
What to put in your SEIS/EIS pitch deck
1. The problem you want to solve
What pain point are you looking to address with your service/product? This doesn’t need to be overly detailed, but is still a strong opener to get things going.
2. How you’re going to solve it
This needs to cover what solution you offer, and how you offer it. What does your company do? This part lines up with HMRC’s request for ‘details of all trading or other activities to be carried on by the company’. Remember to go easy on the industry jargon. Keep it simple!
3. Your business model
In this section, you should answer the question: how does your business make money? Tell them about your clients, your fees and any affiliate agreements.
4. Intellectual Property and Employment Structure
If your business uses any intellectual property or Patents, be clear about who owns and licenses these rights. The same applies to any external software you might be licensing. Are you going to employ anyone, or outsource any element of your workflow? HMRC’s Risk to Capital condition means this information is particularly important for them.
5. Market and competitors
If you haven’t done this already, market research is a must. Demonstrate a clear understanding of your competition, both direct and indirect, as well as your positioning in the market and any risks to be aware of. Who are your clients, and who are your biggest competitors?
6. A SWOT analysis
We touched on the Risk to Capital condition earlier. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis is a technique for assessing these four aspects of your business. When prepping this, make sure to focus on the Weaknesses and Threats aspect of the analysis.
Why? The Risk to Capital condition says investors must stand the risk of losing more than they could gain with SEIS tax relief. It also asks that your company has long-term growth objectives. A SWOT analysis is the perfect way to hit the mark on both those criteria.
7. Your team
We’re not saying HMRC needs to know each team member’s life story. But having a slide with a quick bio for your founding team is always a key addition to your pitch deck. It fosters trust and adds that human touch.
8. Your company history
A company timeline will help establish a backdrop for your project proposal. Information on how long you’ve been trading, what you were doing before that, as well as a trajectory of how fast you’re scaling are all important to include.
Even if you’re only just getting things started, having these metrics on paper will help HMRC and future investors understand your company’s journey – and get a clear picture of your project potential.
9. Your roadmap
This is a big one for HMRC. You need to show your plan for long-term growth. Be as specific as possible. What new products or service offerings will you be adding to drive growth? How are you planning to scale up? What will the funds you raise be used for, and how will they directly contribute to the expansion of your income and client base?
While you’re doing this, make sure that the projects you include here will qualify for SEIS/EIS. Otherwise, however exciting they may be, they won’t do you any favours here.
10. Your financials
A chart showing your projected profit and losses for the next 3 years (starting from the date of application) is essential. You’ll likely already have these numbers, but in case you don’t, this is something that not only HMRC, but any future investors or partners will need to see. It can be a simple spreadsheet file, but the more detailed, the better.
11. What you’re asking for
This is where you showcase how much you’re looking to fundraise for the round. It’s important that your target is realistic. A low bar implies you won’t raise enough to last you 12-18 months until the next round. At the same time, an inflated number suggests you have unattainable targets and will struggle to get investment.
As well as the total amount, you should include your minimum investment, and any investor protections you have in place.
Want Some Help With That?
The above list is by no means exhaustive. But hopefully, it’s given you a clearer idea of what a strong pitch deck should contain if you want HMRC to greenlight your application.