The majority of investors are influenced to back companies in the UK due to favourable tax relief schemes, according to new data.
A survey of investors from equity crowdfunding platform Seedrs found that 70% of investors said that tax schemes such as the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) were a consideration when backing an early-stage business.
These initiatives allow investors in the UK to claim tax relief on the value of early-stage investments into qualifying businesses.
“As long-standing champions of EIS and SEIS, we are also pleased to see how fundamental a role those schemes now play in ensuring that the businesses that are shaping the world of tomorrow receive funding,” said Jeff Kelisky, chief executive of Seedrs.
Since the Spring Budget earlier this year, companies can raise up to £250,000 from SEIS investments, up from £150,000. Other amendments to the scheme include extending eligibility rules to allow firms that hold up to £350,000 (up from £200,000) and allowing companies of up to three years of age (an increase from two years).
The reforms also doubled the amount that individuals can invest through SEIS in a single tax year to £200,000.
The Seedrs 2023 Investors Survey, which took the views of more than 1,200 investors across Europe, found that while around half of investors are putting less cash into businesses, the bulk of investors (57%) are predominantly motivated by an “affinity” for the industry they are backing.
This affinity motivation has made climate tech a leading sector to continue receiving investment during a period of economic instability. However, crypto investor sentiment “remains stalled”.
Last year US investment firm Republic completed its £86.5m acquisition of Seedrs. Since then, Seedrs has expanded its focus from crowdfunding to offer other private investment services, such as limited parter products.