Delve into the latest statistics and trends of the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) for the tax year 2022 to 2023.
Enterprise Investment Scheme (EIS)
The Enterprise Investment Scheme (EIS) statistics for the tax year 2022 to 2023 reveal that 4,205 companies raised a total of £1,957 million. This marks a 15% decrease from the previous year's figures. The investment levels returned to average figures seen before the exceptional rebound in the previous year, which had been a recovery from the pandemic.
In 2022 to 2023, a total of £436 million was raised by 1,280 new EIS companies. The Information and Communication sector dominated, accounting for £660 million (34% of all EIS investment). Geographically, companies registered in London and the South East raised the largest proportion of funds, securing £1,280 million (65% of all EIS investment).
Seed Enterprise Investment Scheme (SEIS)
In the tax year 2022 to 2023, 1,815 companies raised £157 million through the Seed Enterprise Investment Scheme (SEIS), which is a 24% drop from the previous year. Of these, 1,440 companies were first-time fundraisers under the SEIS, attracting £137 million in investment.
Similar to the EIS, the Information and Communication sector led SEIS investment, securing £62 million (39% of total SEIS investment). Companies in London and the South East raised the most funds, amounting to £102 million (65% of SEIS investment).
Comprehensive Evaluation of EIS & SEIS
The Enterprise Investment Scheme (EIS) has witnessed fluctuating trends since its inception. In 2022 to 2023, the number of companies raising funds decreased to 4,205, with a total of £1,957 million raised. This decrease can be attributed to rising interest rates and a natural reduction following a record-breaking year in 2021 to 2022.
Despite a dip during the Covid-19 pandemic, the EIS experienced a robust rebound in the previous year, with 2021 to 2022 seeing record investments. However, the investment focus has shifted towards early-stage companies aiming for long-term growth, influenced by legislative changes and the introduction of the risk-to-capital condition.
The SEIS experienced a significant decrease in both the number of companies raising funds and the total investment amount in 2022 to 2023. This decline is likely due to the increased interest rates, which have made higher-risk SEIS investments less attractive compared to more stable fixed-income options.
Industry and Geographical Distribution
In 2022 to 2023, the Information and Communication sector was the largest recipient of EIS funds, followed by the Manufacturing, Wholesale and Retail Trade, Repairs, and Professional, Scientific and Technical sectors. London and the South East remained dominant in attracting EIS investments.
Similar to EIS, the Information and Communication sector led SEIS investment, while companies in London and the South East remained the primary beneficiaries. The consistent dominance of these regions highlights their strong entrepreneurial ecosystems and access to investor networks.
Investor Trends
The number of investors claiming Income Tax relief under the EIS decreased to 40,485 in 2022 to 2023 from 44,810 the previous year. The total tax relief claimed also saw a decline, reflecting a broader trend of reduced investment activity.
The number of investors claiming Income Tax relief under SEIS decreased to 8,065 in 2022 to 2023 from 9,900 the previous year. Most investors made smaller investments, with the majority investing £10,000 or less. Larger investments, however, continued to constitute a significant portion of the total investment amount.
Conclusion
The 2024 update on EIS and SEIS statistics highlights significant trends and shifts in the venture capital landscape in the UK. While there has been a decrease in the number of companies and total investments, the resilience of specific sectors and regions underscores the ongoing importance of these schemes in fostering early-stage company growth. The data serves as a valuable resource for investors, and entrepreneurs alike, offering insights into the evolving dynamics of venture capital investments.
