For those looking to launch a fund, the choice of structure for your inaugural vehicle can significantly impact its long-term credibility and fundraising success. A common question is whether to launch a retail-facing SEIS/EIS fund or pursue a GP/LP  (General Partner/Limited Partner) model aimed at institutional investors.

While both have their merits, for new teams seeking to establish their track record and demonstrate proof of concept, launching an SEIS/EIS fund often proves the smarter starting point.

Understanding the Basics: SEIS/EIS and GP/LP Structures Explained

In the UK, two of the most prominent structures for early-stage investment are SEIS/EIS funds and the GP/LP model.

• SEIS/EIS Funds – An SEIS/EIS fund is not a legal entity, but rather a group of bare trusts. It is specifically designed to incentivise investment in small, high-growth companies through generous tax reliefs—up to 50% income tax relief under SEIS and 30% under EIS, along with potential capital gains exemptions. These funds primarily attract retail investors (high net worth/sophisticated, etc).

• GP/LP Structures – The GP/LP model, by contrast, is the standard for institutional-grade venture capital. Limited Partners (LPs) provide capital, while the General Partner (GP) manages the investment strategy, executes deals, and oversees the portfolio. This structure is designed for larger, institutional investors and allows for significant capital deployment.

Both models pool capital to support early-stage businesses, but they differ significantly in regulatory frameworks, investor bases, minimum ticket sizes, and operational requirements. Understanding these distinctions is essential for aligning the fundraising approach with long-term strategic objectives.

SEIS/EIS Funds: Accessible Proof of Concept for Emerging Teams

For first-time teams, SEIS/EIS funds provide an accessible entry point into the market.

Advantages:

• Attractive to investors – Generous tax reliefs incentivise retail investors.

• Lower barriers to entry – Investors can commit smaller ticket sizes, making fundraising more achievable.

• Proof of concept – Teams can demonstrate their ability to source, select, and support companies while building a verifiable track record.

Challenges:

• Modest fund sizes – Typically smaller in scale.

• Strict compliance – HMRC rules impose tight eligibility and deployment criteria for the SEIS/EIS.

• Ongoing reporting – Robust systems to maintain regulatory status and investor trust.

Despite these hurdles, SEIS/EIS funds are highly effective for teams looking to deploy capital quickly, showcase discipline, and prepare for larger institutional fundraising rounds.

GP/LP Structures: Scale, Governance, and Institutional Reach

The GP/LP structure is widely regarded as the gold standard in venture capital, offering scalability and institutional-grade governance.

Advantages:

• Favoured by institutional investors such as pension funds, endowments, and insurance companies.

• Enables large-scale capital deployment.

• Provides long-term alignment of interests between GPs and LPs.

Challenges:

• Intensive due diligence – Institutions require evidence of prior investments, exits, and team experience.

• Substantial commitments – Fundraising often requires tens or hundreds of millions.

• Prolonged timelines – Institutional fundraising cycles can take years, with success far from guaranteed for first-time teams.

For this reason,  GP/LP structures are generally best suited to established investment teams with a proven track record and the necessary infrastructure to support institutional expectations.

Key Regulatory and Tax Considerations

The regulatory and tax environment is a critical factor when selecting the proper structure, particularly for a first-time vehicle.

SEIS/EIS

• Retail investors – Stricter scrutiny applies to how these funds are marketed, and most require FCA-authorised distributors or authorised platforms for promotion.

• Financial promotions – Must comply with FCA rules, often requiring suitability or appropriateness tests.

• HMRC compliance – Strict criteria around company eligibility and deployment timelines. Strong reporting and governance are essential.

GP/LP

• Institutional focus – GP/LP structures are primarily aimed at institutional investors, which means there may be fewer restrictions on promotions compared to retail-facing funds. Professional investors may be considered capable of assessing risks without the same level of FCA protection.

• Legal documentation – Complex agreements, such as the Limited Partnership Agreement (LPA), set out the rights, obligations, and governance framework. These documents must meet regulatory and fiduciary standards expected by institutional investors.

• Tax considerations – Unlike SEIS/EIS, tax reliefs are not the main driver. Institutions are more concerned with tax structure, carried interest arrangements, and ensuring alignment with their fiduciary duties.

From Angel to EIS to GP/LP: The Zero Carbon Capital Journey

A compelling example of how teams can evolve their structure over time is Zero Carbon Capital (ZCC).

• Starting as Angels – The ZCC team, lead by Pippa Gawley, began with direct angel investments into climate technology ventures, refining their thesis of backing “hard science” solutions to the decarbonisation challenge.
• Fund 1: Zero Carbon Fund (EIS) –Building on its angel track record, ZCC launched its first pooled vehicle under the EIS structure, raising £1.7m and investing in seven companies tackling grid flexibility, sustainable fuels, advanced batteries, and other climate-critical technologies.
• Fund 2: Zero Carbon Capital 2022 LP – With a demonstrable track record, ZCC successfully raised a £20m GP/LP fund, securing institutional commitments from investors such as Isomer Capital and Extantia. This GP/LP structure provided scalability, institutional-grade governance, and the capacity to lead larger rounds while retaining its focus on ambitious climate tech founders.

This progression—from angel to EIS to GP/LP—demonstrates the natural pathway available to many new investment teams: test your thesis with small-scale investments, validate it through SEIS/EIS, then scale with institutional capital.

Pippa Gawley, the founder and managing partner at Zero Carbon, noted the following regarding the transition from EIS fund to GP/LP:

“For Zero Carbon, starting with the EIS fund was a logical first step. The generous tax reliefs help de-risk the investment for high-net-worth individuals, and it is often an expectation from the earliest retail investors. However, when it came to Fund 2, our ambition was to expand our investment thesis across Europe and secure substantial institutional capital. To achieve that scale and reach, we needed an internationally-recognised, institutional-grade structure like the GP/LP model. Navigating the regulatory and fiduciary implications of this shift was a complex process, and having a partner like Sapphire was critical in successfully making that transition.”

Choosing the Right Structure: Aligning Strategy, Investors, and Growth Goals

Ultimately, the decision between launching an SEIS/EIS fund or a GP/LP structure depends on strategy, investor base, and growth objectives.

• For emerging teams, SEIS/EIS offers accessibility, investor appetite, and the opportunity to build a track record. It is a pragmatic way to establish credibility and prove an investment thesis through a "proof-of-concept" before approaching institutions.

• For established teams, GP/LP structures are ideal once you have the experience, networks, and operational capacity to meet institutional demands and scale assets under management.

In short, starting small with SEIS/EIS can pave the way for long-term growth. Early achievement—whether realised or unrealised - helps unlock institutional capital, laying the foundations for sustainable expansion into GP/LP-style funds.

Next Steps:
If you would like to find out more about how to set up an investment fund, pricing, and options, fill out this form, and we will be in touch right away.