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For students and graduates thinking about a career in venture capital, and anyone new to EIS and SEIS
I have recently joined Sapphire as a placement student, and one of the first things I was asked to do was complete the Enterprise Investment Scheme ("EIS") and Seed Enterprise Investment Scheme ("SEIS") accreditation run by Intelligent Partnership. I had heard both schemes mentioned in lectures, usually on a single slide describing them as government tax reliefs. Working through the EIS/SEIS course, it was obvious that the slide had been
doing a lot of heavy lifting.
Why are these schemes so important?
On the surface, EIS and SEIS exist because early-stage companies are hard to fund. They're too risky for bank lending and often too small for institutional venture capital, so the government offers tax reliefs to private investors willing to take that risk. Beyond the surface, there is much more to understand. Information such as whether a
company qualifies, whether it stays qualifying, how a fund is structured, what investors are told, and when all of it is governed by detailed rules; getting any part wrong has consequences for real people's money.
What are the three things that changed how I think about the UK Enterprise Investment Scheme?
Is tax relief guaranteed?
Reliefs aren't guaranteed at the point of investment. I had assumed tax relief was something an investor secured when they put money in and then stopped thinking about. However, this is not the case. Relief can be withdrawn if things change afterwards, for example if the company stops meeting the qualifying conditions, or if the investor doesn't hold the shares for the minimum period. The investment and the relief stay linked for years after the money moves.
Does Advance assurance mean an investment is safe?
Advance assurance isn't a certificate of safety. Based on the information provided, HMRC advance assurance tells a company it expects the shares to qualify. It's an important step, but it isn't a guarantee, and it says nothing about whether the business will actually succeed. Those are two separate questions, and I would have been quietly collapsing them into one.
What are the main risks of EIS and SEIS?
The risk module was the one that stuck with me. Losing your money is obvious, but it sits alongside illiquidity. There's usually no market to sell these shares into, so an investor may be committed for years whether they like it or not. The tax risk is also very important. If a company stops meeting the qualifying conditions during the three- year period, investors could loose their tax relief. The lack of investor control really surprised me. Buying shares in an early-stage company isn't like buying shares in a listed one; there's no say in day-to-day decisions, and outcomes depend entirely on a management team the investor doesn't control. It's easy to read a list like that quickly. Slowing down on it made me realise how much of the work I'll be looking at over the coming months exists specifically to manage those risks.
I've only just started at Sapphire, so I can't claim I've seen all of this play out yet. However, completing the course in my first weeks gave me a map before I needed it. The effect has already been noticeable in small ways. Terms that would have gone past me in conversation now have a specific meaning. When advance assurance comes up, I know what's being applied for and why it matters. When someone refers to a company's qualifying status, I understand it's an ongoing condition rather than a one-off test. I'm still mostly in the listening stage, but I'm listening with a clearer idea of what I'm hearing.
Now I'm curious about the gap between the two. The course teaches the rules cleanly, in the order that makes them easiest to learn. Real companies and real funds presumably don't arrive in that order, and I suspect a lot of the skill in this job lies in the judgement calls the syllabus can't cover. That's what I'm looking forward to seeing over the rest of the placement.
Where this goes next
For the rest of my time at Sapphire, the accreditation means I can follow conversations I'd previously have had to nod through and ask sharper questions when I can't. When I go back to Ulster University for my final year, I'll be looking at both sides of my degree differently. The accounting modules will give me a much clearer sense of how tax relief works in practice, not just as a set of rules on a page, and the law modules will give me a better feel for how a regulatory framework like this gets built and applied day to day. Studying accounting and law together suddenly makes a lot more sense when you've seen a scheme that sits right at the junction of both.
