Don’t invest unless you’re prepared to lose all the money you invest. These are high-risk investments and you are unlikely to be protected if something goes wrong.

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Risk summary for non-readily realisable securities which are shares:

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

Last updated: 01 July 2026

What are the key risks?
  1. 1. You could lose all the money you invest

    If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.

  2. 2. You are unlikely to be protected if something goes wrong

    Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance.

    Try the FSCS Investment Protection Checker

    or use this URL link:

    www.fscs.org.uk/check/investment-protection-checker.


    Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it.

    Learn more about this service from the following Financial Ombudsman Service Protection

    or use this URL link:

    www.financial-ombudsman.org.uk/consumers.

  3. 3. You won’t get your money back quickly

    Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.

    The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.

    If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.

  4. 4. Don’t put all your eggs in one basket

    Putting all your money into a single business or type of investment, for example, is risky. Spreading your money across different investments makes you less dependent on anyone to do well.

    A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

    Read more at the FCA InvestSmart Guide

    or use this URL link:

    www.fca.org.uk/investsmart/5-questions-ask-you-invest

    5. The value of your investment can be reduced

    Putting all your money into a single business or type of investment, for example, is risky. Spreading your money across different investments makes you less dependent on anyone to do well.

    The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.

    These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

    If you are interested in learning more about how to protect yourself, visit the FCA website:

    FCA InvestSmart

    or use this URL link:

    www.fca.org.uk/investsmart.

    Please find the PDF version of the Risk Summary.

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The Sapphire guide to SEIS and EIS Funds.

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What's Included?

  • What are SEIS/EIS funds.
  • The difference between SEIS and EIS.
  • What is a managed portfolio.
  • Structuring SEIS and EIS funds.
  • Explanation of the tax benefits.
  • How to set a fund up.
  • Important terms to know.

Frequently Asked Questions

1

What does my company need in order to approach an SEIS and/or EIS fund for investment?

Before approaching a SEIS/EIS fund for investment, we recommend obtaining advance assurance. With this, you are able to approach funds knowing you have already received pre-approval from HMRC indicating the company's qualifying status. Then you can approach SEIS/EIS funds in the hope of meeting their selection criteria.

2

Is an EIS fund an Alternative Investment Fund (AIF)?

We have seen various attempts to structure EIS offerings in a way designed to take them outside the scope of AIFMD. We think such attempts should be approached with caution, given the FCA's view, as expressed in its Perimeter Guidance Manual, that a traditionally structured EIS fund should be considered an AIF.

3

How long does investor hold the SEIS/EIS shares?

The Life of the Fund.

In order to retain the SEIS/EIS reliefs, investors must hold their shares for three years in the companies which the Fund has invested in. Normally the Investment Manager will require that the investors will hold their shares in the Fund for longer periods e.g. up to ten years. It is noted that the Investment Manager typically retains the right to sell the investors shares at any time, even within the SEIS / EIS three year period. Therefore the purchase and sale of shares in the companies the Fund invests in is at the discretion of the Investment Manager

4

What if the ebook doesn't answer all my questions?

Ask us!

At Sapphire Capital, we are always happy to help therefore don't be afraid to send us an email or book a call to discuss your remaining questions.

5

Is this ebook really free?

Absolutely!

Just sharing some free knowledge that we hope you’ll find useful. Keep us in mind next time you have any questions!

Boyd is a co-founder of Sapphire and a leading voice in the venture capital industry, recognised for his expertise in designing, launching, and managing LP/GP, property, BR and SEIS and EIS funds. Over the past three decades, Boyd has helped future investment managers turn their ideas into successful, FCA-compliant venture capital funds. His practical, educational approach has made Sapphire a trusted partner for future fund managers building new investment vehicles and for startups seeking growth capital. When he’s not advising on fund structures or making investments in investee companies, Boyd shares his knowledge as an Honorary Professor of Practice in Venture Capital and as a faculty member at Harvard University, teaching Venture Capital.

Boyd Carson
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