Investing in stocks and shares of big multi-corporations is often a go-to for first-time investors, but this isn’t the only option, especially if you want your investments to have the best opportunity to outperform.
With an Enterprise Investment Scheme (EIS) you receive tax relief for your high-risk investments, and the early-stage businesses you invest in to receive the essential funding needed to grow.
You’re probably wondering how these schemes impact the startup ecosystem and why these investments are crucial for our economy.
👉 Growth and development – The tax benefits afforded by EIS help to mitigate a significant proportion of the investor risk (with loss relief and various other tax reliefs and benefits), meaning early-stage companies are given the opportunity to grow, with downside protection given to those investors who decide to back them.
The impact of these schemes is particularly noticeable in sectors where initial costs are high, and returns may take longer to materialise.
👉 Diversified investor base – These schemes appeal to a wide variety of investors, from private clients to family offices, to institutions - all with different motivations. Some invest solely for the tax reliefs, whilst most invest because they want to access investments in to companies that are not available anywhere else, and represent a great opportunity to make a significant ROI.
This diversification has brought in varied expertise and mentorship, which are invaluable to startups.
Have you ever considered investing in an EIS? Or, if you already have, do you know how much it impacted the businesses you supported?
*Not all tax advantages are guaranteed to be applicable to all investors. Enterprise Investment Schemes (EIS) can offer tax benefits, but it's important to remember they involve risks. Investments in smaller, unlisted companies can be volatile, with a higher risk of capital loss and may be less liquid. Tax reliefs are also dependent on individual circumstances and may change. We recommend seeking independent advice to understand these risks fully.
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