Enterprise Investment Scheme increasingly appealing to small businesses
The number of small businesses planning to raise money under the Enterprise Investment Scheme (EIS) rose from 2,965 in 2019/20 to 3,245 in 2020/21 – an increase of almost 10% - according to a report from private investor network Growthdeck.
Last year saw a total of £1.65bn in EIS investment raised by small businesses, according to Growthdeck. Since its inception in 1994, the EIS has raised more than £24bn in funds for almost 33,000 companies. Its scope was extended in 2020 when the UK government launched the knowledge-intensive EIS fund. This initiative allows investors to invest £2m a year as opposed to £1m for the standard investment – providing the capital is put into a company focussing on research, development or innovation.
The small business sector continues to be vital for the UK business landscape, making up three-fifths of employment and nearly half of turnover in the UK private sector, according to investment firm IW Capital. In the last quarter of 2021, 56.2% of SMEs reported a rise in earnings versus the same period of 2020.
“The Enterprise Investment Scheme could make a fantastic option for expansion for small businesses,” IW Capital CEO Luke Davis said in a statement. “The EIS provides SMEs with a platform to successfully expedite their growth trajectory, and often empowers business owners to innovate - expanding its scope could provide a big jump in investment for one of the most innovative sections of the UK economy.”
Learn more about the EIS here