NextCrowd, a newly launched crowdfunding platform for growing businesses, has responded to the latest Government Enterprise Investment Scheme (EIS) data with a mixture of optimism and caution.
The platform highlighted the critical importance of maintaining the current benefits of the scheme for the continued success of UK businesses.
The recently released data for the 2022/23 period shows that investors have displayed caution amid post-Brexit economic uncertainties. Additionally, there was concern over whether the scheme would be extended beyond the 2025 Sunset period. Although the Chancellor has extended the Sunset period, the future of private investment through the EIS scheme remains uncertain, particularly if future budget announcements bring significant changes.
Stability Essential for Investor Confidence
Sacha Bright, CEO of NextCrowd and author of The Crowdfunder, A Guide to Equity Crowdfunding, emphasised the reliance of investors on stable economic conditions and consistent tax reliefs. “With over £30 billion raised from private investors since the inception of the EIS and SEIS schemes, many innovative businesses, which might otherwise struggle to secure bank loans, have been able to start and grow. Companies like Skyscanner and Revolut are prime examples of businesses that benefited from these schemes.”
Bright warned that any adverse changes to the tax reliefs available to investors could significantly impact the ability of new growth businesses to attract necessary funding. “The 2022/23 data underscores the importance of stability for investor confidence. Any negative changes could hinder new businesses from securing initial investments, which would be detrimental to the UK economy.”
The Future of EIS Amidst Economic Uncertainty
The Enterprise Investment Scheme has been a cornerstone for encouraging private investment into new and growing businesses since its establishment. However, the scheme’s future is at risk if the government introduces changes that could disrupt investor confidence. The recent extension of the Sunset period offers some reassurance, but long-term stability is crucial for maintaining the flow of private investment.
NextCrowd’s cautious stance reflects a broader concern within the investment community about the potential impact of government policy changes. Investors are keenly aware of the economic environment and any signals from the government that might affect their investment returns.
Call for Government Commitment to EIS
NextCrowd is calling on the government to commit to preserving the current benefits of the EIS to ensure continued support for start-ups and growing businesses. The platform argues that consistent and favourable tax reliefs are essential for sustaining investor interest and confidence, which in turn supports innovation and economic growth.
The investment landscape for growing businesses in the UK heavily depends on the stability of schemes like EIS. By maintaining these incentives, the government can help secure a robust future for new ventures, fostering innovation and entrepreneurship across the country.
