Investments  

Financial advisers offer the gateway to EIS

Dan Perkins

Dan Perkins

Over the last few weeks I have been on the road with a number of like-minded venture capitalists presenting to potential investors, looking for funding to support the businesses we have identified as best of breed in our chosen industrial sub sectors. 

With the traditional forms of funding constrained, alternative investment, particularly in the form of venture capital, has provided a lifeline to these growth businesses, the engine of the UK economy.

In the past 25 years, this has been in no small part thanks to the Enterprise Investment Scheme (EIS), which according to recent research is one of the government support mechanisms most envied across the globe.

Since 1994, EIS has raised over £20bn and funded close to 30,000 companies.

Helping these entrepreneurs through EIS not only helps companies grow but also offers growth opportunities for investors, presenting a valid form of alternative investment, bringing diversification to client portfolios and allowing the potential for some great returns. 

There is no question of our entrepreneurial spirit and the ambitions of our small businesses.

A report conducted earlier in the year by Enterprise Nation, the small business network, found that almost three quarters of British entrepreneurs expect to grow their business in the next six months, compared to larger companies whose leaders say confidence is down.

I believe that a key catalyst to matching these genuine growth opportunities to the right profile of investor is the role of the financial adviser.

This has certainly been the prevalent theme from our recent interactions with the advisory community.

Since the beginning of November the roadshow, organised by Intelligent Partnership, has taken us to six cities across the UK and given us the opportunity to present to over 170 IFAs.

From Glasgow to Exeter, representatives from the best in British venture capital have presented and answered questions on the investment opportunities in growth businesses through EIS. 

One of the striking impressions from the tour has been the diversity and range of businesses that our respective firms have backed over the past few years and are looking to back going forwards.

Financial and commercial support has been provided to businesses and entrepreneurs operating in technology, retail, leisure, life science, the impact sector and my own specialist sector, the creative industries, which struck me as a fantastic insight into what a fantastically diverse ecosystem our growth economy really is.

We also know that despite new rule changes introduced in 2018 to bring a sharper focus on investing in genuine growth businesses, there is growing appetite for using EIS as part of the wealth planning mix for advisers and their clients.

Our own independent research corroborates this.

A survey of financial advisers we commissioned in November found that more than three quarters (77 per cent) expect to see the same or increased use of EIS in the next 12 months.

On average, the IFAs we spoke to said that one in six clients currently have investments in EIS and typically invest between £20,001 to £100,000.