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29 November 2011

Government announces major catalyst for angel investing

in entrepreneurs backing angel investors to bring their financial capacity

and business experience to support small business growth and jobs.

Business Angel Investing received a strong boost from Government today, through both a new major 50% tax relief for seed stage investing and the launch of a new £50m angel co-investment fund. These measures  together with the credit easing programme to underwrite up to £40bn in low-interest loans to SME’s will provide a major boost  to entrepreneurs seeking to get their businesses off the ground  their businesses and encourage investors to fund them with tax breaks underwriting  part of the risk. 

In his Autumn statement today, Chancellor George Osborne announced that investors wishing to back very early stage seed stage businesses can gain up to 50% tax relief.  Under this new Seed Enterprise Investment Scheme (SEIS), commencing from April 2012, (which appears to be similar in design to the current Enterprise Investment Scheme), the focus will be on supporting new early stage companies with 25 or fewer employees and assets of up to £200,000 which are carrying on or preparing to carry on a new business.   For investors the maximum an annual investment limit for will be £100,000 and the maximum that any early stage business can receive cumulatively under this scheme will be £150,000.

With the launch of the new £50M Business Angel Co Investment Fund, the  Angel CoFund which will invest alongside Business Angel syndicates across England.  The fund, which opens for business shortly, will be administered with the support of Capital for Enterprise Limited (CfEL) and set up with a grant from the Regional Growth Fund.

The fund is able to make initial equity investments of between £100K and £1M in to SMEs alongside syndicates of business angels, subject to certain geographical restrictions and an upper limit of 49% of any investment round. Investment decisions will be made by the independent Investment Committee of the fund based on the detailed proposals put forward by business angel syndicates.

This is exactly the encouragement needed from the Government for  business angels and entrepreneurs to reboot  a sluggish investment climate. Beer & Partners have continued to successfully raise funding for early stage businesses but we have seen the process extended and drawn out with final commitment of funding often held back pending clarification of the economic outlook. Tax incentives underwriting investors risk will, we believe,  free up a pipeline of interest and enable businesses to establish themselves and provide much needed employment.

Mike Weaver, CEO
Beer & Partners Limited