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A RECORD 2,905 start-ups applied to raise funds through the Seed Enterprise Investment Scheme in 2014/15.
The growth, up from 2,845 last year and 1,729 the year before, is being driven by hightech firms and the restaurant and catering sectors – a combination of fashionable coffee drinking and tech-savvy businesses that has been dubbed the ‘flat-white economy’.
High-tech firms account for 31.5 per cent of applicants, while distribution, restaurants and catering make up 14.6 per cent, analysis by Radius Equity, which provides finance under the SEIS and Enterprise Investment Scheme, found.
Radius said most entrepreneurs hoping to use the SEIS – where investors get income tax relief for buying shares in eligible businesses – were putting clear business plans in place before starting to trade, and 94 per cent of applications to Revenue & Customs for SEIS approval were successful last year.
Radius director Gary Robins said: ‘SEIS has been one of the most important innovations in business finance since the financial crisis, as shown by its continuing popularity.
‘The fact that high-tech startups in particular are benefiting from the SEIS shows how new businesses are a key contributor to the dynamism of the UK economy.’
However, the Institute of Directors is calling on policymakers to revamp the schemes because it says entrepreneurs and investors do not understand the benefits.
In a report this month, the IoD claimed SEIS and EIS were under-used. It revealed 95 per cent of £1.6billion investment via the schemes in 2013/14 came from business angels. It found only 38 per cent of directors had come across the SEIS.
The IoD’s Jimmy McLoughlin said: ‘We want more people with a few hundred pounds rather than a few thousand to be more aware of investing.’