We made an interview with Mark Brownridge, Director General, Enterprise Investment Scheme Association – EISA and we asked our questions bout their mission and how they help to both startups and investors.
Mark, thank you for accepting our interview offer. We know that you have an impressive career. Would you be kind enough to share its milestones in your own words?
Before becoming Director General at EISA, I was Head of Research at a financial planning firm and its here I developed my passion for EIS and SEIS, helping our financial planners choose the most appropriate EIS/SEIS investments for their clients. When the DG job became available I know instantly that was the job for me, helping to guide and steward the EIS industry. It was a great decision and I haven’t looked back since!
Would you please tell us about EISA; the trade body of EIS and SEIS?
Happy to. The Enterprise Investment Scheme Association (EISA) is the trade body for both the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) in the UK. EISA supports and promotes policies and initiatives that facilitate the smooth flow of risk equity capital from private individuals to smaller companies thereby benefitting the UK economy. This is achieved through;
- Protecting the interests of our members so they can continue to operate in an environment that is conducive to the growth and support of SEIS/EIS
- Promoting and raising awareness of SEIS/EIS to small businesses and financial advisers as well as to MPs, the media and the general public.
- Positioning SEIS/EIS as a trusted source of funding. We seek to demonstrate the impact and value that SEIS/EIS funding continues to have acting as a significant contributor to UK economic growth and job creation
What are the main financial (maybe read as “tax-wise”) and legal advantages of EISA resource usage or membership?
SEIS/EIS uses tax reliefs to incentivize private investors who recognize that significant returns are achievable if they are willing to risk their funds by investing in early-stage businesses. Early stage businesses often struggle to raise equity finance so EIS/SEIS have established itself as a trusted and crucial source of equity funding. The schemes, therefore, play an important role in facilitating the smooth flow of risk equity capital from private individuals to early-stage businesses. Investors get valuable tax reliefs (5 in 1 investment – income tax relief at 30%, no CGT on gains, CGT rollover, IHT relief and share loss relief); small business owners get funding and mentoring so it’s a win/win! By joining EISA, you get access to all events, contacts in the industry as well as technical and market updates. Take a look at our website here – https://www.eisa.org.uk/eis-members/member-benefits/
The UK is going through a rather vibrant and fast-paced era of political and economic change; what can you tell us about EISA’s policymaker engagement in accordance?
We have been very actively engaged with HMRC and HMT, particularly over the last year or so in light of 2 major Government reviews, The Patient Capital Review and The Industrial Strategy. Only yesterday we had representatives from HMRC attend a meeting we arranged with our members to talk about how EIS and SEIS have changed since the Budget so this is an important area of our work. The UK Government is keen to work with bodies like ourselves who act as a conduit to an industry and bring all participants within that industry together to speak with a collective voice. EIS is being refocused on growth, innovation and technology based companies so should be of increasing interest to small businesses in Turkey keen to get a foothold in the UK.
As a seasoned professional with a strong background in financial planning, do you see any probable opportunities in forming a liaison in between EISA community and IFA/wealth management circles?
A year ago we relaunched our proposition to IFAs and wealth managers to encourage more to become members and be part of the growing community within EISA. We were aware we needed to attract more IFAs and offer something more rounded. We also knew EIS is a growing area of interest for IFAs but that they needed help with education and getting up to date on the market and what was happening so we have put a number of measures in place to help with this including a number of guides giving them informative and relevant collateral that they can use with clients. You can view our guides here https://www.eisa.org.uk/eisa-guides/ IFAs act as the distribution channel for the whole industry so are tremendously important in acting as the conduit between funds and clients. Without them, the industry would very quickly dry up so we recognize their importance and are keen to serve them however best we can.
Mark, there is thriving and burgeoning Turkish start up community in the UK encompassing entrepreneurs granted with ECAA2 Turkish Business Person Visa; a.k.a. “Ankara Agreement Visa.” These professionals bring both valuable intellectual capital and a serious amount of financial resources to the British eco-system. What are your reflections as regards probable mutual partnerships/opportunities that may be formed with this distinguished populace?
Firstly, it’s very exciting! We have a couple of fund manager members who have experience of working in Turkey and have already helped Turkish companies take advantage of EIS funding here in the UK so I have some awareness of what a vibrant, on the march entrepreneurial center Turkey is.
It’s an exciting time to come to the UK particularly in the Tech space as the UK has set out plans to become a Tech Hub and be at the very forefront of a new technological revolution in areas such as Robotics, AI and driverless cars. This is partly a response to Brexit and Britain wishing to set its own new course without cutting itself off from the rest of Europe.
We are working with the Department of International Trade to ensure Europe knows Britain is very much open for business and we would certainly welcome collaboration with such an esteemed country as Turkey. The UK welcomes anyone with an entrepreneurial mind or who is looking for funding in an innovative, high growth business. Similarly, investors from Turkey looking to invest in UK start and scale ups can benefit greatly via EIS and also Business Investment Relief which allows UK offshore investors to bring money into the UK very tax efficiently. In short, the benefits work both ways are very much worth exploring
Finally, what is new in 2018 in EISA and do you have any pertaining messages to our readers? Thank you.
2017 was a rollercoaster year for EIS and SEIS culminating in the November Budget with a number of changes to the schemes. At times, some of the rhetoric we have experienced has felt like a shot across the boughs of EIS and SEIS, particularly with the findings of the Patient Capital Review and the resultant budget. With many whisperings of severe restrictions being placed on EIS and SEIS and perhaps its complete withdrawal, the eventual outcome with increased limits (for knowledge intensive companies) and a new risk to capital condition felt like a victory for those campaigning for EIS and SEIS to continue to offer support to high growth, high risk entrepreneurial businesses.
We now have more crystal clarity than ever about where HMT and the Government see the future of EIS and SEIS. Both schemes received overwhelming support from across the political and economic sector, particularly from those businesses that have receive EIS or SEIS funding with many noting they would not have been able to start or grow their business if the schemes were not in place. So, where do we stand now? It’s almost back to the future, going back to the very origins of why EIS first came into being but with a digital age, 2018 edge.
EIS and SEIS investments should be focused on supporting both those businesses who would otherwise struggle to gain access to funding and also those businesses that are seeking not just to grow but to grow quickly and as such are high risk, therefore, warranting the need for investors prepared to take that risk to be rewarded in the form of tax reliefs. Technology, growth and innovation would seem to be EIS and SEIS’s new best friends as both the Patient Capital Review and the Industrial Strategy paint a picture of a bright new technological revolution led by UK PLC’s small businesses. This is a great vindication for EIS and SEIS and a real shot in the arm for the industry. It’s now up to us to heed the message from Government and deliver on this vision! If 2017 was tainted with uncertainty, we start 2018 more hopeful for the future of EIS and SEIS than ever.
We would like to thank Gökhan Gökçeoğlu who helped us to get this interview.
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