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2024 could be a ‘year of exits for investors’, says SFC Capital’s Ed Prior

by | May 28, 2024

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Welcome back to our series of exclusive interviews with industry experts, where we speak to key figures in the tax-efficient space to get their thoughts on the new tax year.

This time, we have Ed Prior, Head of Investor Services at SFC Capital. Ed predicts a positive year for SEIS, discusses the effects of a general election, and reflects on the 2023-24 tax year.

 
 

Q.) What does the new tax year mean for tax-efficient investing?

    In an otherwise gloomy landscape, 2024/25 will see the acceleration of SEIS as a mainstream tool for tax-efficient investing.  Last year’s rule changes have boosted SEIS’ appeal, drawing a new class of advisor-led investors who are generally allocating larger amounts via SEIS funds rather than directly into startups. At SFC, we have seen a 25% increase in our SEIS Fund since the changes to SEIS were made, which we believe is reflective of a general market trend as more investors and advisors become aware of SEIS and its merits. 

    We expect it to be a year of exits for investors. SFC is seeing more and more liquidity events with strong cash returns, partly due to the belated rise of Britain’s secondary market. The changes to SEIS, which now permits up to £200,000 in annual investments and allows more established companies to raise under the scheme, have also significantly improved the risk profile and opportunity for investors. Coupled with a surge in innovative early-stage startups, investors have unprecedented opportunities to benefit from significant growth potential while maximising tax efficiencies.

     
     

      Q: Looking back, what lessons can investors learn from the previous tax year?

        The overall tax-efficient market declined last year in terms of number of investors. In the SEIS space, though, the lesson is that losing volume doesn’t necessarily mean losing value. Thanks to the enhanced SEIS 2.0, the new advisor-led segment of the market has emerged and reshaped the demographics of the market. These individuals typically invest larger amounts each year compared to tourist investors who came in on a post-covid wave before leaving again as general economic conditions worsened. 

        Q: With the general election soon to take place, how will this affect the industry?

         
         

        Election years often spark concerns for market stability, but the macro economic challenges we’ve faced and overcome in recent years—due to broader economic conditions— likely surpass anything this election could bring. For SEIS, last year’s updates fortified the scheme and set it on a growth path, attracting new investors and solidifying its place as an effective tool for tax-efficient investing. This built resilience suggests that SEIS is well-equipped to handle election-year turbulence and continue to perform strongly.

        Q: Finally, do you have any tips for advisers regarding tax-efficient investments?

        The big recommendation for advisors is to get up to speed with SEIS and the main SEIS Funds. As clients become increasingly aware of SEIS, they are likely to demand exposure to its uniquely general tax relief opportunities as well as the upside potential of investing in early-stage innovation. 

         
         

        Ed heads the Investor Services team at SFC Capital, where he manages investor relations and fundraising initiatives with Financial Advisors. His background includes roles as an election strategist, political speechwriter, and policy developer. Ed has published reports in the Sunday Times, including “Future CEO,” “Business Transformation,” and “Employee Engagement.” Additionally, he has extensive experience assisting startups with equity fundraising campaigns.

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