The Enterprise Investment Scheme Association‘s new report, in partnership with Beauhurst, looks into the impact of the Enterprise Investment Scheme on the UK economy over the last 30 years. The report also gives an in depth summary of EIS and EISA, highlighting the incredible achievements of the scheme over the last 30 years.
According to the report, since its inception in 1994, EIS has been a cornerstone of the UK’s efforts to foster entrepreneurial growth. In the past 30 years, EIS and SEIS have facilitated a total of £32.0b in funds to over 56.0k companies in the UK.10 The scheme offers tax reliefs to individual investors who purchase new shares in qualifying companies, providing a funding channel for small companies who might otherwise struggle to find investment. Companies can raise up to £5.00m each year and a maximum of £12m in their lifetime through the scheme.
The scheme has experienced significant milestones over the last 30 years. Funding has steadily increased since 2010, supported by historically lower interest rates and increased involvement from funds. In 2020-21, the number of companies raising EIS funds declined by 9.84%, largely due to the impact of the COVID-19 pandemic.12 There was a strong recovery in 2021-22, leading to a record-breaking £2.30b. In 2022-23, the number of companies securing funding fell to £1.96b, representing a decline of 14.8%.
Impact
EIS-backed companies have been pivotal in driving job creation over the last decade, with headcount growth
rising from 37.0k in 2014 to a peak of 343k in 2022. This remarkable rise highlights the crucial role EIS-backed companies play in the broader economy. Digital security platform Red Sift is among the companies influencing job creation in the UK. The London-based company grew its team by sixfold over a span of five years, and supplemented its growth via the acquisition of network security firm Hardenize in October 2022. Red Sift received backing from Oxford Capital and Highland Europe to drive job creation domestically while targeting its US expansion.
Similarly, the total turnover recorded by EIS-backed companies has increased year-on-year, reaching an unprecedented peak of £32.9b in 2022. This trend underscores the role of finance in allowing businesses to scale their operations and resource facilities. It also reflects the higher population of EIS-backed businesses in recent years. These businesses experienced landmark success in 2022—allowing many to bolster their headcount growth and scaling targets. Among these is Cambridge-based Microbiotica, a pharmaceutical firm developing therapies for medical conditions such as inflammatory bowel disease. Another prominent firm was AeroCloud Systems, which develops cloud-based management software for the aviation industry. The Stockport-based firm received significant backing from Haatch and Praetura’s EIS funds.
The 2023 estimate reflects the ongoing positive trend in reported turnover and employment figures for businesses supported by the EIS. It’s likely that the full 2023 figures will exceed those of 2022.
Read the full Enterprise Investment Scheme Association Beauhurst report here
