Tag Archives: angel investing

SEIS and other support for UK entrepreneurs

Whilst we all know that starting a new business is a risky move, this post seeks to demonstrate how support that exists in the UK entrepreneurial ecosystem is making the process of getting your venture off the ground a less difficult proposition than in previous times.

Though beginning your own venture is full of uncertainties, not all uncertainties are equal. By being smart about where you piggyback on schemes, services and set ups have been created for the sole purpose of supporting your new company you can maintain your focus on what really matters: the core of why the world needs your business to thrive.

Here will we cover the three main areas that each start up needs to consider: money to grow, a place to work, and compliance with HMRC.

Raising start up capital

Almost all ideas need a bit of start up capital to get them off the ground.

Even if the early days of testing your proposition can be funded from retained savings, there will likely (hopefully) come a point where in order to take your business to the next level, and injection of external funding is desirable.

SEIS

If you begin conversations with people about the possibility of putting money into your idea, these are four letters which should likely crop up soon into the conversation.

The Seed Enterprise Investment Scheme is a government policy to encourage those with surplus capital to fund new businesses which in turn can stimulate growth in the UK economy.

Before 2011, an investor would be taxed relatively heavily on any money that they put into a new business. As such, the economics had to be really compelling for them to think that not only would the idea be a success itself, but that they wouldn’t end up losing out, because a significant portion of the gains would go to the taxman.

Under SEIS, a number of tax breaks are given to would-be investors meaning it becomes much more rational for them to fund a start up, like yours.

Making the most of SEIS

The key takeaway here is that those with surplus capital have an incentive to direct that money towards your venture.

If they were to invest, say, £50,000 then they may only be liable to lose £25,000 in the worst case scenario. That concept of (essentially) putting in £25,000 to a business, but your bank account topping up by £50,000 is a win-win you can look to take advantage of.

What’s more, groups of “angel investors” (who will all be using SEIS) regularly meet to evaluate business ideas with a view of funding the good ones.

It’s not a case of haplessly hoping for chance meetings, you can attend regular networking events to meet with potential investors. Checking on sites like Meetup is a good way to go.

Then, it’s down to you to sell them on the vision…

Where to work

In the early days, your living room or the local coffee shop will probably suffice.

As you seek to expand, not only will the baristas get suspicious, but the realities of setting up a workplace will become more pressing.

In years gone by, this would have involved trudging around the local area negotiating prices for (with a limited budget) probably some dusty box room in a basement.

Now, however a cross-breed of office-cum-coffee-shop has emerged: the co-working space.

As you start out, these charge by the desk (rather than needing to fork out for a whole office) and most have flexible packages if, for example, you won’t be spending all of your time “at the desk”.

It also means that you can afford to be in a much more convenient and pleasant setting: natural light, colourful soft furnishings and, if you’re lucky, free beer on tap.

Other people just like you

Arguably though, the main benefit that comes from co-working spaces is that you are surrounded by like-minded individuals.

Within eyeshot of your desk will be other start ups in a similar position to you, who “get” why you’re doing it, and will be there to give you support.

The regularity of water cooler chats you can have with random people will exponentially increase the chances of hearing things like “Oh, I know someone who can help with that…” or “We went through that too, don’t worry, it gets better” all essential in your arduous journey along the entrepreneurial road.

What’s more, these spaces regularly host events and fireside chats to get inspiration from those who have gone through the process.

Here are lists of the top co-working spaces in London, Birmingham, Manchester, and Bristol.

Keeping things legal

Some might argue that this is the most important of the lot.

Despite the convivial atmosphere around encouraging entrepreneurship in the UK, there are still legal requirements involved in establishing a company, appointing company directors, and filing regular financial reports to HMRC.

For a sub-set of remorseful entrepreneurs, their answer to: “What would you have done differently?” boils down to variants of “Get the legal and accounting set up properly from the start”.

The sad reality is that some of the best ideas become undone (or at least significantly held back) because of oversights in the nuts and bolts of running a compliant business.

Outsource, outsource, outsource

The key to entrepreneurship is to scale your vision beyond yourself.

This typically manifests itself in appreciating what you are uniquely good at, and what you can hire others to do for you.

When it comes to payroll, VAT registration and filing annual accounts, it should be noted that none on its own is supremely complicated at its core.

What entrepreneurs do say however is that there always seems to be myriad options whenever it comes to filling out a form, and a steep learning curve in understanding exactly what you need to do.

Even then, there could be something simple which you omit which has significant legal consequences.

Outsourcing this part of the business to an organisation who do it day in, day out can give you peace of mind that everything is done correctly, and save you hours understanding the specifics of tax codes when you could be out winning business.

Conclusion

This post has sought to sooth some of the headaches that can come in establishing a company.

There are many plates to spin as a company founder and so hopefully you can see that by:

  1. Plugging into networks of angel investors: who have an incentive to fund your business through SEIS
  2. Taking a desk at a co-working space: to share your working hours with like-minded individuals; and
  3. Getting peace of mind on legalities: by outsourcing to people who do it day in, day out

you can leverage your time and energy in the ways that can best grow your business.

If you are interested in discussing with us about how we can help with 3., please do feel free to contact us, and in any case, best of luck with your venture!