EIS explained: how does it work?

EIS in a nutshell

EIS can support your funding applications. Through the scheme you will be able to:

Raise up to £5M in any 12 month period
Raise up to £12M in your company’s lifetime.

All the money raised must be used for growth and development of the business.

The growth needs to be a permanent solution e.g. invest in equipment to scale operations, and not rely on ongoing investment to sustain it.

As EIS was introduced to grow and develop the UK economy, businesses are not eligible for EIS if they expect to wind up operations after a project or series of projects.

There are certain rules around how the investment should be spent.

The money must be used to:

Grow your business
Present an actual risk to capital* for the investor
Not be used as part of a merger or acquisition
Be spent within two years of the investment.

Good to know...

Those classed as 'knowledge intensive companies' are able to raise more money than the usual scheme limits.

It applies to companies that carry out research, development or innovation.

*Risk to capital

This dictates that the investment should carry an actual risk to the investor. Only investment that isn’t protected, for example, by an agreed salary, would be eligible to qualify for the relief.