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How to look juicier to investors

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Mutant

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FUNDRAISING IN THE UK

SCENE ONE
INT. DAY. MEETING ROOM.
A UK TAXPAYER LOOKS TO INVEST IN A BUSINESS

INVESTOR: I'm interested in your start-up. It's obviously splendid, but I'm still weary of losing all my money. What can you do to protect my downside? I'm considering putting £10,000 in.

YOU: Hmm, how about money off your tax bill for performing such a noble act? Would 50% of your investment do, so £5,000 off your income tax bill. This year's or last year's - your choice.

INVESTOR: Blimey, effectively half price? Not bad at all. But still, what if the shares become worthless?

YOU: Loss relief should comfort your misery somewhat. Of the remaining "at risk" capital of £5,000, how about 45% of that back if you're a higher rate tax payer? That means you'll have only lost £2,750.

INVESTOR: Gosh yes, that'd take the edge off a bit. Now, let's focus on the upside, seeing as you're actually going to be marvellously successful?

YOU: Absolutely. How's no Capital Gains Tax if you hold the shares for three years sound?

INVESTOR: Spiffing! Though speaking of Capital Gains, I sold something recently & have a bill to pay - so irksome.

YOU: Well, if you use that gain to invest in these shares, you can put that bill off for a while.

INVESTOR: Oh that'd certainly help manage things. Hmm, I'm thinking of investing more now!

YOU: Well, you can invest up to £100,000 a year in any number of qualifying companies, but you can of course just give it all to me.

INVESTOR: This all sounds wonderful. But what about the absolute worst case scenario?

YOU: No inheritance tax - on these shares at least!

INVESTOR: Crikey. What's the downside on all of this? Do you have to give shares to the government or something?

YOU: No, just some forms to fill & some criteria to meet.

INVESTOR: Ah yes, the rules, I suppose there are some. Where can I check all the details?

YOU: Well, there's HMRC information here, & here, but you can just google "Seed Enterprise Investment Scheme" or "SEIS" to find plenty of websites putting in plain English, such as this one*.

END SCENE

SCENE TWO
INT. DAY. STUDIO

PRESENTER: You could use SEIS to raise up to £150,000 for your business. Even foreign companies that have a UK base could be eligible. If your business is less than two years old, has fewer than 25 full time equivalent employees, no more than £200,000 in gross assets, & is carrying on a qualifying trade (& there's not too many that aren't), you could benefit.

After that, you can move onto the Enterprise Investment Scheme (EIS) to raise up to £5 million. This is similar to SEIS, but offers 30% off the investors income tax bill, instead of 50%. More details available here, here, here* & of course, your old friend Google.

FIN.

*Not an endorsement of Seedrs. I've not used them. I just found their explainers decent, so have linked them.

I have however worked for tech start-ups that have used SEIS & EIS to help raise funds. Searched on this forum & realised no threads came up! Thought I'd make this little introduction.
 

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OP
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Mutant

Mutant

Bronze Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Jan 8, 2018
137
317
174
London
FUNDRAISING IN THE USA

SCENE ONE
INT. DAY. OFFICE.
TWO PEOPLE WHO WORK FOR AN OPPORTUNITY ZONE FUND WONDER WHAT TO DO.

PERSON ONE: Gee whizz, we've got so much money, I don't know what to do with it all!

PERSON TWO: How'd we get so much?

PERSON ONE: Folks with big capital gains. They want to delay the bill till 2026, get up to 15% off, & make a swell new investment with no capital gains at all if they hold if for 10 years.

PERSON TWO: Golly. What kind of investments can we make?

PERSON ONE: Well, the whole point of these zones is to bring investment & jobs to the area, so we can only invest in businesses that earn at least 50% of their income within the zone, but there are several ways to do this:

  1. Either their employees (and independent contractors) spend at least 50% of their work time within the Opportunity Zone.
  2. Or at least 50% of the wages of their employees (and contractors) come from performing services within an Opportunity Zone.
  3. Or at least 50% of the income of their business is generated by tangible property located in an Opportunity Zone, and the management or operational functions are performed within the Opportunity Zone.
There are well over 8,000 zones, across all 50 states.

PERSON TWO: Sounds just dandy. So, what's the problem?

PERSON ONE: Here's the kicker - we have to deploy at least 90% of our funds within 6-12 months of receiving the capital from investors.

PERSON TWO: Holy pretzel! We'd better get our skates on!

PERSON ONE: Yes indeedy. Let's find us some businesses!

RAIN DESCENDS

AND SCENE.


Ok, so I'm not US based, & haven't dealt with this scheme personally, but I read this article, & thought I'd add this short sketch version to the thread here, just as a prompt for those who might find it useful to look further into. A quick google has revealed a list zones here, & at least one list of funds here - others are available.



Do you know of any tax advantaged schemes in your country that could help entrepreneurs get investment? Why not add 'em below?
 

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