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Crowdfunding EIS and SEIS investments - In praise of diversity across sectors and geography

Posted 8 years ago

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How to build an enterprise investment scheme and portfolio using equity crowdfunding

Having recently discussed some of the advantages of the Seed Enterprise Investment Scheme, I was interested to see an article in Forbes online entitled ‘How To Build An Enterprise Investment Scheme Investment Portfolio Using Equity Crowdfunding’. Written by Gonçalo de Vasconcelos, CEO of leading equity crowdfunding platform SyndicateRoom, the piece first caught my attention because it leads on the excellence of Great Britain as ‘a place to create a portfolio of investments in early-stage companies’, citing the potential tax benefits available to investors in early-stage companies under the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS).

I’m certainly not going to argue with that – and it’s great to see those venerable schemes mentioned alongside equity crowdfunding. As Mr. de Vasconcelos points out, Equity Crowdfunding is a new and effective way to benefit from investing using these tax effective schemes because it ‘allows online investors to build their own portfolio with all the advantages of diversifying their investments across a wide range of different sectors and geographies’.

Once again, I wholeheartedly agree. The author goes on to outline six key pointers – the headers of which are as follows (I recommend you read the article in full).

  1. Decide on a strategy and play the long game – five years or more.
  2. Know and understand the platforms you use to invest and what it means to you as an investor.
  3. Invest with those that have sector knowledge
  4. Diversify your investments
  5. Know what the fund management fees are
  6. Be prepared to follow your money

Crucially, the author is careful to point out that you need to apply the same due diligence and caution building a portfolio of investments through an equity crowdfunding platform as you do with any other vehicle, such as direct ‘angel’ investing. That said, the equity crowdfunding platform standardizes the legal process, making it simpler for the investor, and instead of investing into a fund, you can choose precisely which businesses your money is backing based on personal preference. As Mr. de Vasconcelos says, ‘what’s not to like!’.

As the founder of Businessagent.com I’m obviously biased – nevertheless I believe our website can help in navigating your course through the investment process the Forbes article describes because our very raison d’être is to enable you to compare diverse equity crowdfunding investment opportunities ‘across a wide range of different sectors and geographies’ in one easy to navigate space. Perhaps due to the infancy of the industry, few platforms have more than 10 equity Crowdfunding pitches active at any one time. By amalgamating the investment opportunities as well as a range of different crowdfunding platforms, and very soon, our Property investments section, we aim to help investors ‘see the wood for the trees’ – to home in on the kind of investment that suits them and with a large collection of EIS/SEIS investments in one place, to provide visitors to our site a holistic overview.

Finally, it is important as always to reiterate that it is not our place to offer advice on the investments we present, also to note that the potential tax benefits offered by EIS and SEIS will depend on each individual’s circumstances and may be subject to change in the future. Investors should seek independent professional advice when considering a potential investment as these offerings are High Risk and the total capital invested could be lost.

Tagged: SEIS EIS equity crowdfunding investments

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