The numbers are out!
Thanks to our friends at MICAP, we have the magic number for how much funds were raised through EIS in the 2020/2021 tax year.
This number stands at £381,498,716. This is compared to £395,442,115 in the 2020/2019 tax year.
Given the landscape for fundraising in each of the two tax years was completely different (think Coronavirus!!), then to sustain levels of fundraising at a level rate is an impressive performance and testament to the resilience of and determination of fund managers and to the level of confidence in the market of financial advisers and planners.
When Covid hit these shores in March 2020, fundraising in almost all sectors fell of the side of a cliff and nowhere more so than EIS and SEIS (often perceived as a particularly high risk investment area) as investors took risk off the table but confidence seems to have rapidly returned, perhaps fuelled by stories from funds as to how they have supported investee companies during the pandemic and not only kept those companies in existence but also steered them towards growth as well as funding new companies with investment.
EIS funded companies have often been at the forefront of the fight against Covid, like Touchlight, whose DNA technology helps to make vaccines and Hy-genie, a hand hygiene company serving the NHS and beyond. As well as numerous meal delivery, gaming, streaming and ecommerce startups who have kept us fed, entertained and occupied as we all faced months of lockdown. As a result, the majority of EIS portfolios are positioned more strongly to provide significant returns more than ever before
We now wait until May when we get the official EIS and SEIS numbers from HMRC but remember these are always a year behind so will relate to tax year 2020/2019. We won’t know the full Covid effect on fundraising in 2020/2021 until May 2022.
Overall, the EIS industry can be judged to be in rude health. This maybe didnt look the case in March/April last year but fundraising has shown tremendous bouncebackability since then even as great uncertainty has remained. To maintain fundraising levels at historic levels is a great achievement in an uncertain market and we can still factor in the strong possibility that many investors are still to come back to the market and make the investments they had intended to but held off due to Covid. That latent investment could be as much as £3ooM. We also hold strong hope that the Government will expand the schemes to encourage greater entrepreneurship and early stage investing so the future is bright