Planning a start-up is easy but accumulating the victuals to accelerate the growth of the business is quite tricky. Entrepreneurs who evolved this idea of accumulating became gainers. Apart from physical toiling, one needs to work on his decisions. It says, in business, decisions are precious.
It is not difficult to understand how much an entrepreneur needs to work out to find an investor for his start-up. Even being unable to arrange for the fund, sometimes the person starts looking for a fast loan in the UK. Undoubtedly, it is not difficult to find out lender in the UK. But, when there are other scopes open, why take extra burden overhead? Here is a plan by implementing which your start-up business can attain the status of a large company within few years.
Seed capital is basically a source of fund that is necessary to begin a start-up. A small amount of money is invested for the initial growth of the business that includes buying the essential machine, materials, primary marketing, production of goods on a small scale, registration fees, and even seeking expert’s advice for securing success. While some may find seed capital funding completely risky, we suggest how it can be beneficial for the growth of the business.
How to convince small to large investors:
Whenever you can convince either your friend or family or small investors for the necessary fund. Now the time arrived to make him feel assured that his money will no longer be lost and he will get a good return. It is to make him clear that he is actually accelerating the growth of a new business idea by investing small capital. Usually, this type of small investment only assures little production, which is experimental, should convince large investors to invest.
The next step of seed capital, there comes venture capital. In this funding, an entrepreneur generally finds out large investors who solve the funding problem of small and medium start-up owners. But to attract venture capital provider, the business needs to represent a possible growth preferably prevails for a long time.
Apart from money, these venture capital providers also can lay their helping hands in the improvement of technical gadgets or production parts like the advancement of goods or services, etc.
Hope, you can understand how seed capital can accelerate the speed of your business. Being an entrepreneur, finding an investor instead of searching for a fast loan in the UK is imperative. What if a person unable to find out even a small investor? For them, there is a way too. They can take help from Seed Enterprise Investment Scheme (EIS).
If your company is enrolled under this scheme, then the small investors will be attracted by getting a tax discount. Here are some BENEFITS of Seed EIS in the growth of the company.
HMRC secures the fund –
The approval of HMRC matters a lot. When you have approached lots of companies, and still no one agrees to invest. This small approval will help the company a lot. Maybe investor was reluctant because of no assurance of their invested fund. But when you tell that your company is enrolled under HMRC and seed EIS, it will bring a sense of assurance to the investor. They will be confident in investing because governing bodies like HMRC never approve a start-up idea without analysing it.
Discount on tax bring investors –
Whenever you approach an investor for investment with seed EIS tax relief. Then he will be ready at once to fund your start-up. There is a possibility of being eligible for approximately a 50% discount on tax. If the investor invests a minimum of £100000 and a maximum of pound 150000 in a financial year. After investing £100000, an investor secures the chance of getting a minimum of £45000 from HMRC.
Therefore, if you convey this calculation before an investor, he will agree to help you grow your business.
There is the scope of being a director –
Whenever you enroll the company under HMRC for seed SEI. Whoever the investor can become the director of the company too. Who does not want to play such an essential role after investing money in a company? Therefore, when you place the offer of becoming a director of your company, the investor will feel good and agree to invest. As a result, the initial funding problem will be solved in no time.
Money Utilised for at least 3 years –
Apart from making the growth of the company firm and steady. It also allows an entrepreneur to use the fund for at least 3 consecutive years. To get 50% tax relief, HMRC puts the condition of a minimum three-year lock-in period to be beneficial for the governing body. Therefore, you need not worry about the upcoming fund at all.