Venture capital firm DFJ Esprit has launched an EIS fund which will back promising, fast growing UK start-ups while offering generous tax reliefs to investors through the Enterprise Investment Scheme (EIS).
EIS is the UK Government’s flagship tax initiative aimed at boosting investment in start-up and SME businesses. It offers 30 per cent income tax relief on qualifying investments, with no capital gains tax to pay on the proceeds.
Previous DFJ Esprit investments that have been part of its EIS co-investment scheme include Horizon Discovery, a Cambridge-based life sciences company which has announced its intention to seek an IPO; Achica, the luxury brand retail club; and Lyst, a personalised fashion marketplace that recently raised USD14m of follow-on investment.
The latest fund is DFJ Esprit’s third EIS vehicle.
Richard Marsh, partner at DFJ Esprit, says the fund offers “investments in the true spirit of EIS – backing the best entrepreneurs to build exceptional businesses”.
“EIS is a fantastic scheme and is a tax break that the government actively wants you to use. But to build large, successful businesses with global potential you need financial firepower and experience and we’re allowing private investors to access the kind of opportunities that wouldn’t normally cross their radar.”
Statistics from HM Revenue & Customs show that GBP525m was invested through EIS in 2010/11 and that could rise to an estimated GBP1bn a year as a result of changes introduced by Chancellor George Osborne in 2012.
In the past year, DFJ Esprit’s deal sizes have ranged from USD415,000 (GBP250,000) to USD25m (GBP15m).
DFJ Esprit expects around 50 per cent of its new EIS fund to be contributed by entrepreneurs – often from successful companies the firm has previously backed – and experienced business ‘angel’ investors, with the remainder coming from high net worth investors.
