Ryecroft Glenton, the Newcastle-based advisory firm, has warned that proposed changes to the Enterprise Investment Schemes could hit small businesses and job creation.
Ahead of the Autumn Statement in November, the Treasury is believed to be considering plans to clamp down on investors benefiting from a system that stimulates investment in UK start-ups.
According to 2016 statistics, since its launch in 1993, 24,620 companies have received investment through the Enterprise Investment Scheme (EIS) or the Seed Enterprise Investment Scheme (SEIS). Among them is Newcastle-based Cheviot Insured, which is aiming to grow its workforce on the back of strong growth in its first year in business.
Having launched in mid-2016, the company is seeking to recruit a further four members of staff to meet demand from its growing client base.
Founded by equity fund manager Joel Marks, insurance specialist John Baty and North East entrepreneur Charlie Hoult, Cheviot predominately provides insurance services for businesses and charities, with a particular sector specialism in technology.
Its first year growth was given momentum by funding secured through SEIS, which helps small, unquoted trading companies attract investment by enabling qualifying investors to take advantage of generous tax reliefs.
With expert advice from Ryecroft Glenton, Cheviot secured more than £100,000 of SEIS investment, which was essential to not only establishing the business, but also meeting the regulatory capital requirements stipulated by the Financial Conduct Authority (FCA).
Operating out of offices at Hoults Yard, the company has quickly gained traction in the market, winning a number of blue chip companies and North East charities as clients. Its growth, for the first six months of 2017, was fifty percent ahead of the first six months of 2016.
Peter Glenton, Partner at Ryecroft Glenton, said: “Cheviot Insured is a great example of how SEIS can be a real boon for start-up businesses. Cutting the relief the scheme offers investors will only serve to reduce the available funding options for start-ups, hitting business growth and job creation.
“Many investors are keen to support innovative new firms and their ideas, but they need persuading that the risk is worth taking. SEIS and EIS help to reduce the risk the investor is taking and encourages them to choose to support a start-up over a safer investment option.
“Cheviot’s business model, together with the tax relief the scheme provides, made the company an attractive proposition for investors, which is proving to be justified after its first successful year in operation.”
Joel Marks, Director of Cheviot Insured, said: “The pace of our growth in the first year has been very positive and as a result we now have the opportunity to expand our team and increase our presence in the North East region, as well as increase our reach in specific sectors, especially the technology sector.
“The support Peter Glenton and the team at Ryecroft Glenton have provided the business has been invaluable. In addition to its support and advice during the fundraising process, which included identifying potential investors, the firm has provided payroll, accounts and tax services to Cheviot, enabling us to focus on the development and operation of the business.”