A Letter from a venture capital firm to our new Prime Minister
Andrew Aldridge, Partner at Deepbridge Capital, has written an open letter to new Prime Minister Liz Truss setting out what he feels are her key priorities for the UK.
Congratulations on becoming Prime Minister… if you’re anything like me you’ll be unpacking those removal boxes for weeks, but I’m you sure you sensibly ensured the kettle and bottle opener were within easy reach!
With a war in Europe, energy prices continuing to soar, Covid continuing to hang around and the NHS in turmoil, I’m sure you have an inbox stacked high with items marked ‘urgent.’ However, as a Conservative leader I am sure that you also wish to send a message to the business community and our globally leading financial services sector.
So, I have a ‘quick win’ suggestion for you that will showcase your desire to support UK innovation, whilst empowering UK investors to support the high growth opportunities of tomorrow. The answer is extremely simple and will leave you with the time and focus to crack on with the considerable challenges you face elsewhere. Surely such a quick win is appealing so that you may stamp your mark with minimal fuss and maximum impact?
The UK is a world leader as a home to innovation, technology and life sciences. World class academia and an entrepreneurial appetite has created highly skilled jobs and innovations with the support of a robust funding ecosystem. We have a strong funding community in the UK but the Enterprise Investment Scheme (EIS) has arguably never been more critical. The EIS is internationally recognised as one of the most effective tax relief schemes; providing investors with an unparalleled mix of generous tax reliefs including income tax relief, capital gains tax deferral, CGT-free growth, IHT exemption and share loss relief.
So, Prime Minister, what is your opportunity for a unique ‘quick win’ in Office? Simply remove the 2025 sunset clause, which was historically agreed with the EU when seeking State Aid approval for EIS. With ‘Brexit done,’ as I paraphrase your predecessor, this clause is no longer needed and is merely a hinderance to investor and entrepreneur confidence. So, a swift change could cement your reputation as a PM supporting business, entrepreneurship and financial services.
Your team in the Treasury, and a number of your MPs, have been liaising with the likes of the Enterprise Investment Scheme Association (EISA), the UK Business Angels Association (UKBAA) and The British Private Equity & Venture Capital Association (BVCA), to objectively showcase the impact of the EIS in terms of job creation, tech and life sciences advancement and HMRC receipts. All research we have seen to date, including our own at Deepbridge Capital, emphatically shows a significantly positive impact across the board. With our focus being on early-stage tech companies and life sciences this is particularly impactful, but this not about us!
Another potentially easy win would be to increase the Seed EIS (SEIS) limits from the current £150k maximum SEIS raise per company and £100k limit per investor. Perhaps £300k for each company and £200k per investor would be a sensible improvement, but that’s just a thought for another day.
At Deepbridge we shall continue to support great early-stage companies across the technology and life sciences sectors, providing private investors with access to these opportunities no matter what, but it would be great to continue this under the world-leading Enterprise Investment Scheme.
Anyway, good luck in the new role and the new house – have you wondered whether changing the colour of the front door is in order, I believe teal is currently on trend?