The EIS scheme was originally designed to encourage investors to directly invest in companies themselves. However, there are now many EIS providers where professional managers work to select suitable EIS companies that would be of interest to their would be investors.
These providers typically offer EIS solutions or funds in either single companies or via a professionally managed fund investing in a selection of EIS companies in specific or multiple sectors. There are also some providers that target substantial capital growth for investors and others that focus on capital preservation depending on the risk profile of the investors.
Following the start of the new tax year, many EIS providers are reporting an upswing in interest from investors looking to purchase shares in EIS qualifying investments. This follows a number of changes to the scheme announced in the Autumn 2017 Budget that doubled the EIS investment limits for knowledge-intensive companies and increased the amount of money that companies could raise. These changes are helping to encourage investment in EIS schemes with higher risks and rewards.
The EIS providers help to drive investment in many EIS schemes and offer investors a wide range of options. The providers can also help to speed up the EIS process by being very aware of the rules of the scheme and acting as a go-between with the company and investors. The provider will also seek to raise the money for an EIS company and ensure funds are spent as quickly and efficiently as possible to help investors make an exit at the earliest opportunity.
The providers usually make their money by charging the companies seeking funding a fee. In some scenarios, investors are also charged a fee. There can also be additional fees for investors dependent on the returns achieved on their investment. Before making any investment, it is important to carefully check what fees are being charged.
It is also important to check the track record of any EIS providers. These investments can certainly have a place in an experienced investors portfolio. However, it is important to be fully aware of all the associated risks and choose any provider wisely.
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