EIS Industry Report 2019/20

8 9 MARKET UPDATE FUNDRAISING UPDATE RESILIENCE, BUT THE BIG IMPACT IS YET TO COME 1200 1400 1600 1800 2000 1000 800 600 400 200 0 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 500 1000 1500 2000 2500 3000 3500 4000 0 The figures published by HMRC in May 2019 show there is some resilience in the amount of funds raised by all companies in the EIS market, after a dip the previous year. The provisional figures show £1.929 billion was raised in 2017-18, marginally up from the £1.901 billion the previous year. While that is still down on the £1.976 billion raised in 2015-16, to put this in context it remains well above the £1.592 billion raised in 2013-14, which at that time was the highest amount ever raised under EIS. Meanwhile, the overall number of companies raising funds has continued to rise since 2004-05, reaching 3,920. The number of companies raising funds for the first time also increased from 2016-17, but at 1,710 remains slightly behind the peak of 2014-15, when 1,745 companies raised funds for the first time. Although all the other metrics increased on the previous year, it is worth noting that the amount raised by companies for the first time dropped, from £844 million to £759 million. That was some way down on the all time high of £1.125 billion seen in 2014-15. This could in part be down to the continued uncertainty in the UK, particularly around Brexit, which may have discouraged new companies from raising significant sums because they have not been able to plan for their long-term future. Another reason for this slowdown - and the fact that the amount of money raised by all companies is running at roughly the same as in 2014-15 - will be the impact of the rule changes to EIS and venture capital trusts (VCTs) in the 2017 Autumn Budget. The increased risk to capital requirement has caused a number of managers and investors to pause while they refocus their attention onto higher risk propositions, and it is expected that the 2018- 19 figures will reflect this even further. Mark Brownridge, director-general of the EIS Association, has suggested that the announcement of these changes in Autumn 2017, before their introduction in Spring 2018, may have created a “buy now while stocks last” environment that helped push the 2017-18 figures up from the previous year. EIS SINCE LAUNCH SOURCE: EIS1 FORMS, HMRC AMOUNT OF FUNDS RAISED NO. OF COMPANIES RAISING FUNDS