Seed funding helping business to grow
Entrepreneurship, business, start-up, funding, seed funding, seed enterprise investment scheme, SEIS, LJMU, Liverpool
The costs of starting a business can be surprisingly low and a vast majority of start-ups are self-funded (also known as bootstrapping) but what do you do when your business idea needs a significant cash injection to move the idea forward? One option is the Seed Enterprise Investment Scheme (SEIS), which offers tax benefits to investors who purchase new shares in early-stage companies. LJMU graduates and Idealab 2016 participants Liam O'Donnell (Business Studies) and Rob Dobson (Computing and Information Systems) have both opted for the SEIS and we caught up with them recently to find out how they got on.
Liam is the founder of Skiffl, an app that takes the headache out of organising a night out. Skiffl will get you on the guest list and help you to skip queues, split the bill with friends and book private booths. Rob is the founder of Digi-Hawk Ltd, a smart detection system for debris and he is currently in the application process for SEIS.
Where there any finance alternatives that you explored? [Liam] No, I decided against the only other viable alternative of a bank loan. [Rob] I decided I need seed funding as I want guidance from a business person who has contacts and experience in my sector.
How long did the process take? [Liam] The application to get advanced assurance took around a month; SEIS only becomes applicable once you have spent 70% of funds raised and this took around 8 months to spend. [Rob] The application process took me three weeks, with most of the time in waiting for a response. The initial submission only takes 20-30 minutes.
What has the investment meant to your business and how has it changed what you are doing? [Liam] It has helped me turn Skiffl into a full-time business and enabled me to hire members of staff, to develop our product so it is infinitely better and to put sufficient funds into marketing.
"SEIS has allowed Skiffl to reach the next level, meaning that the business could become 'professional' as opposed to a part-time project"
[Rob] Having SEIS has meant my company valuation has increased. Investors immediately see your venture having higher value and there is less risk for them to invest in you.
"Since having SEIS, I have more confidence when I pitch Digi-Hawk to investors. I may end up having a few offers to choose from, which is a privileged position to be in at the start."
Both Liam and Rob are recent graduates who started developing their business ideas alongside their studies. The award-winning Centre for Entrepreneurship at LJMU helps our students to start their own ventures and test their ideas, with additional support from the Bathgate Group of companies. We also provide support for LJMU graduates up to five years from the end of their studies and have been active in student enterprise since 2003. You can follow us on Twitter and join our communities on Linked In and Facebook.