Yet early-stage companies often find it difficult to secure funding. Anastasia Sagaidachna, senior investment manager in Foresight’s ventures team, explains that high uncertainty, limited collateral and a lack of trading history can make traditional lending challenging, while many investors are wary of backing high-risk start-ups.
To help bridge this structural funding gap, the UK government introduced Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EISs). These programmes offer tax incentives to encourage investment in innovative early-stage businesses, offsetting the risks involved. In turn, they direct private capital towards high-growth sectors, support job creation and deliver wider economic benefits.
What are EIS and VCT schemes?
One of the main hurdles for early-stage businesses is securing the risk capital required to develop products, recruit talent and scale. VCTs and EISs aim to unlock private funding by enhancing the risk-return balance for investors.