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Investors missing out on benefits of early stage firms, says SyndicateRoom

New research shows that around one in ten retail investors have put cash into products aimed at early-stage companies in the past year

Investors missing out on benefits of early stage firms, says SyndicateRoom
Knowledge about these products is reportedly much higher for those aged 18–30

Many investors are missing out on tax efficient products aimed at early-stage companies, but younger people are making use of them in the current low-yield environment.

This is according to online investment specialist SyndicateRoom, which offers access to early stage companies.

New research shows that around one in ten retail investors have put their cash into products aimed at early-stage companies in the past year, including Venture Capital Trusts (VCTs), the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS).

Knowledge about these products is much higher for those aged 18–30, as well as for those with more than £1mln in investments.

Millennials, generally seen as born post 1980, are twice as likely to embrace early-stage investing as a means of reaching their financial goals than 51 year olds and older, it said, with 92% of investors aged 18–30 believing a portfolio of diversified early-stage equities would help them achieve their long-term financial goals, compared to 49% in the older category.

Chief executive of SyndicateRoom Gonçalo de Vasconcelos said: "This belief in the value of Britain’s young companies and business ideas by those who will control the economy of tomorrow is highly encouraging.

He added: "Many investors are having to look at alternative routes to get the capital growth they need to reach their financial goals, in today’s low-yield economic environment.

"As part of this move, many are willing to take on additional risk in order to meet their goals.

"It is hugely important that any retail investor considering an investment in early-stage businesses makes sure they are able to take advantage of the generous tax breaks when doing so, as this can have a material impact on returns and, in turn, lead to them reaching their goals quicker.”

MP Mark Field, a former chairman of the All-Party Parliamentary Group on Venture Capital and Private Equity, said: "  The Enterprise Investment Scheme (EIS) is designed to offer a stimulus for Britain’s ambitious small and medium businesses and provides a burgeoning asset class for British investors.

"EIS also plays a role in bringing forward the kinds of technological innovations that will be so important to maintaining Britain’s competitive advantage in business and finance on the world stage."

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