EIS Stands as an “Oasis of Calm” Ahead of the Budget as Deal Flow Surges 30%

As Chancellor Rachel Reeves prepares to deliver a Budget widely expected to bring tax rises across multiple areas on 26 November, Your VC has described the Enterprise Investment Scheme (EIS) as an “oasis of calm” providing rare long-term certainty for investors backing UK innovation.

With speculation mounting over potential increases to income tax thresholds, property taxes, and business levies, the tax-efficient investment platform has emphasised that EIS, currently guaranteed until April 2035, remains one of the few areas where investors can plan with confidence in an otherwise uncertain tax landscape.

Kieron Launder, Chairman of Your VC, said: “As we approach the Budget, EIS stands out as an oasis of calm. While tax rises are expected across many areas, EIS provides structural certainty until 2035 and delivers one of the few investments where post-tax returns can actually exceed pre-tax returns. In an uncertain economic environment, that certainty becomes invaluable.”

Entrepreneurship Thrives Despite Uncertainty

Far from retreating in the face of economic headwinds, the firm has seen deal flow increase by 30% year-on-year, a surge Launder attributes to businesses focusing on solving real problems during challenging times.

“In difficult economic conditions, there’s actually more focus on addressing fundamental issues,” he explained. “The companies we’re backing aren’t building ‘nice-to-haves’, they’re solving critical business problems. When budgets are tight, businesses prioritise solutions that reduce costs, deliver efficiencies and address genuine pain points.”

The firm invests predominantly in B2B companies providing measurable value to other businesses, precisely the type of innovation that gains traction when economic pressures intensify.

“These are businesses helping other businesses navigate difficult conditions,” Launder continued. “That’s why we’re seeing increased deal flow despite slower GDP growth and elevated inflation. Entrepreneurs are responding to market needs and investors recognize the opportunity.”

Selectivity Reflects Quality, Not Quantity

Despite the 30% increase in opportunities, Your VC maintains rigorous standards progressing fewer than 2% of deals to investment.

“We look for three things: a good idea, an economically sound and scalable business model and experienced management with the discipline to execute,” said Launder. “In uncertain times, that discipline becomes even more critical. We spend significant time with founders to ensure they understand sales, cash flow and capital efficiency, not just product development.”

The firm’s approach reflects broader market dynamics: while small companies (those with fewer than 50 employees) account for approximately 40% of UK private sector employment, government funding strategies are evolving toward larger scale-up investments. This makes private sector capital through schemes like EIS increasingly vital for early-stage growth.

Why EIS Certainty Matters Now

Against a backdrop of rising government debt, demographic pressures from an ageing population and persistently limited budget surpluses over the past 30 years, future economic growth is critical. Maintaining tax incentives for risk capital in small businesses has therefore never been more important.

EIS offers investors:

• 30% upfront income tax relief

• Tax-free capital gains after three years

• Loss relief to reduce downside risk

• Guaranteed tax treatment until April 2035

“Whatever happens in Wednesday’s Budget, EIS provides one of the few certainties for the future of investment in Britain,” Launder concluded. “It ensures entrepreneurship can continue to thrive despite challenges and gives UK investors a clear, tax-efficient route to participate in that growth. The quality and volume of businesses seeking funding show that innovation doesn’t stop in difficult times; if anything, it accelerates as entrepreneurs focus on solving the problems that matter most.”