That represents a 20% drop in funds raised and an 11% drop in the number of companies using the scheme, compared to the previous year.
This marks the second consecutive year of decline, following a peak in 2021–22 when investor confidence and economic recovery post-COVID drove record levels of participation in tax-efficient investment schemes.
"This data highlights a real concern about how hard it’s becoming for high-growth UK companies to access early-stage capital,” said Freddie Hamilton, Head of Investment at Growthdeck. “The tax incentives offered by EIS remain among the best in the world – but they need to be matched by investor confidence and a stable political and regulatory environment."
London and the Southeast continued to dominate in terms of investment volumes, and the Information & Communication sector again attracted the lion’s share of funds. However, many regional and sectoral start-ups appear to be struggling to raise investment as macroeconomic uncertainty persists.
Despite the downturn, the long-term outlook for EIS remains structurally positive, especially with the Government’s extension of the scheme to at least April 2035.
As we have previously advised the incoming government, supportive policy measures could, though, play a crucial role in reinvigorating investor appetite.
“We’d like to see the government take a more active role in promoting and streamlining EIS investing,” added Freddie. “UK innovation needs patient capital, and EIS remains a cornerstone of that funding landscape.”
To see the full 2023-24 breakdown and report, please visit the HMRC website.