Knowledge Base: How to raise SEIS and EIS in the same round - a dual round

Structuring the round

Broadly, if you wish to raise both SEIS and EIS in the same round (a 'dual round'), then you have the choice of either issuing SEIS:

1. First come first serve - ie your first investors get the 50% tax relief of SEIS, your later investors get allocated EIS. This is easy to manage, especially when using and agile funding round, but you need to manage the disappointment of your EIS investors will feel when they are investing in the same round, at the same valuation, but getting 30% tax relief rather than the 50% offer to SEIS investors; or
2. Pro-rata - ie you are raising £400k in total, and if someone commits £10k in total, then they will invest £6,250 under SEIS and then £3,750 under EIS. You need to do this very carefully (see the next section!), and this can feel fairer to investors as they are all getting the same deal.

Closing the funding round - carefully!

This potential gotcha is easy to trip over – if you are doing a ‘dual round’ – i.e. raising £250k via SEIS and a further £150k via EIS, for example, and even just one EIS gets their shares on the same day as the SEIS shares are issued then this could destroy eligibility under one of the schemes.

You may wish to use a process similar to the following to avoid this item:

1. Before you close your funding round for signing, communicate specifically to each and every investor that they shouldn’t transfer any investment funds until you communicate with them again.

2. Once all documents are signed, communicate to all SEIS investors that they should transfer the SEIS funds only at this point. At this stage I would specifically advise investors individually regarding how much they should be transferring under SEIS. Note: If you have investors subscribing for both SEIS and EIS investment during this funding round (e.g. someone is investing £10k which has been split as £7k SEIS and £3k EIS) then this investor should be instructed to only transfer the £7k SEIS portion at this stage.

3. Check your bank account for received funds and chase investors. When you do receive a payment from a specific SEIS investor, you should mark the investment as received on the FounderCatalyst platform. This step ensures that the share certificates will be issued on the correct date.

4. Only once you have confirmed receipt of all SEIS investment and issued all SEIS share certificates should you pass this point on the process.

5. Wait a day – you must not issue SEIS and EIS shares on the same day.

6. Now instruct EIS investors to transfer investment funds.

7. Again, mark the funds as received on the FounderCatalyst as you get visibility of the funds arrive in the company bank account

Clear and consistent communication with your investors is key in this scenario, to prevent the loss of either SEIS or EIS eligibility for all investors.