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The EIS is a great way to attract top talent for your fintech business…here’s why

Using the EIS to make your fintech start-up attractive to top international talent

When it comes to attracting the sort of top talent from successful international companies that will really help your fintech business scale-up, there are many problems.

Attracting top business talent when you are a small and unknown business is not easy. So, ensuring your business is in the best possible position to scale and grow quickly is essential in this crucial war for talent facing London’s numerous fintech businesses. For instance, your business plan needs to be believable and have strong supporting research and analysis, and it must prove scalability for top level talent to be interested.

At our central London accountancy practice, Wilson Wright works with many fintech businesses to help them develop robust business plans that will help them successfully achieve rapid growth, and consequently be attractive to the talent they need.

Typically, one of the most frequent problems we come across is businesses having too little capital when they start looking for senior hires.

Too little capital = too much risk

The problem with being under-capitalised is twin-fold. Firstly, it creates the impression that your business is not serious and will quickly become resource-constrained… joining such a business is hardly an attractive proposition for someone with a secure and highly paid job who is also being courted by several ambitious tech businesses.

Putting aside the business risk, it also means the financial package your firm offers will involve too much financial risk for them… few are going to want to join a firm when their share options and other parts of the financial package could be diluted by the need for future investment.

So how should an ambitious early-stage fintech business go about ensuring it is well capitalised ahead of recruiting the talent needed to scale up?

Using the Enterprise Investment Scheme (EIS) to capitalise your business

Ensuring the business is adequately capitalised is essential for being attractive to top talent.  While there are numerous options, our experience of working with dozens of such tech businesses is that usually the best approach in the early rounds is to utilise the UK government’s Enterprise Investment Scheme.

The EIS is a scheme created specifically for smaller, higher-risk companies to help them quickly and efficiently raise finance by offering a range of tax reliefs to investors who purchase new shares.

We work with tech businesses to help them successfully use the EIS to raise money from private investors and HNW individuals.

By way of example, we recently worked with a fintech business with innovative technology.  There was a significant market opportunity but funding was crucial to the opportunity being exploited.

The company had previously been denied EIS clearance by HMRC. Upon being engaged we re-submitted an application, making full disclosure and within 6 weeks had received clearance.

The company was quickly able to raise the first-round finance and attract the key people it needed, in this case a CEO and Chairman with experience in running similar companies.

The company has since launched and closed a crowdfunding round and was oversubscribed within two weeks. It has reached break-even and is now growing its revenue at a rapid rate.

Sign up for future blogs and dinners for fintech CEOs and founders

In future blogs I’ll be looking at the other building blocks for attracting the sort of top talent that will really help you successful scale up your fintech business, including ensuring the right package for your top talent (and why we endorse the EMI share options scheme), the key role of the chairman in attracting top people and, really importantly, what top recruits are looking for when they analyse your business case.

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  • We also have regular discussion dinners in central London for fintech business CEOs where you can privately discuss your biggest business challenges.  For full details, click here

Discussion dinners for tech CEOs & founders: new London dates unveiled

Tech CEOs: overcoming your biggest dilemmas

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Undeniable positivity among the UK’s tech start-ups

The majority of Britain’s tech start-ups are confident of growth, in spite of challenges facing the sector.

A report published this month canvassed the views of more than 1,000 entrepreneurs in the technology sector.

Almost two thirds of respondents said they were targeting either dramatic or moderate growth by 2019. And nearly half were hoping to take on new staff over the course of the next two years.

Only seven per cent of those to take part in the research had concerns that their business may be forced to shrink or wind down over the same period.

Generally speaking the report found a willingness among tech companies to raise venture capital, with the appetite in this regard apparently eclipsing all other sectors.

More than three quarters (76 per cent) of small and medium-sized tech firms would be open to investment from venture capital, private equity firms or business angels.

The UK’s tech sector is presently estimated to be worth £161billion, although the report noted that the industry is still confronted with a number of key challenges, including finding skilled staff and ongoing political uncertainty, most notably arising from Britain’s departure from the European Union.

London in particular has a reputation as a hub for the industry, with figures suggesting that around a fifth of UK firms are headquartered in the capital.

Companies lose Corporation Tax deductions case

A First Tier Tribunal has this week dismissed an appeal lodged by three companies who had sought to deduct Corporation Tax on contributions to Employee Benefit Trusts (EBTs). Read More

Contentious Stamp Duty surcharge raises almost £1.5billion

The controversial decision to hike Stamp Duty for landlords and second home owners is squeezing more money from the sector than had been expected. Read More

Young British businesses are hungrier for growth, study suggests

Start-up businesses that have been trading for five years or less have imminent plans to recruit new staff and expand their horizons by the end of next month, according to new research.

A recent study carried out by Hitachi Capital suggests that one in five (20 per cent) of such small and medium-sized enterprises (SMEs) expect to expand their workforce by hiring new members of staff before the end of April 2017.

This is comparable with 17 per cent of SMEs that have been trading for six years or more, suggesting that younger, less established businesses are more confident in their firm’s short-term growth.

Hitachi Capital’s quarterly British Business Barometer also found that, regionally, small ventures in London, the South East, the North West and Scotland had the most ambitious recruitment plans for coming months.

If you are a small business owner, or you are setting up a new firm and establishing yourself in the business world, it is crucial to make sure that you explore all of the expansion opportunities available to you. This can be achieved by ensuring that you are supported by experts who understand today’s business environment and are experienced in helping people just like you to achieve specific entrepreneurial goals. It is equally important to seek out expert tax-planning assistance and advice.

Wilson Wright are here to help. We can assist you with all tax-related matters and ultimately help you to get ahead in the business world. Our team can advise you on managing your spending and day-to-day costs, and help you to implement tax-efficient business structures and find your feet on the path to success.

For more information about our services for small and start-up businesses, please contact us.       

VAT rules need to be updated, Treasury advisor insists

The current VAT system is in sore need of reform, the Office of Tax Simplification (OTS) has argued. Read More

SMEs are afraid of ‘business jargon’, says study

Small businesses across the UK are afraid of ‘business jargon’ – and are missing out on important expansion and growth opportunities as a result, according to a new study. Read More

Property bodies call upon Chancellor to consider SDLT reforms in Spring Budget

With the Spring Budget just around the corner, property bodies are calling upon Chancellor Philip Hammond to consider reforms to Stamp Duty Land Tax (SDLT). Read More

Research sheds light on entrepreneurial ambitions of people living in the UK

According to a new study, more than half of people living in the UK have ambitions to one day become their own boss – while it is estimated that one in every ten Britons will be ‘an entrepreneur’ by the end of 2018.

The research, which was carried out by funding group Idinvest Partners, also shed light on the entrepreneurial ambitions of different age groups.

Their research found that more than three quarters (76 per cent) of 18-24 year-olds wish to start up their own business in a post-Brexit Britain, while 70 per cent of 25-34 year-olds are hoping to do the same.

Meanwhile, 66 per cent of 35-49 year-olds and 48 per cent of 50-64 year-olds added that they also wished to build and run their own business.

When asked about their motivations, 48 per cent of people cited financial success as the key reason they wanted to be their own boss, while 47 per cent said that freedom and independence was most important.

If you are a small business owner, or you are setting up a new firm and establishing yourself in the business world, it is crucial to make sure that you are supported by experts who understand today’s business environment and are experienced in helping people just like you to achieve specific entrepreneurial goals. It is equally important to seek out expert tax-planning assistance and advice.

Wilson Wright are here to help. We can assist you with all tax-related matters and ultimately help you to get ahead in the business world. Our team can advise you on managing your spending and day-to-day costs, and help you to implement tax-efficient business structures and find your feet on the path to success.

For more information about our services for small and start-up businesses, please contact us.                


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