Autumn Budget: A Fruitful Harvest for Crowdfunders
Investors using the Enterprise Investment Scheme (EIS) had a huge reason to celebrate after ‘Spreadsheet Phil’ doubled the investment limit from £1m to £2m in his Autumn Budget. After months of consultations with VCTs, Phillip Hammond defied all the predictions by widening the EIS scheme, rather than introducing any significant restrictions.
This means that while an investor has been able to claim back up to £300,000 in tax relief this financial year, the threshold will leap to £600,000 from April 6 2018. On the other side, new eligibility criteria means that a company will only be pre-approved for EIS if they can show they are taking real risk (albeit reduced by a taxpayer subsidy) in exchange for the potential to achieve high returns.
There has also been an increase in the period during which “knowledge-intensive” companies can qualify for EIS and/or VCT investment up to 10 years following the date at which annual sales first exceed £200,000.
The government also announced additional support to companies in the life sciences and technology sectors through an increase in R&D tax allowances and other additional schemes, although the specific details have been fairly light in that area.
The revision of the EIS scheme aims to discourage investors from putting their money into low-risk assets – often seen as tax vehicles – and instead back Britain’s innovative, higher-risk, and “knowledge-intensive” early-stage firms, or KICs for short.
This new EIS limit will be a boon to forward-thinking companies looking to crowdfund their innovative ideas, and for the investors who support them.
TribeFirst looked at three knowledge intensive life sciences campaigns that will be allowed to double their EIS allowance from £5m to £10m and get almost three years longer to take advantage of it.
OR Productivity’s FreeHand
FreeHand designs and manufactures robotic assistive arms, which hold and manipulate laparoscopes and cameras during keyhole surgical procedures.
By providing a still image for a surgeon to operate from, FreeHand eliminates the need for a medical assistant to hold the camera, freeing-up crucial staff for more important work. The system has also been shown to reduce the duration of surgery, patient recovery times, and in-turn, hospital bed occupancy.
The wide availability of systems like Freehand will make it difficult for hospitals to justify the retention of their current, manual camera holding practices. And with staff, bed and budget shortages among the NHS’s biggest future challenges in a continued age of austerity, technology like FreeHand could be crucial.
OR Productivity can raise up to £1.8m in its current round on Capital Cell – the first European equity crowdfunding platform specialising in BioTech and life sciences – which will accelerate their growth beyond the UK and allow them to be more aggressive with global sales.
If they raise their maximum, it will increase the ROI for investors, and the speed of generating investor returns.
The new rules raises the stakes, making it more likely a round of this size will be filled by a smaller number of investors. Also, having a decade to take advantage of EIS means they can innovate further without worrying about future investors missing out on tax relief, which has the potential to maximise value for shareholders whilst giving the business the time it needs to realise its full potential.
Equinectar by Tharos
Tharos has created a new malt extract feed supplement that aims to address the overwhelming number of health, welfare and performance issues caused by modern day, high-carb feeding practices in horses; these practices can lead to life-threatening problems.
By helping to maintain balanced equine body function and improving condition by promoting an optimal gut environment, Equinectar could be instrumental to the improvement of health of horses and has been demonstrated to increase the win-rate of performance horses, verified by independent analysis of racing data for a well-known race yard over a three-year period.
Tharos will soon launch an equity crowdfunding campaign in order to fund veterinary trials to further support patent pending Equinectar, and a pipeline of other products and diagnostics in the growing equine healthcare market.
Clinical studies show after six months of trying to conceive, 75% of women have an ovulatory issue which can result in variable ovulation timing. This variability makes it difficult for women to know at what point in their cycle is best to try for a baby, and many women who struggle are told that they may not be ovulating at all.
The OvuSense fertility monitor solves this problem by predicting ovulation 24 hours in advance using data from the current cycle which is not affected by this variability. Based on the clinical evidence, the company claims this more than doubles the chances of conception for couples, including those which struggle due to ovulatory issues.
OvuSense comprises a vaginal sensor which tracks changes in core body temperature, and via a smartphone app for data upload. It is a Class 2 medical device but sold directly to consumers in the UK, Ireland, USA, Canada and Australia via the company’s website: www.ovusense.com
OvuSense’s patented technology also uniquely enables diagnosis of ovulatory issues and tracking of fertility treatment.
Recent press coverage shows exactly how OvuSense helps women who struggle to conceive.
OvuSense is currently crowdfunding on Capital Cell and a successful raise will allow them to accelerate sales and improve the product further, helping even more couples around the world to conceive.
Some of the biggest winners in the government’s drive to fuel innovation are life science companies like the above, and the investors who back them. They’re companies that are very R&D-intensive and have the chance to add significant value to society, but also require deeper investment and longer timeframes to test their products and get them approved for use in the various global regulatory systems.
And with the new EIS threshold, we hope to see more and more innovative companies put their disruptive ideas to the crowd, and be met with renewed enthusiasm from increasingly confident investors.