As an established business owner and serial entrepreneur it is in my interest to keep abreast of any funding opportunities that might be out there.

However, previous attempts to gain government funding for projects and business ventures have all proved to be time consuming, distracting and eventually fruitless and unsuccessful. So I consider any new government-backed schemes with a touch of scepticism.

However, the government have launched a new scheme that allows you to generate your own funding from private investors, but then it pays them back as a generous tax break.

I am currently looking to obtain private funding for our innovative and award winning online recruitment service, Smart Recruit Online, and so I have just applied to the government-backed SEIS (Seed Enterprise Investment Scheme).

If you haven’t come across this yet and you are looking at funding for a project of your own, then this is something that you absolutely must look into.

This scheme is making so much noise in investment circles at the moment, that it is evoking strong public statements from recognised Angel Investors suggesting that this is potentially “the world’s most generous scheme for Angel Investors”. 

It has also generated plaudits from accountants and tax experts that are equally generous in their praise, “excellent”, “astonishing” and “extraordinary” are just a few exclamations that I have seen from that part of the finance community.

From a recruitment industry perspective, this has the potential to seriously influence and drive some major technology innovation. 

There is as much as 64% tax relief for investors in start-ups schemes, capped at £150k investment level, for each private investor. So, in principle, an investor could put in £150k and claim back an initial £75k and an additional £21k at the point that they dispose of their shares.

I decided that I wanted to understand how the scheme worked a little better and to gain some insight, to best position ourselves to take advantage of this generous initiative. I had recently read an article posted by Invest Milton Keynes, a local council initiative, who were waxing lyrical about the success that Milton Keynes enjoys as the ‘investment capital of Europe’, so I invited some representatives from the Invest Milton Keynes team to come and talk me through the SEIS program.

Surprisingly it’s relatively straightforward. There is a set of criteria that you need to comply with and if you do, you complete the application form, include your financials and attach your business plan and investment executive summary. You then wait to hear whether you have satisfied their criteria and get accepted in principle. It is in principle, because your investor has to apply again for the rebate and if the business has changed dramatically outside of the details that you originally submitted, they retain the rights to withdraw the SEIS offer.

The rules on this seem quite simple. The company must be carrying on, or preparing to carry on, a new qualifying trade. ‘New’ means no more than two years old (and some trades are excluded). The company must have fewer than 25 employees and no more than £200k in gross assets. A company can receive a maximum of £150k under SEIS. Investors aren’t allowed to have more than a 30% stake in the company, or be an employee, and can invest up to £100k per year in companies. As you might expect with such generous tax reliefs, there are a number of anti-abuse rules in place, both for the investor and for the company.

I am reliably informed, that locally; there have been no instances of the SEIS being withdrawn at the point of final application by the investor.

The government recognises that investing in early stage innovative companies is risky, but also sees that by encouraging investment in innovative products and services, this has the potential to reduce unemployment and establish a network of innovative companies that can help pull this country up into economic growth mode.

I saw a quote from former Dragons Den angel Doug Richard, who said: “SEIS promises a twin benefit for British business. By widening the pool of business investors, it will go a long way to narrowing the funding gap for small business owners who hit a brick wall seeking funding from the banks or other traditional means. By shifting the focus on to angel investors, it can also herald a change of culture about start-up capital. Angel investment remains an attractive source of funding for start-up owners, who can rely not only on up-front capital but the advice and support of an experienced business owner fully invested in the success of their venture.”

At a time when access to capital is difficult, especially for start-ups, SEIS seems to provide a highly attractive tax incentive to help get a new business get off the ground, creating growth and jobs for UK plc.

Further information on SEIS for investors and entrepreneurs can be found at www.seiswindow.org.uk with HMRC guidance at www.hmrc.gov.uk/seedeis

• Mark Stephens is the current joint managing director of the F10 Group and the founder of Smart Recruit Online, Ask The Experts, Websmart UK and most recently the Technology in Recruitment Alliance.