78% tax relief lures start-up investors Private investors are being given the opportunity to back a range of risky start-up businesses with sums of as little as £10 - and claim up to 78 per cent tax relief - thanks to new services giving access to the government's Seed Enterprise Investment Scheme (SEIS). When announced in last year's Budget, the SEIS - which offers tax incentives for funding pre-revenue start-ups seeking no more than £150,000 - was expected to be used by "friends and family" of existing entrepreneurs. Financial advisers argued it would not be cost-effective to spend money on research and "due diligence" for external investors, given the small sums involved. However, several investment managers, and a new online platform, are now making it possible for individuals to take part in SEIS fundraisings. This week, a new website, Seedrs.com, was launched to provide a platform for start-ups to pitch their ideas to investors. Potential backers who pass a short test to prove they understand the risks involved will then be able to view videos and written details of the business ideas, and choose to spread investments of between £10 and £150,000 across various start-ups. Once an investment is made, Seedrs.com will hold and manage the shares on the investors" behalf. But unlike other "business angel" investment portals, the platform has regulatory approval from the Financial Services Authority. At launch, 15 start-ups were seeking investors via the platform - and most are eligible for SEIS. Investors who back these businesses can claim 50 per cent upfront tax relief plus an exemption from 28 per cent tax on any capital gains after three years. Co-founder Jeff Lynn hopes investors will "enjoy the process of picking and choosing the businesses and people they want to invest in." However, Seedrs.com provides no advice on which business to back - it simply verifies the accuracy of their pitches - and charges 7.5 per cent of all returns. For investors who want professional help in choosing which start-ups to back, several managers offer portfolio services that will consider companies qualifying for SEIS. Oxford Capital plans to incorporate a few SEIS investments in its Oxford Gateway EIS Portfolio, which diversifies investment across growth-stage businesses involved in funding rounds. "Where we identify a business which has the potential to deliver growth, fits our investment criteria, and falls inside the Seed EIS rules, we'll back it," says investment director David Mott. Investors pay a 5 per cent initial charge, 2.5 per cent a year and a 20 per cent performance fee after the return of initial capital. Parkwalk Advisors also offers a managed solution to investing in SEIS - which partner Moray Wright argues is essential for individuals seeking to evaluate start-up opportunities. "The devil is in the detail of the actual SEIS investments and where Parkwalk, as a fund manager, has an advantage over a platform is ensuring that the investment and the companies are, and remain, SEIS-compliant throughout the three-year minimum holding period," he says. This will be detailed and time-consuming and could potentially have some pitfalls for groups of investors who may not have a designated lead manager/co-ordinator. Parkwalk charges the same for SEIS as EIS: 5 per cent initial charge and 1 per cent a year management fee for five years. DFJ Esprit's Angels" Co-Investment Fund says it puts the majority of its "angel" investors" money into EISs, but will include "some small SEIS deals as part of the portfolio." It has not disclosed its charges.