What to include in your business plan for an SEIS/EIS Advance Assurance Application

Across the hundreds of SEIS/EIS Advance Assurance applications we see every month at SeedLegals, no two look exactly alike. HMRC are picky about having a clear and concise understanding of the company, but are flexible when it comes to how that information is presented to them.

Often, the best answer to “What should my Pitch Deck look like?” is “It should look however it looks now”. Any materials you have already prepared to show investors are usually the best starting point. Nonetheless, we suggest every pitch deck sent to HMRC, for Advance Assurance review, include the following 10 topics:

1. The ‘Problem’
2. Our Solution
3. Our Business Model
4. Intellectual Property and Structure
5. Competitors and Market Size
6. Risk to Capital [SWOT]
7. The Team Profile
8. History and Progress
9. Roadmap
10. Financials
11. The Ask‍

These might each take several slides, depending on the stage you’re at, and the nature of the business, but for SEIS/EIS purposes it is important that the deck touches the following areas:

1. The ‘Problem’

This outlines the problem which the company is poised to fix. This isn’t too touchy or pertinent from HMRC’s perspective, but is a fairly common starting point for most pitch decks.

2. Our Solution

Following on from Slide 1, the solution slide is crucial. This must be a clear and concise statement of what the Company does. This section should cover HMRC’s requirement to see ‘details of all trading or other activities to be carried on by the company’. Avoid Jargon, this needs to be comprehensible to someone with no sector specific knowledge!

3. Our Business Model

Here, it’s important to cover how the business will be making money. Do you have an affiliate agreement in place? Where do you charge fees? From whom are those costs taken? This section should set out a profile of who your customers are.

4. Intellectual Property and Structure

If the business has any intellectual property uses, especially regarding Patents, it would be important to include all of the details of who will be owning and licensing these rights. In addition to this it is essential to provide any relevant details on employment structure. Who will be hired? What work will be outsourced? What external software or IP will you be licensing? This type of information is essential to HMRC, especially under the new Risk to Capital condition.

5. Competitors and Market Size

Equally important, to demonstrate an understanding of the risks and marketplace, is to show a snapshot of the market. This is often demonstrated with market sizing metrics, and a chart plotting the main direct or indirect competitors. Clearly identify the customers you serve.

6. Risk to Capital [SWOT]

The clearest way to address the Risk to Capital is by including a brief  SWOT analysis with focus on the Weaknesses and Threats of your business. It’s a good idea to explain how these factors contribute to the risk of the investment and/or show the company’s objective to develop and grow.

7. The Team Profile

Within the pitch deck, it’s usual to include a slide which displays all of the founders, NED’s, and founding team. There’s not too much to worry about with SEIS / EIS here.

8. History and Progress

Typically, it’s important to provide a brief background to the project – usually to demonstrate traction. This often is presented in the form of a company timeline. This provides a more detailed indication to HMRC of when you began trading, and what the Company has been doing prior to (or since) that point. Traction should also provide some metrics associated with the current scale of the Company.  Be clear as to whether or not you are currently trading.

No worries if you’re at a very early stage – this would be a great place to demonstrate your idea valuation.

9. Roadmap

The Roadmap is potentially the most essential slide (or slides) for HMRC. It is essential that you demonstrate an intention to grow the business in the long term (especially if you work in film production or work on multiple discrete projects). Here’s more on applying for Advance Assurance as a tv / film or production company.

Here, you must set out the plans to grow the Company. This ranges from new geographical markets, new products or product-features, new lead generating streams, etc… It is also important to ensure that your roadmap for the funding is set out. How are you going to spend your thousands (or millions)? HMRC are looking for a demonstrated intention to grow, and that the SEIS and EIS funds will only be used on qualifying business activities. Check out HMRC Venture Capital Scheme Manual to read more on qualifying business activities.

10. Financials

This is often attached to the application as a separate document (as many Companies will already have a fully set out excel file covering all of the finances). The minimum requirement here is a basic chart within the business plan which sets out the 3 year (from the time of application) projected profit and losses.

If you already have a more complete file covering this, it would be best to attach this, rather than worrying about including a summary within the pitch deck.

11. The Ask

Finally, it’s common to provide a summary of your funding plans. No worries on this one! We’ve already done the work for you here, free to use our Fundraising Page template. An important note here is that you don’t Advertise SEIS or EIS eligibility until HMRC approve you. The purpose of Advance Assurance is to be able to advertise yourself as eligible, so HMRC don’t like founders making this call for themselves. (Of course, it’s totally fine to say that you are applying for SEIS and EIS, and that eligibility is pending.)

5 Extra Tips for SEIS / EIS Pitch Decks:

1. There’s no need to include page long NDA’s or FCA notices. These usually aren’t necessary. But… you should always have a ‘Capital At Risk’ slide on a pitch deck. (NDA’s don’t work in venture, so it’s a good hack to safeguard your idea).
2. Don’t use fancy language, just tell it how it is.  If you are creating an Uber-esque service for hamsters, then say so, don’t call it a technology driven transportation system for Mesocricetus Auratus.
3. Make sure to be careful about liberal usage of the word ‘partnerships’ and ‘partnering’! HMRC often interpret this to mean Legal LLP arrangements (which aren’t SEIS / EIS eligible). Whilst everyone loves to ‘partner’ with everyone, it is best to be clear. Some companies are better described as suppliers or distributors, or even just creative collaborators.
4. Ensure to be unequivocally demonstrating a risk for investors and a long-term intention to grow!
5. Be careful about mentioning exits. You are not eligible for SEIS / EIS if you have any pre-arranged exits. No start-ups we deal with fall under this category, however plenty of companies still include grand (and unwarranted) exit hypotheses.
6. Of course – it is best to provide this as a PDF. Make sure this is roughly 5MB or less (the total application across all documents must be under 8MB). If your file is too large, we suggest using www.smallpdf.com

If you are uncertain on any of the above, it’s best to reach out to us directly! We’ve seen hundreds of SEIS/EIS applications, and provide all of our customers with a detailed review of their Pitch Deck. Hit the chat feature in the bottom right corner to speak to a member of the team!

And if you’re not already using SeedLegals, here’s how easy we make it easy to secure Advance Assurance from HMRC.