DSW Ventures launches SEIS fund to back regional start-ups
DSW Ventures, the venture capital arm of the Dow Schofield Watts group, is launching its first Seed Enterprise Investment Scheme (SEIS) fund to enable private investors to benefit from tax incentives while funding regional start-ups.
It aims to raise up to £2m for the new fund, of which over £230,000 will come from personal investments by Dow Schofield Watts partners and associates. The DSW Ventures SEIS Fund plans to invest at least £1m a year in early-stage technology businesses and university spin-outs outside of the London-Oxbridge golden triangle.
The fund aims to fill the persistent funding gap for regional start-ups. According to data produced for the British Business Bank’s Nations and Regions Tracker, 70% of UK seed-stage investment goes into London and South East businesses despite having only 30% of the population.
The firm’s prominent position in the national early-stage venture capital market means that it now sees over 2,500 new applicants a year.
The launch of the new fund follows changes to the tax rules which come into force in April 2023. Companies can now receive SEIS funding from £150,000 to £250,000 and investment is now open to businesses up to three years old, instead of two years at present. “It was the one sensible thing that Kwasi Kwarteng did in his very brief time as Chancellor,” cofounder of the fund, David Smith, told TheBusinessDesk.com. “It’s made earlier stage investments that little bit more attractive to institutional investors, previously SEIS was really just a tax sweetener for friends, family and individual angel investors.”
Established in 2019, Manchester-based DSW Ventures has invested in 11 businesses, facilitating £12.5m of venture capital. The firm made its first exit in December with the sale of ACAI Outdoorwear, achieving a 4.2x return.
Keith Benson, cofounder of DSW Ventures, commented: “We set up DSW Ventures to take advantage of the opportunity created by the huge regional imbalance in early-stage venture capital. Investing in entrepreneurial and scientific talent acts as a catalyst for growth in local economies, creating jobs and supporting communities whilst generating very attractive investor returns. Our investors – many of whom have built businesses or work as professionals in the regions – totally understand this and are therefore keen to work with us.”
Cofounder David Smith added: “We have built our investment business on the principle that the more you put in, the more you get out. We work on an intensive basis with our portfolio companies to maximise the benefit for them and investors. The launch of the SEIS fund means that we can start that journey at an earlier stage – so we can optimise businesses from the start and take them through several stages of funding.”