How to Use SEIS to Raise Money for Your Startup

Using SEIS to raise money is one of the most effective ways for early-stage UK startups to attract angel investors, especially before you are ready for a full EIS round. By offering generous tax relief to investors, the Seed Enterprise Investment Scheme reduces downside risk and makes backing young companies far more appealing.

If you’re planning to raise capital under SEIS, securing advance assurance early is critical. With SEIS and EIS advance assurance, you can approach investors with confidence, knowing HMRC has confirmed your structure is likely to qualify.

SEIS often acts as the first step in a wider funding journey. Many founders use it to prove traction, then move on to EIS once the business has grown. Understanding how SEIS fits alongside schemes like EIS CGT deferral and longer-term EIS investment limits helps you plan a smoother raise and avoid mistakes that can derail investor interest later.

What SEIS is and why founders use it to raise money

The Seed Enterprise Investment Scheme is a UK government-backed incentive, set out in HMRC’s official guidance on the Seed Enterprise Investment Scheme, designed to help very early-stage companies raise equity investment while offering generous tax reliefs to investors.

Founders use SEIS because it materially improves fundraising outcomes:

• Lower investor risk
  SEIS offers investors up to 50 percent income tax relief, potential capital gains tax exemptions, and loss relief if the business fails.
• Easier early-stage fundraising
  Because the downside is reduced, angel investors are more willing to back companies with limited trading history.
• Faster funding timelines
  SEIS-backed raises often close quicker, especially when advance assurance is secured before pitching.
• Clear pathway to future funding
  SEIS is typically the first step in a wider funding journey, with many startups progressing to EIS once they have traction.

SEIS is most effective when used early. It is designed for young companies raising their first external equity, before larger funding rounds become viable. Once a business grows, founders usually transition to EIS, which supports higher investment limits over a longer period. 

Our guide on difference between SEIS and EIS explains how the two schemes work together and when it makes sense to move from one to the other.

Importantly, SEIS is not just a tax scheme. It is a practical fundraising tool. When structured correctly and supported by advance assurance, it signals to investors that your company is compliant, credible, and planning for growth beyond the seed stage.

How SEIS helps you attract investors

SEIS makes early-stage investment more appealing by reducing downside risk and improving potential returns. For founders, this shifts investor conversations from pure speculation to structured opportunity.

Because of these advantages, many angel investors actively look for SEIS-qualified opportunities. For founders, this means access to a broader investor pool, faster fundraising conversations, and stronger leverage when negotiating terms.

When SEIS is positioned as part of a wider funding journey that later includes EIS, it becomes even more attractive to investors thinking beyond the seed stage.

Step by step: how to raise money using SEIS

This is the practical process founders follow when using SEIS to raise investment. Investors expect this structure, and HMRC assesses your application against it.

Step 1. Check your company qualifies for SEIS

Before approaching investors, confirm your company meets SEIS eligibility rules. If eligibility fails later, investors lose their tax relief.

Your company must generally:

• Be UK incorporated with a permanent UK establishment
• Have been trading for less than three years
• Have gross assets under £350,000
• Employ fewer than 25 people
• Carry on a qualifying trade
• Not have previously raised EIS or VCT funding

Eligibility issues are one of the most common reasons SEIS applications fail. Many founders identify problems early by reviewing SEIS and EIS 10 common pitfalls before applying.

Step 2. Prepare your fundraising documents

SEIS approval is not based on eligibility alone. Both HMRC and investors assess commercial substance.

You will typically need:

• A business plan outlining the product, market, and growth strategy
• Financial forecasts showing how SEIS funds will be used
• A clear fundraising plan, including the target amount and timeline
• A pitch deck aligned with your SEIS proposal

Investors use these documents to assess upside. HMRC uses them to assess risk to capital. Any mismatch between the two raises red flags.

Step 3. Apply for SEIS advance assurance

Advance assurance is confirmation from HMRC, applied for using the process outlined in HMRC’s advance assurance guidance for venture capital schemes, that your proposed investment is likely to qualify for SEIS.

While not legally required, most angel investors expect advance assurance before investing.

HMRC focuses on:

• Company eligibility
• Risk to capital
• Use of funds
• Whether the investment supports growth rather than capital protection

Applying early avoids delays that can stall a round and prevents the risk of raising money before HMRC approval.

Step 4. Find and pitch SEIS investors

Once advance assurance is in place, founders typically raise SEIS funding through:

• Angel investors
• Angel syndicates
• SEIS-focused crowdfunding platforms

When pitching, SEIS should be framed as a risk-reduction mechanism, not the main reason to invest. Investors still expect a strong commercial case, credible growth plans, and realistic use of funds.

Step 5. Receive investment and issue shares

After investors commit:

• Funds are received by the company
• SEIS shares are issued
• The company deploys capital in line with the approved plan

Once qualifying expenditure begins, the company submits its compliance statement to HMRC. This allows investors to receive certificates and claim their tax relief.

How much you can raise using SEIS

SEIS is designed for very early-stage fundraising, which means the limits are deliberately lower than EIS. Understanding these caps helps founders plan a raise that fits HMRC rules and sets up future funding rounds cleanly.

Because SEIS has a lifetime cap, founders typically use it to fund initial product development, early hires, or market validation, rather than long-term scaling. Once traction is proven, most companies move on to EIS to raise larger amounts.

A common strategy is to raise under SEIS first, then follow with an EIS round once the business grows beyond SEIS limits. Timing matters here. 

Our guide on EIS investment time limit explains how long companies have to qualify for EIS and how early fundraising decisions affect later rounds.

Planning SEIS and EIS together avoids dead ends, protects investor confidence, and gives founders a clearer funding roadmap from seed to scale.

SEIS vs EIS for fundraising

SEIS and EIS are closely linked, but they serve different stages of a company’s growth. Founders who understand how the two schemes fit together can raise money more strategically and avoid hitting funding limits too early.

When SEIS is the right choice

SEIS is designed for companies at the very start of their journey. It works best when you are:

• Raising your first external equity
• Pre-revenue or early revenue
• Validating product market fit
• Building initial traction and credibility

Because SEIS offers stronger tax relief, it is often easier to attract angels at this stage, even without a long trading history.

When founders move on to EIS

EIS supports larger, later funding rounds once a company has started to scale. Founders typically move to EIS when:

• The SEIS limit has been fully used
• The business has grown beyond SEIS asset or age limits
• Larger cheque sizes are needed
• Institutional or syndicate investors become involved

EIS allows significantly higher raises, but with lower tax relief than SEIS. Investors generally accept this trade-off once the business risk has reduced.

Key differences at a glance

Many founders deliberately structure SEIS as a stepping stone into EIS, rather than treating it as a standalone raise. This approach reassures investors that there is a clear path for future funding and liquidity.

For a deeper breakdown of how the two schemes interact, our guide on difference between SEIS and EIS explains when to use each scheme and how to transition without breaking eligibility.

Common SEIS fundraising mistakes to avoid

SEIS is powerful, but small mistakes can delay a raise, reduce investor confidence, or invalidate tax relief altogether. These are the issues founders most often run into.

• Raising money before advance assurance
  Many investors will not commit without HMRC confirmation. Raising first and applying later increases risk and can stall the round.
• Using funds for non-qualifying activity
  SEIS money must be used to grow the business. Spending on excluded activities can lead to SEIS relief being withdrawn.
• Poor alignment between pitch and HMRC documents
  Investors focus on upside. HMRC focuses on risk to capital. If your pitch deck and forecasts tell different stories, approval becomes harder.
• Misjudging timing between SEIS and EIS
  Founders sometimes rush into EIS without planning the transition. This can limit future investor relief and complicate follow-on rounds. Understanding how investors later claiming EIS tax relief works helps avoid structural mistakes early on.
• Overpromising certainty to investors
  SEIS reduces risk, but it does not remove it. HMRC expects genuine commercial risk. Any suggestion of capital protection is a red flag.
• Leaving compliance too late after the raise
  Delays in issuing shares or submitting compliance statements frustrate investors and can slow down tax relief claims.

Avoiding these mistakes keeps your raise on track and protects long-term funding options. SEIS works best when it is treated as part of a planned funding journey, not a one-off tax exercise.

How Sleek helps you with SEIS fundraising

Raising investment through SEIS requires careful planning, clean documentation, and precise timing. When done properly, it can significantly improve investor confidence and shorten your fundraising cycle.

Sleek helps you confirm eligibility early, prepare a strong advance assurance application, and align your investor materials with HMRC expectations. This reduces the risk of delays, rework, or lost investor momentum.

By planning SEIS alongside EIS from the outset, founders avoid structural mistakes that can limit future funding. With the right support, SEIS becomes a reliable first step in a longer, well-structured investment journey.