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 startups.
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 startups – based on 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 launch of the new fund follows changes to the tax rules which come into force in April 2023 and increase the amount that companies can receive in SEIS funding from £150,000 to £250,000 and enable firms up to three years old to qualify, instead of two years at present.
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. 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.
“We set up DSW Ventures to take advantage of the opportunity created by the huge regional imbalance in early-stage venture capital,” said Keith Benson, co-founder of DSW Ventures.
“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.”
Co-founder 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.”