Manchester-based DSW Ventures, the venture capital arm of the Dow Schofield Watts group, is launching its first Seed Enterprise Investment Scheme (SEIS) fund — aiming to raise up to £2 million — to enable private investors to benefit from tax incentives while funding regional start-ups.
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.
Dow Schofield Watts is an independent advisory and investment group, headquartered in Warrington, Cheshire, and with offices in Manchester, Leeds, Aberdeen and London.
DSW Ventures aims to raise up to £2 million 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 £1 million 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.
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.
Established in 2019, Manchester-based DSW Ventures has invested in 11 businesses, facilitating £12.5 million 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.
DSW Ventures cofounder Keith Benson said: “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.”
DSW Ventures 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.”
DSW Ventures made its first investment in 2018 and is an investor in early-stage scale-up businesses requiring venture funding of more than £250,000, primarily on an EIS basis.
It is funded by a growing network of high-net-worth angel investors. DSW Ventures is the trading style of DSW Angels LLP, which is part of the Dow Schofield Watts group.
DSW Ventures is a partner in British Business Investments’ £100m Regional Angels Programme, designed to help reduce regional imbalances in access to early stage equity finance for smaller businesses across the UK.
British Business Investments is a wholly-owned commercial subsidiary of the British Business Bank, the UK government’s economic development bank.