SEIS and EIS rounds: building a data room investors can rely on

What will an investor’s lawyer ask for first?

Before anyone reads the deck again, the lawyer acting for a lead SEIS or EIS investor tends to work down a short list. If these items are in the room on day one, the first call is about terms rather than missing paperwork.

• Current articles of association, plus any special resolutions that changed them
• A fully diluted cap table, reconciled to the register of members and Companies House filings
• The HMRC advance assurance letter, or a clear note that you have not applied
• A one-page description of the trade and how the money will be spent
• Founder IP assignments to the company, signed and dated
• Details of every previous share issue, including any earlier SEIS or EIS rounds
• The draft subscription agreement or shareholders’ agreement, and any existing one it replaces
• Latest management accounts and a forecast covering at least the next 18 months
• Confirmation that no investor has a side arrangement protecting them against loss

The list is short on purpose. A seed or early-stage investor is not running a full buy-side diligence exercise, and most will not pay for one. What they are checking is narrower: is the company what it says it is, does it own what it sells, and will the relief they are counting on survive an HMRC enquiry three years from now?

That last question is what makes a SEIS or EIS room different from an ordinary fundraising folder.

Why does a tax-advantaged round need a different data room?

In an ordinary equity round, a mistake in your paperwork is the company’s problem. In a SEIS or EIS round it becomes the investor’s problem too. The relief belongs to the investor, but most of the conditions are about the company: what it does, how big it is, what the shares carry, how the money is spent. If any of those conditions fails, HMRC can withdraw relief that the investor has already claimed.

So investors and their advisers read your documents with two questions in mind. The commercial one (“is this a good business?”) and the technical one (“will this qualify, and will it keep qualifying?”). A room built only for the first leaves gaps on the second, and the second is where rounds get delayed.

There is a practical benefit to the company as well. The compliance statement you file after the round asks you to confirm facts that you will already have evidenced in the room. Doing the work once, in one place, saves you reconstructing it later from email threads.

What does SEIS require, and what does EIS require?

The detailed conditions sit in HMRC’s Venture Capital Schemes Manual, which is the reference most advisers will quote back to you. The table below sets out the headline SEIS conditions that have applied to shares issued since 6 April 2023, and how the room should show each one.

EIS is the larger scheme, aimed at companies further along. Its limits (on annual and lifetime investment, gross assets, employee numbers and company age, with higher figures for knowledge-intensive companies) are set by HMRC and have changed more than once. We deliberately do not reproduce them here; check the current figures on gov.uk on the day you plan the round, and record the version you relied on in the room.

How the two schemes compare in what they ask of your data room is more stable than the numbers:

Many companies raise both in one round: SEIS shares first, then EIS shares, with the SEIS shares issued before the EIS shares (even if only by a day). If you plan that, the board minutes and share certificates that prove the order belong in the room.

How should the folders be organised?

Keep the structure flat and numbered. Investors’ lawyers raise questions by reference (“please explain 2.3”), and a numbered tree makes those references stable even when you add files. Six top-level folders cover almost every early-stage round.

The one folder that is specific to these schemes is the second. Everything in it is there to answer the technical question, so it can be opened to the investor’s tax adviser without exposing customer contracts or salaries. The other five are the ordinary diligence a careful investor wants, and they double as the core of a later Series A or sale process.

A few habits make the tree easier to use:

1. Put a one-line readme at the top of each folder saying what is in it and what is deliberately not.
2. Name files with a date and a version, so “Cap table 2026-09 v3” is never confused with an older draft.
3. When a document is superseded, move the old one into an archive subfolder rather than deleting it; investors sometimes need to see how something changed.

Is advance assurance worth applying for?

Advance assurance is HMRC’s informal view, before the round, that the company and the proposed share issue look likely to qualify. It is optional. HMRC explains how to apply in its guidance on applying for advance assurance, and the application asks for documents you will want in the room anyway: the business plan, the latest accounts, the articles and the draft subscription paperwork.

Whether to apply is a judgement. Plenty of angel investors and some funds will not commit to a SEIS or EIS round without it, because it reduces the chance of a nasty surprise. On the other hand it adds weeks to the timetable, and it is not a guarantee; HMRC reviews the facts again when it receives the compliance statement.

If you do apply, put the application and HMRC’s reply in folder 2. If HMRC asked follow-up questions, include those and your answers. An investor’s adviser will read the correspondence more closely than the letter itself, because the questions show where HMRC saw risk.

How do you evidence the qualifying trade and the risk-to-capital condition?

These are the two conditions most likely to draw questions, because they turn on judgement rather than a number.

Qualifying trade. The company must carry on (or prepare to carry on) a trade that is not on HMRC’s list of excluded activities, which includes things like dealing in land, financial activities, property development and several asset-backed businesses. A short trade description, signed off by a director, helps. So do a handful of supporting documents: your first customer contracts or invoices, the product roadmap, and any professional opinion you obtained. If part of your business is close to an excluded activity, say so plainly and explain the split; investors respect candour more than silence.

Risk to capital. Since 2018 both schemes include a principles-based test. In plain terms, the company must intend to grow and develop its trade over the long term, and the investment must carry a significant risk of losing more capital than the investor stands to gain in net return. The evidence is mostly the business plan and the financial model, read together: ambitious growth plans, real uncertainty about whether they succeed, and no arrangements that cap the downside. Investors will also look for anything that looks like capital preservation, such as guaranteed exits or asset-backed security, because those can fail the test.

Keep the narrative short. Two pages that reference specific sections of the plan are worth more than a long essay that repeats it.

What about the cap table, articles and shareholders’ agreement?

Folder 1 is where most rounds lose a week. The investor needs to see that the share capital is exactly what you say it is and that the new shares will carry the right rights.

Start with the cap table. It should be fully diluted (options, warrants and any convertible instruments shown), and it should reconcile to three other records: the register of members in your statutory books, the statements of capital you have filed at Companies House, and the share certificates. Where these disagree, fix the disagreement before you open the room. Our guide to Companies House checks in a data room walks through that reconciliation.

The articles matter twice. Commercially, investors want to know about pre-emption rights, drag and tag, and board appointments. Technically, SEIS and EIS shares must not carry preferential rights to the company’s assets on a winding up, and must not be redeemable. A preference share class designed for a later institutional round can create problems if the paperwork is careless. Put the current articles and the proposed amended articles side by side.

The shareholders’ agreement or investment agreement is usually negotiated in the room, through several drafts. Keep each version, and make sure that nothing in it gives SEIS or EIS investors protection against loss (a put option, for example) that could disqualify them.

Who needs to own the intellectual property?

The company does. For a young technology business, the most valuable asset is often code, designs or know-how created by founders before the company existed, or by contractors who were never asked to sign anything. An investor’s lawyer will look for written assignments from every founder and every contractor who built something material.

Put the assignments in folder 4, together with a short schedule listing each piece of IP, who created it, and the document that transfers it. If something is missing, sign a confirmatory assignment now; it is quick and cheap at this stage and expensive later. Trade mark filings at the UK Intellectual Property Office and any key third-party licences belong in the same folder.

What happens in the room after the money arrives?

The round does not end at completion. For SEIS, the compliance statement (form SEIS1) can be submitted once the company has carried on its qualifying trade for at least four months, or has spent at least 70% of the SEIS money. For EIS, the EIS1 compliance statement follows four months of trading. HMRC reviews it, and if satisfied authorises the company to issue SEIS3 or EIS3 certificates to investors, who then use them to claim relief.

Keep the room open, in a reduced form, until the certificates are out. Investors will ask when they can claim, and a single place to point them to saves a dozen emails. After that, export the room and keep the archive for at least the three-year holding period; if HMRC opens an enquiry, or if a buyer asks during a sale whether past relief is safe, you will want to show exactly what investors saw and when.

Which data room features matter most for a SEIS or EIS round?

The features that earn their keep in a raise are slightly different from those in a sale. Granular permissions let you show folder 2 to a tax adviser without opening the commercial folders. An audit trail shows which investors actually opened the risk factors, which is useful if anyone later claims they were not told. Watermarking discourages a casual forward of the deck to a competitor. E-signature lets investors sign the subscription agreement in the same place they read it.

Price is part of the picture too, because a raise room often stays open for many months. Of the providers we track, a few publish entry prices:

All figures are indicative, from our own research; confirm with the provider, and note that they may exclude VAT and are billed in US dollars. Hosting regions are not something we can confirm for any vendor, so ask where your files will be stored before you upload personal data about staff or investors. For a wider view of budgets, see data room costs in the UK.

What mistakes hold SEIS and EIS rounds up?

Most delays come from the same few gaps, and almost all of them are paperwork rather than substance.

A cap table that does not match the Companies House record. An earlier SEIS round that nobody can find the compliance statement for. A founder who wrote the core code before incorporation and never assigned it. An advance assurance letter based on a business plan that has since changed shape. A use of funds plan that mentions buying a building.

None of these is fatal. Each one is cheaper to fix before the room opens than after the first investor’s lawyer has found it, because once a question is raised it has to be answered in writing, and the answer stays in the record.