Seed stage funding is not easy to come by in the UK. My friend Hussein (who is far more experienced and knowledgable in this space than I am) reckons that a large part of the reason for this is the lack of competition amongst VCs in Europe. In the US, investing at the seed stage is a way of reserving a seat at the table for the ‘A’ round. Here in the UK, there’s so little competition amongst VCs that they don’t need to compete for a seat at the table. As a result, startups are starting to eschew the UK/European scene and raise money in Silicon Valley instead.

Credit where credit’s due – the government has not only recognised that the lack of seed funding is hampering startups in the UK but they’re actually doing something meaningful about it.

On July 6th, HM Treasury announced a consultation on a proposed scheme called the Business Angel Seed Investment Scheme (BASIS). In my opinion, this is an incredibly important consultation and the outcome is likely to have an impact on startups in this sector for years to come.

The government is effectively asking for our opinions on what steps they should be taking to encourage seed investment and improve the EIS and VCT tax-relief schemes. They are considering introducing EIS-style tax breaks for business angels and one of the things that I’m particularly glad about is that it looks like convertible debt stands a good chance of being included within the scope of eligible investments.

If you are at all interested in this sector, you should download and read the consultation document and submit your answers to the Treasury’s questions ahead of the submissions deadline on 28th September.