A total of 650 technology companies in the UK said they were planning to use the Enterprise Investment Scheme (EIS) to raise funds in 2013/14, according to research by Radius Equity.

This is 27% higher than the figure for 202/13 and means that technology companies now make up the highest proportion of any sector in the UK for businesses using EIS. The total figure across the period was 2,370.

EIS is a scheme introduced by the government to stimulate investment in small, high-growth companies through tax breaks. As part of the scheme investors receive 30% initial income tax relief whilst also benefiting from profits free of capital gains tax.

Since 2012, companies looking for funding can have up to 250 employees and gross assets of up to £15 million, allowing already well established companies to receive investment through the scheme.

These figures suggest the technology sector is looking to expand in the near future by attracting a high level of growth capital.

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Radius Equity director Gary Robins commented that the figures show “EIS is playing an increasingly vital role in supporting the UK’s booming tech sector”.

“Young tech entrepreneurs are seeing the success of start-ups within tech hubs such as Silicon Roundabout and are wanting to emulate their success. The EIS can help these new start-ups access the right investors and provide the funding that is not available from banks,” he said.

“EIS-eligibility is a big draw to help ambitious tech entrepreneurs attract investors, and is often a deal-clincher for investors looking for high quality investment opportunities in start-ups and fast growing tech companies.”

And Robins highlighted the benefits for all over the UK; not just London.

“Local communities up and down the UK are benefiting from this sector’s growth with more jobs and interest in these areas, and the EIS scheme is helping to create these opportunities,” he continued.

“Technology companies, especially FinTech companies’ strong capital growth potential, make them an ideal investment for investors looking to play a part in the UK’s technology sector.”

Further reading: Brighton named top UK city to start a business