PwC has welcomed the launch of the Seed Investment Programme announced by the Minister of Finance in his 2015 Budget speech.
Bonavent Gauci, PwC advisory services senior manager and coordinator of The PwC €1 million Start-up Fund said: “We are delighted with the launch of the Seed Investment Programme. Investing in start-up companies carries a high risk and this initiative is intended to offer some compensation for that risk by offering tax relief to investors. This initiative offers a ‘subsidised’ source of equity funds to companies for whom borrowing might be expensive, or impossible because of the stage of their business development.
“With the Seed Investment Programme, we hope to see the creation of a local business angel network, the benefits of which should extend beyond the raising of funds. Angel investors are often experienced business people who can put their knowledge and network of contacts to the service of start-up companies.”
Tax incentives such as those proposed by the Seed Investment Programme have been in existence in other jurisdictions for a number of years. In the UK, for example, the Enterprise Investment Scheme has been in operation since 1994 and has proven to be very successful. More recently, in 2012, the Seed Enterprise Investment Scheme was launched, which offers even more generous tax reliefs for investments made in brand new seed stage companies.
Mr Gauci added: “The need to introduce initiatives aimed at assisting start up entrepreneurs had long been felt, which is why in June 2013 we launched The PwC €1 million Start-up fund where we offer pro bono advisory assistance and other financial services to start-ups. The assistance that we provide, together with that provided by the various incubators across Malta, complement the tax incentives announced by the government. Together, these initiatives contribute to providing a well-rounded support to start ups. It is therefore a truly exciting time for entrepreneurs who take the plunge and seek to turn their business idea into a successful business.”
In the 2015 Budget speech, Finance Minister Edward Scicluna said that the launch of the Seed Investment Programme was aimed at facilitating the raising of equity finance by start-up companies. With this initiative, the Income Tax Act will be amended to provide tax credits to private investors who take up an equity stake in start-ups up to a maximum tax credit of €250,000.
This should encourage private investors to consider investing in start-up companies as a way of diversifying their investment portfolio by including equities with a higher growth and a higher earning potential than that generated by traditional blue chip companies and at the same time benefit from fiscal incentives, which reduce their initial capital outlay.