The Future of EIS Investment in the UK

A more disciplined era for EIS

EIS has been a cornerstone of the UK’s early stage investment landscape for over three decades, offering investors a tax efficient route into innovative, early stage, high growth companies and playing a pivotal role in unlocking private capital to fuel entrepreneurial startups and SMEs.

Today, however, the market is evolving. We are seeing a shift away from narratives driven solely by themes or sector buzzwords, towards a more evidence based, structurally disciplined approach. This transition has been accelerated by underlying macroeconomic and regulatory factors. Recent data from HMRC shows a 20% drop in total EIS fundraising year-on-year, falling from £1.97 billion to £1.57 billion. The number of companies raising EIS investment also declined 11%. While those numbers suggest a contraction, I would argue that they more accurately reflect a market that is becoming more selective and perhaps more prudent.

Changing investor priorities

Investors are accessing opportunities through a sharper lens. Governance, transparency, and realistic valuations are increasingly non-negotiable. Growth sectors such as AI, climate tech, and digital health remain attractive, but only when underpinned by operational substance and commercial credibility. The impact of rising interest rates has heightened the need for portfolio resilience where tighter financial conditions demand clearer evidence of resilience and profitability, while the FCA’s Consumer Duty obligations have reinforced the importance of well structured, clearly articulated products that advisers can confidently recommend.

From unicorns to sustainable growth

Alongside these structural shifts is a more philosophical one. For many years, the UK early stage market has borrowed heavily from the Silicon Valley playbook by chasing the elusive billion-pound unicorns. But the UK ecosystem is different, with a smaller domestic market, fewer exits, and a shallower pool of follow-on capital. As a result, UK investors are beginning to favour sustainability over the spectacular. This isn’t about lowering ambition but rather about anchoring it, as the market is starting to trade in measured ambition underpinned by key investment fundamentals rather than speculative hype. The goal will always remain to back exceptional founders building transformational companies, but to do so with a model that balances risk, supports resilience and offers upside potential across a diversified portfolio.

Implications for founders and fund managers

For founders, this means a greater burden of proof. Investors are looking for business models that reflect market realities rather than just pitching mission statements. For fund managers, it demands a move away from single company opportunism and towards shaping more curated, institutional style structures. At Maven Cognition, we have built our EIS strategy with this shift in mind, applying the same governance frameworks, portfolio discipline, and due diligence standards that underpin Maven’s wider investment business. That doesn’t mean saying no to rocket ships but rather building a stronger, more robust launchpad.

We have already backed a number of businesses that are demonstrating strong commercial traction, clear paths to scale, and proprietary technology. For example, Sensoteq’s industrial IoT platform addresses a critical need in predictive maintenance, combining robust sensor technology with scalable distribution and a founder with deep technical and commercial expertise. Similarly, NuVision Biotherapies brings a clinically validated regenerative therapy to market, underpinned by strong IP and a leadership team with both academic and medical device experience. Another business we invested in, PervasID, has developed patented RFID reader technology that solves high-value challenges in asset tracking across key industries and has shown impressive commercial traction. 

Addressing regional disparities in EIS funding

One area that remains a concern is regional disparity. Despite efforts to encourage broader access to capital, EIS investment remains heavily concentrated in London and the South East. This could be, in part, down to investor caution, but also reflects where much of the capital is currently held. This is where Maven’s regional business model sets it apart from many London-centric managers. Maven has one of the largest investment and portfolio management teams in the UK, with a strong track record of backing emerging, high growth businesses across a broad range of sectors and UK regions. Its extensive office network provides deep geographic coverage of key UK corporate finance markets and helps feed a healthy deal pipeline. This footprint gives Maven the ability to originate and support investments nationwide, including in areas often underrepresented in traditional EIS deal flow.

A maturing EIS market

Ultimately, the direction of travel appears to be shifting. EIS is maturing. The recalibration we are seeing is less a crisis of confidence and more a moment of reflection. It may result in fewer companies being funded, but those that are should be better prepared, more investable, and more likely to deliver sustainable outcomes. For investors, founders, and fund managers alike, this is an opportunity to raise the bar and build something stronger, together. 

For more information on Maven Cognition, visit its website.

EIS investments are considered to be very high risk, are designed to be held for the long term and are generally illiquid. They are not suitable for everyone. Investors should only invest money they are prepared to lose. Tax rules can change, and benefits depend on circumstances.