How a U.S. Version of the UK’s EIS/SEIS Could Unlock Billions for Startups

For decades, early-stage capital formation in the U.S. has been constrained by access, risk, and investor incentives. While venture capital and angel networks support a fraction of startups, the vast majority struggle to secure funding. Investment crowdfunding has emerged as a powerful tool to democratize startup investing, yet it still lacks a key driver that has fueled early-stage investment in the UK for years—tax incentives.

In the United Kingdom, the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) have transformed the funding landscape, directing £24 billion ($30 billion) into 33,000 startups since inception. These programs provide tax breaks to investors willing to back early-stage companies, reducing risk and increasing long-term commitment.

With investment crowdfunding gaining traction in the U.S., the time is now to introduce a U.S. version of EIS/SEIS, integrating tax incentives into the next Tax Cut and JOBS Act proposal. The impact could be transformative, unlocking billions in new investment, creating jobs, and fueling economic growth.


How the UK’s EIS/SEIS Works—and Why It’s Successful

The UK’s EIS and SEIS are among the most successful investment tax incentives globally. They provide significant tax relief to individuals investing in early-stage companies, encouraging more risk-taking in the startup ecosystem.

EIS (Enterprise Investment Scheme): Supporting Growth-Stage Startups

  • 30% income tax relief on investments up to £1 million per year.
  • No capital gains tax on profits if held for at least three years.
  • Loss relief—if the company fails, investors can offset losses against their income tax.
  • Over £1.96 billion raised in 2022-2023, funding 4,205 companies.

SEIS (Seed Enterprise Investment Scheme): Supporting Early-Stage Startups

  • 50% income tax relief on investments up to £200,000 per year.
  • No capital gains tax on profits after three years.
  • Loss relief similar to EIS.
  • £157 million raised in 2022-2023, funding 1,815 companies.

These tax breaks reduce investor risk, incentivize long-term holding, and increase capital availability for startups—all of which are crucial for a thriving entrepreneurial ecosystem.


What If the U.S. Had a Similar Tax Incentive for Investment Crowdfunding?

To estimate the potential impact of a U.S. EIS/SEIS-style tax program, we can scale the UK results based on economic size and population. The U.S. economy is 5-6 times larger than the UK, meaning a similar tax incentive program could generate $13–$16 billion in new startup investment annually.

If applied to Regulation Crowdfunding (Reg CF), which currently raises about $600M annually, a tax incentive could 20x the capital flowing into early-stage businesses.

Beyond capital formation, the economic impact would be substantial:

  • Job Creation: Based on UK multipliers, this level of investment could create 39,000–64,000 new jobs per year.
  • GDP Growth: A 3.5x economic multiplier suggests a $45B–$56B annual boost to U.S. GDP.
  • Increased Startup Survival Rates: EIS/SEIS-backed companies in the UK are twice as likely to survive beyond five years. Applying the same logic, U.S. investment crowdfunding issuers could see significantly improved long-term viability.

How a U.S. Version of EIS/SEIS Would Work

A U.S. adaptation should integrate targeted tax incentives for investors backing startups via Reg CF and Reg A+.

Key Features of a U.S. Investment Crowdfunding Tax Credit:

  • 30% tax credit for investments in growth-stage startups (similar to EIS).
  • 50% tax credit for investments in early-stage startups (similar to SEIS).
  • Capital gains tax exemption for investments held at least three years.
  • Loss relief allowing investors to offset startup losses against income tax.
  • Investment cap of $1 million per year per investor to encourage broad participation.
  • Eligibility criteria focusing on startups with <$15M in assets and <250 employees.

This structure reduces risk, attracts more investors, and provides startups with the capital they need to scale.


Why the Time to Act is Now

With Republicans controlling both chambers and a new administration negotiating the next Tax Cut and JOBS Act proposal, this is the perfect moment to introduce investment crowdfunding tax incentives.

Entrepreneurship, innovation, and job creation are bipartisan priorities. A tax credit system that empowers small businesses, reduces investor risk, and stimulates local economies is something both sides of the aisle can get behind.

The U.S. has the largest startup ecosystem in the world, yet we are missing a key incentive that has driven billions into UK businesses. By adapting the EIS/SEIS model, we can unlock massive new investment, create thousands of jobs, and supercharge the startup economy.

Wall Street has tax incentives. Real estate investors have tax incentives. It’s time for early-stage startups and investment crowdfunding to have one too.

Let’s make it happen.

#Startups #InvestmentCrowdfunding #TaxPolicy #EIS #SEIS #Entrepreneurship #VentureCapital #RegCF

Meet Sherwood Neiss of Crowdfund Capital Advisors

Meet Sherwood Neiss of Crowdfund Capital Advisors

Today we’d like to introduce you to Sherwood Neiss.

Sherwood, we appreciate you taking the time to share your story with us today. Where does your story begin?
Embarking on a journey that transitioned from earning my MBA and navigating the intricate world of Wall Street, to contributing to a high-growth Silicon Valley company, and co-founding FLAVORx, Inc., my career has been a vibrant tapestry of exploration and innovation. FLAVORx, which made medicinal consumption for children more palatable, expanded from a single pharmacy to a network of over 40,000, before being successfully sold after various financing rounds. This venture was a significant milestone in my career, but it was just the beginning.

The sale of FLAVORx and the subsequent frustrations of fundraising limitations propelled me into the realm of Investment Crowdfunding. Alongside two entrepreneurial friends from business school, we devised the Startup Exemption, an 8-point framework that blended early-stage venture financing principles with emerging community capital platforms like Kickstarter and Kiva. Our grassroots efforts and strategic alliances in Washington transformed our framework into an 8-page bill, which, after gathering bipartisan support, was signed into law – a moment we were privileged to witness at the White House.

Post-legislation, my journey took another pivotal turn during a Bloomberg Television interview, which spotlighted the potential of Investment Crowdfunding for pre-IPO startups and our economy.

Leveraging my experiences from Silicon Valley and Wall Street, I developed a data aggregator, launched on May 16, 2016, which meticulously tracks around 125 data points on every company initiating a RegCF offering. The industry has since funneled over $2.1B from nearly 2M average Americans, acting as mini VCs, into what we anticipate will be future unicorns.

This extensive dataset, now available through CCLEAR.ai (www.cclear.ai) to various sectors, revealed an opportunity to build wealth for investors intrigued by RegCF deals but lacking the time for in-depth exploration. Partnering with a team of data science PhDs, we spent 18 months developing a machine learning algorithm that identifies patterns and signals from companies that have secured venture capital financing, predicting potential success stories among new entrants. This algorithm is the foundation of our venture fund, D3VC.ai (www.d3vc.ai), where we invest in companies post-typical VC diligence.

Recognizing that many companies are staying private longer, and understanding the investor’s reluctance to wait indefinitely for returns, I co-founded GUARDD (www.guardd.com). This startup facilitates investors in private companies to sell their shares on private exchanges, ensuring regulatory compliance.

Today, my journey continues as I steer the helm of three companies out of Crowdfund Capital Advisors (www.theccagroup.com), each a byproduct of the crowdfunding law we helped shape, firmly believing in a future where Investment Crowdfunding transcends capital raising. It’s about forging an ecosystem where data, liquidity, and venture capital converge, unlocking unprecedented opportunities for investors and startups alike.

Can you talk to us about the challenges and lessons you’ve learned along the way? Looking back, would you say it’s been easy or smooth in retrospect?
Smooth? Far from it! The entrepreneurial journey is anything but a straight path – it’s a rollercoaster of highs and lows, where forging ahead often means cutting through a dense forest of challenges and naysayers. It demands an unwavering determination, a readiness to stumble, stand back up, dust oneself off, and persistently march forward. Throughout my journey, there have been critical junctures where the support of spouses, close friends, and family became my backbone.

I’ve navigated through a myriad of challenges, from making the tough decision to return $1 million to investors after realizing our visions misaligned, to navigating the intricate dynamics of running a family business, and even embroiling in legal battles. And oh, the adventures of trying to steer through the complex maze of Capitol Hill – that’s a story in itself!

Now, as a husband and father of two young children, the balancing act has evolved. Juggling the demands of work, and family, and ensuring my mental well-being is intact, has become the new challenge. That’s precisely why you’ll find me at the gym at 6 am, five times a week – it’s my sanctuary, ensuring I’m fortified to face whatever the entrepreneurial journey throws next!

Alright, so let’s switch gears a bit and talk business. What should we know?
At Crowdfund Capital Advisors, we stand at the forefront of investment crowdfunding, a dynamic sector that we’ve not only pioneered but continue to innovate within. Our organization is a symbiotic ecosystem comprising three integral components that collectively define our operations and our vision.

Our specialization is rooted in data, analysis, and advocacy for the crowdfunding industry. I have had the unique honor of being a foundational influence in this space, sometimes referred to as one of the ‘godfathers’ of investment crowdfunding. This term, while I use it with a degree of humility, signifies my deep involvement in the creation and lobbying of the legislative framework that has enabled investment crowdfunding to thrive. I had the privilege to witness the culmination of our efforts in person during the bill-signing ceremony at the White House.

What truly distinguishes us is our commitment and sustained presence in the industry. Unlike many early pioneers who have since departed, we continue to drive the sector forward, bringing more attention, resources, and clarity to what President Obama envisaged as a fundamental shift in the private capital markets.

Perhaps our proudest accomplishment is the legislative success that we achieved in a remarkably short period. To have crafted and passed a law in 460 days, with a deeply divided Congress coming together in agreement, is something few can claim. This historic achievement exemplifies our ability to unite differing perspectives toward a common goal.

We see ourselves as the definitive source of investment crowdfunding intelligence. Our repositories of data position us as the PitchBook or Crunchbase of our industry, yet with the analytical depth akin to Bloomberg. We offer stakeholders comprehensive insights into capital flow, investor earnings, and strategic capital deployment within the crowdfunding space.

Looking ahead, Crowdfund Capital Advisors is committed to shaping the future of investment crowdfunding. We are the nexus where three transformative themes meet:

CCLEAR, which represents the analytics and transparency driving investment crowdfunding. Here, we transform raw data into actionable insights that highlight the sector’s growth and potential.

GUARDD, our answer to the complexities of liquidity in private securities trading. This initiative is about creating seamless transitions from investment to exit.

D3VC is a reimagining of venture capital that bridges traditional methods with the latest in AI, offering a diversified and inclusive approach to early-stage investments.

The convergence of these themes under the banner of Crowdfund Capital Advisors illustrates our holistic vision. We are not mere spectators but active architects of a future where investment crowdfunding is a complete ecosystem — one where data, liquidity, and venture capital converge to empower both investors and startups.

Or as I like to say, “The future of investment crowdfunding goes beyond capital raising. It’s about crafting an ecosystem where data, liquidity, and innovative venture strategies coalesce to unlock new opportunities.”

We love surprises, fun facts, and unexpected stories. Is there something you can share that might surprise us?
Something that may come as a surprise to those familiar with my professional persona or my brand is my profound passion for the culinary arts and my zeal for cleanliness. While I am wholly dedicated to my craft and career, finding solace and a unique form of expression through cooking has become an integral part of my daily unwinding ritual.

Cooking is not just a means to an end for me; it’s a cathartic experience, allowing me to momentarily step away from my work and indulge in the creation of a different flavor—literally. As I meld ingredients and spices, I’m crafting a masterpiece that’s meant to be savored and enjoyed, much like the work I produce professionally. It’s not uncommon to hear me appreciatively murmur “yum” over the dishes I’ve prepared as I take pride in the excellence and deliciousness of each meal.

And then there’s cleaning—a task many might shun, but for me, it’s another expression of my meticulous nature. Post-cooking, I enjoy the process of restoring order and preparing for what’s next. Systematically loading the dishwasher, scrubbing pots and pans, and ensuring the kitchen is spotless for the next day isn’t just about tidiness; it’s about readiness and the pleasure of knowing everything is set to begin anew.

Contact Info:

     

2023 Annual Report Pre-Order Page

Thank you for your interest in our 2023 Investment Crowdfunding Annual Report: A Game of Chess. You can use this page to pre-order either/both the report and the data download supplement.



Wefunder Ranked #1 Online Investment Platform – Results Come out of 2022 Industry Report

DENVER, CO, UNITED STATES, February 9, 2023 /– Last week, Crowdfund Capital Advisors (CCA) released its 2022 Investment Crowdfunding Annual Report. This report is the most comprehensive market analysis of Investment Crowdfunding. Investment Crowdfunding (aka Regulation Crowdfunding) allows any startup or small business to raise up to $5 million online from their customers, family, friends, or followers. Issuers must file certain company and financial disclosures, and the offer must take place on crowdfunding platforms (aka online investment platforms) registered with the Securities and Exchange Commission and overseen by FINRA. The industry was born out of the 2012 JOBS Act and launched in 2016. The report spans 91 months of activity and covers 6,500 deals from 5,600 Pre-IPO startups and small businesses.

In 2022 over 320,000 investors deployed nearly half a billion dollars into 1,100 deals. Deal volume hit record levels within Investment Crowdfunding, and while overall capital was down from 2021 due to geopolitical and macroeconomic events, investors’ check size hit a record level. There were 78 active online investment platforms in 2022.

“Wefunder was the online investment platform leader by deals, number of investments made, and capital,” said Sherwood Neiss, Principal at CCA. “They helped deliver $164.1 million by 88,000 investors to one out of every three funded deals. An impressive feat.”

Deals like Hemp insulation manufacturer, Hempitecture out of Ketchum, Idaho, real estate crowdfunding platform Equity Multiple, and cyber security company Atakama out of New York catapulted Wefunder to the top. The syndication of Venture-led deals on the platform also made an impact.

“2022 was an exciting year for Wefunder,” said Jonny Price, VP of Fundraising at Wefunder. “With the roll-out of the “Community Round” concept — epitomized by Replit allocating $5 million of their Series B to let their customers invest alongside VCs like Andreessen Horowitz.”

Wefunder was one of the first online investment platforms to register with the Securities and Exchange Commission. StartEngine came in second for investments, $73.9M, and deals, 298, but was in third for the number of investors, 42.2K. Republic had the second highest number of investments at 71.5K and was third for investments, $63.1M, and deals, 126.

Wefunder also leads the industry in total investments, deals funded, and the number of investors since the industry launched in 2016.

When asked what 2023 would hold, Price said, “As the availability and flexibility of venture capital for founders continue to be constrained in 2023, we expect to see a growing number of founders open up ownership to their users and fans.”

A full list of platform rankings is available on crowdfundcapitaladvisors.com. The 105-page report, including 100 charts, tables, graphs, and images, is available here. Scholarships and special discounts are available by emailing sales@theccagroup.com

Seven Charts that Summarize Investment Crowdfunding in 2022

2022 was a challenging year for venture-back companies. Supply chain issues, soaring inflation, skyrocketing gas prices, geopolitical crises, and market volatility sent us on a wild ride. But there were many silver linings for Investment Crowdfunding. Last week we released our 7th annual Year in Review report. This 105-page report (our longest yet) contains 100 charts, tables, images, and maps.

Here are seven charts that sum up key findings:

Pitchbook Angel/Seed Deals are Trending Down. Investment Crowdfunding Deals are Trending Up and Hit Record Highs

Pitchbook released the “Q4 Venture Monitor First Look” that breaks down its data. While they show Angel and Seed deals declining in 2022, Investment Crowdfunding saw the most deals funded in history. Also, this trendline continues to show an increase in funded deals. As more issuers find it challenging to access capital in 2023, we expect to see them turn online for capital.

The Valley of Death is Dead Thanks to Investment Crowdfunding

Much has been written about the Valley of Death. It refers to a crucial early phase of a new venture when work has begun, but a company hasn’t generated sufficient revenue to support its growth. In this case, outside capital is a necessity that either comes from an entrepreneur’s savings or access to credit. After seven years of Investment Crowdfunding experience and the growth in average raises, we can officially announce that the ‘Valley of Death’ is dead. The average raise since the industry launched has grown to $365K, expanding beyond where the Valley existed previously; $25K to $250K. With the maximum issuers can raise now at $5 million, there is much room for successful issuers to perform follow-on raises to not only get them through the Valley of Death but beyond it.

Naysayers be Damned. Investment Crowdfunding Issuers Appear Less Risky

The profile of the average successful investment crowdfunding issuer is changing. The data finds that most of them can be seen as less risky. They tend to be older, are post-revenue, and have average revenues over $1 million. Investors see the logic. The more established issuers raised more money and had more investors than their startup counterparts. As larger, more established issuers come online, this will further derisk investment in this space.

Investment Crowdfunding has Proven its Ability to Democratize Access to Capital

It used to be that if you wanted to access Venture capital, you needed to reside in or near Silicon Valley, New York, or Boston. However, thanks to Investment Crowdfunding, we see that it has successfully been able to democratize access to capital across the country. Even more importantly, the data shows that women and minority entrepreneurs (that routinely struggle to access capital) have had greater success within Investment Crowdfunding and are raising up to 50% of the capital. Show us where else the private capital markets have been able to accomplish that!

Investment Crowdfunding is the Economic Engine we Envisioned

Issuers successful with Investment Crowdfunding are scaling startups and small businesses. They create products and services. Pay business, sales, and payroll taxes. And are massive consumers of local and regional products and services. Investment Crowdfunding issuers are responsible for pumping more than $4 billion into our economy since the industry launched in 2016. All of this capital is going into over 1,600 communities across the USA. This is a local economic stimulus unlike we’ve ever seen. If our government officials are looking for ways to promote economic development, they should focus their attention on Investment Crowdfunding issuers.

Investment Crowdfunding Makes its Namesake, “The JOBS Act,” Proud

Since Investment Crowdfunding began, Issuers successful with Investment Crowdfunding are responsible for supporting over 226,000 jobs. We believe this is an underestimate because it doesn’t take into account issuers that reported no full-time employees but either have grown to support them or outsource jobs altogether. Either way, we went to Washington, DC, and promised jobs. And one can see the industry is delivering on it! Whoever came up with the acronym “The JOBS Act” deserves an award!

Investment Crowdfunding Will Make Some Average American Investors Millionaires

Liquidity is the Holy Grail for private company investors. Why would investors pour billions of dollars into Private Equity or Venture funds if not? Investment Crowdfunding allowed the average American to play the role of mini-VC and invest in pre-IPO startups that they believe in for the first time in history. A small percentage of these will most likely go on to phenomenal exits. If and when that happens, many millionaires will be made, and they will be your next-door neighbor. Over $54B of value is currently sitting inside successful Investment Crowdfunding issuers. Only $1.6 billion has been invested to date by Investment Crowdfunding investors. You do the math. Someone is going to get rich …

And this scratches the surface. In the report, we list all million-dollar-plus raises from 2022. We analyze what would have happened if someone had just invested in all million-dollar-plus deals. And much more! Don’t wait; download your copy now!