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SEIS (Seed Enterprise Investment Scheme) was launched by Chancellor George Osborne in 2012 as a way for small, early-stage companies to raise money through individual investors.

For startups, SEIS helps you raise money you need to grow when your startup is at an early stage by offering significant tax breaks to company investors, making a potential investment into your business more attractive.

Startups can now raise up to £250,000 through the SEIS scheme.

Liam Hallam, a SEIS expert with digital equity management company Vestd, says: “Hopefully the new £250,000 ceiling increases investment in seed companies. That’s the goal of SEIS. On top of that, the investor can now match the £250,000 with a further £200,000 of their own – doubled from £100,000. If you find an investor with deep pockets, they can back you more than they could have done previously.”

Just over 2,000 companies raised £175m through SEIS in 2020-21 with 64 per cent of businesses raising more than £50,000 and 39 per cent receiving investments of over £100,000.

Companies in the information and communication sector accounted for 41 per cent of all SEIS investment in 2020-21, while businesses registered in London and the Southeast accounted for the largest proportion of investment, raising £120m (68 per cent of SEIS investment).

To date, the SEIS has raised over £1.5bn worth of investment, with nearly 16,000 companies raising money through the scheme to date.

What is SEIS tax relief?

From April 6, 2023, an individual investor can invest up to £250,000 per tax year. This will allow the investors to claim up to a maximum of £125,000 income tax relief on qualifying SEIS investments made in one tax year. At 50 per cent, SEIS is one of the world’s most generous tax reliefs.

The investor will also benefit from a capital gains tax exemption on any profits that arise from the sale of shares after three years.

SEIS tax reliefs in full

• 50 per cent income tax relief
• Any profits from the sale of SEIS shares after three years is exempt from capital gains tax
• Inheritance tax does not apply to SEIS shares held for at least two years
• If SEIS shares are sold at a loss, investors can offset that loss against their capital gains tax

Pro tip: An SEIS investor who has more than 30 per cent of your company or has voting control cannot invest in a company through SEIS.

What kind of companies can use SEIS?

• Has up to 25 employees
• Less than three years old
• Less than £350,000 in value
• Incorporated in UK
• Never received investment from a venture capital trust or EIS (see below)
• Not listed on a stock exchange or have plans to list at the time SEIS shares are issued
• No control over another company that isn’t a qualifying subsidiary
• Not be (or have been) under the control of another company

In order to qualify for SEIS, your company must carry out a qualifying trade. Most companies do, but there are some exceptions.

What is a qualifying trade?

If over 20 per cent of your trade involves these areas, you do not qualify:

• Coal/steel production
• Farming/market gardening
• Leasing activities
• Legal/financial services
• Property development
• Running a hotel
• Running a nursing home
• Generation of energy, such as electricity and heat
• Production of gas or other fuel
• Exporting electricity
• Banking, insurance, debt or financing services

How can my investor make a profit?

Investors must hold shares for a minimum of three years if they want to use the 50 per cent write-off. If they sell before that, the 50 per cent tax break can be withdrawn.

Investors then exit in much the same way as any other investor, such as selling their shares to another investor or exiting as part of a follow-on fundraise. The company can also buy back the shares from an investor, just not through EIS.

What’s the difference between SEIS and EIS?

SEIS is targeted at raising investment in early-stage companies, while the Enterprise Investment Scheme (EIS) helps more established businesses raise funding.

You can raise up to £12m through EIS, rising to £20m if you are a “knowledge-intensive company” (KIC).

EIS investors can claim a 30 per cent tax break if they invest up to £1m each year (rising to £2m if it’s a KIC), compared to 50 per cent for SEIS.

The qualification criteria are also different, with EIS allowing investment for companies with up to 250 employees and up to £15m in assets.

To qualify for EIS, you must have been:

• Trading for less than two years
• Fewer than 250 employees
• Have less than £15m in gross assets

Can you claim both SEIS and EIS?

Yes, but only once you’ve exhausted your £250,000 SEIS allowance. If you want to raise more than the SEIS limit of £250,000, you can always start taking on EIS investment once you’ve hit the SEIS funding limit.

What can I spend SEIS investment on?

You can only spend the funds you raise through SEIS on either:

• Expenses that are going to help grow your company, such as hiring new employees or marketing your business.
• Research and development that is going to help you grow your company, such as developing a new product or researching ways to improve an existing one.

Also, you must spend the money you raise through SEIS within three years.

Applying for SEIS Advance Assurance

Founders can apply to HMRC for “Advance Assurance” so that prospective investors can be reassured they will qualify for tax relief.

Liam Hallam says there are several things you can do to help get that Advance Assurance:

• Be familiar with SEIS guidelines, including eligibility criteria
• Have a solid business plan, which will help HMRC decide if your company is eligible
• Investors on board in principle before applying – having a few names and how much they want to put in is helpful
• Be clear about the risk-to-capital condition – detail what the money you’re going to raise is going to be invested in, which has to pose a risk to investors’ capital. For example, putting the money on deposit in a bank would not be risky but spending the money on a new sales team or marketing campaign would be
• If possible, include financial statements for the past three years

Says Hallam: “Being consistent throughout the application is key. Make sure the business plan aligns to what you’re spending the money on and it’s going to help growth.”

HMRC is taking between four and six weeks to make Advance Assurance decisions.

Case study: how Seafields raised £150,000 through SEIS

Seafields is a hyper-scaled aquafarm operation growing sargassum, a type of seaweed, in huge volumes capturing vast amounts of carbon – one more way for the planet to reach net zero.

About two years ago, climate scientist Victor Smetacek approached co-founder and CEO John Auckland with the idea of growing vast seaweed farms which could be used to capture carbon and sunk to the ocean floor.

The startup bales the seaweed and sinks it to the bottom of the ocean, where it will sit with all that locked-in carbon for thousands of years.

‘Without SEIS, the danger is that some really good business ideas don’t get lift-off’

Seafields co-founder and CEO John Auckland

The beauty of this carbon-capture scheme is that it is a virtuous circle: the seaweed feeds itself from the seabed, which means it is not stripping the Earth of resources.

John Auckland, co-founder and CEO of Seafields, explains: “There are not many areas on land where we’re not already growing crops for human consumption. Algae is fast-growing and the ocean is vast, so you’re not competing with other food sources.”

The company will primarily make money through the use of carbon credits. However, Seafields will also sell of nutrients from the seaweed for sale as part of livestock feed or be converted into naptha, the fuel which is used in disposable lighters and in plastics.

Seafields raised £150,000 through SEIS for research and development in the UK, Germany and the Caribbean. The company is now raising a further £500,000 to £1.5m using EIS as part of a raise on the Crowdcube crowdfunding platform.

Auckland himself comes from a crowdfunding background, having founded crowdfunding agency TribeFirst in 2016, helping startups raise mostly SEIS and EIS at pre-seed and seed stage. He sees crowdfunding as a form of marketing and a very public way for startups to launch themselves.

We sat down with Auckland to discuss Seafields’ experience of using SEIS and what advice he would have for other founders.

What was your experience of using SEIS?

We used SEIS to get much larger investment faster from our sole investor. Because you are limited to raising £250,000 through SEIS, as a founder you can create that all important “fear of missing out” because if once it’s gone, it’s gone.

What would your advice be to other founders wanting to use SEIS?

As a founder, it’s really important that you understand the rules. I have seen some companies get the order wrong and have had to turn down SEIS investment because they accepted EIS investment first. That’s a no-no.

What is the process for applying for SEIS?

The process is pretty easy. You fill out an electronic form. However, I would recommend using an advisor because once HMRC rejects you, they won’t review you again.

There are three types of SEIS of approval/rejection: there’s an approved first time, a we-need-more-information-before-we-can-approve-you, and then there’s an outright no. Most end up in the first two brackets. But if you get the application wrong – for example, you can’t use SEIS application for stock purchases, because they’re not risky enough – as I said, you cannot reapply. I would recommend using a platform such as Seedlegals because they review your application. It’s much cheaper than paying an accountant, which can cost up to £3,000.

What should I be aware of in putting together my application?

HMRC has started asking for you to have your first investor lined up before you obtain pre-approval, and that investor has to be investing 20 per cent of the amount to be raised.

A letter from a crowdfunding platform is also sufficient, so if you’re going through the crowdfunding process, they can give you that letter which will enable you to get pre-approval.

Without named investors or a letter of acceptance from a crowdfunding platform, you can’t even begin the SEIS process for SEIS.

What supporting materials should you include?

It’s good to include a pitch deck as part of your SEIS application, but there’s a slight difference between the deck you put in front of an investor and the one you send an assessor because the investor wants to see the excitement – and the potential exit – whereas the assessor wants to see risk. Bizarrely, the assessor wants to see how the investor will lose all their money!

How long does the SEIS approval process take?

It used to take three to four months but in my more recent experience you get a response within one month. What slows the 28-day turnaround down is getting the application wrong o if you don’t have the documents in place, so you get pushed back down the bottom of the pile. But if you make it easy to say yes, HMRC says yes really quickly.

How helpful has SEIS been for Seafields?

Increasing the SEIS fundraise ceiling from £150,000 to £250,000 has been a big improvement.

The £150,000 limitation was quite a prohibition when everything has become so much more expensive over the last couple of years. Getting a website, getting your branding done, all those things are suddenly 20-40 per cent more expensive than they were a few years ago.

What SEIS is brilliant for is that it lets an investor take a true punt on an idea or on a founder before any traction has taken place. A lot of businesses need more cash than they can raise through bootstrapping or raise money through family and friends. I mean, we’re building seaweed farms in the ocean, a new type of aquafarming infrastructure which has never been done before. Without SEIS, the danger is that some really good business ideas don’t get lift-off because they don’t have enough of a cash runway.

Further reading

Top 20 EIS funds and investors you should know about – Which EIS investor is right for you? Growth Business guide to some of the most active EIS funds in the market.

What is venture debt?  – What is venture debt? How do you get it and who are the providers in the UK?

What are potential sources of funding for your business? – To help navigate through the numerous business funding options on the market, Acuity partner Matthew Byatt takes a brief look at those available.

The post What is SEIS tax relief and how to claim appeared first on Growth Business.

With so many layoffs happening across the tech ecosystem, it’s understandable many people fear hiring has dried up and think tech is a wobbly career prospect these days.

The fear is evident: Google Trends data shows that search interest in the term “layoff” is spiking.

But while mega-corporations have laid off some serious numbers over the past 12 months, in many cases these redundancies were driven by a need to amend over-hiring during the pandemic, which given recent economic factors necessitates a correction.

While that is of little comfort to those who have lost jobs in the sector, most layoffs represent a smaller percentage of a much larger workforce. Meta, for example, is letting 13 per cent of its employees go, whereas Google’s parent company Alphabet is culling around 6 per cent per cent of its global workforce.

The types of jobs that are being shed are worthy of note too. A recent report on layoffs found that job cuts were mostly in finance, construction, technology and real estate. Drilling down further, those working in roles such as customer service, sales, IT and operations were most at risk.

“Sales is the most common role, accounting for 20 per cent of laid-off tech workers,” Layoffs.fyi founder Roger Lee confirms. “Recruiting and HR are the functions most disproportionately affected relative to their size; it’s becoming quite common for companies to lay off 50 per cent or more of their talent teams.”

Crypto and digital assets

There is plenty of life in the old tech dog yet, however, and many sectors and job roles are experiencing growth, including in alternative finance. In 2022, the government announced its vision to become a global hub for the crypto and digital assets industries.

User penetration will be about 32 per cent by 2027, according to Statista, with revenue growth set to rocket to a projected $3.77bn by the same year.

A number of important centres are emerging, with Glassdoor identifying London, Leeds, Bristol, Cambridge, Glasgow, Belfast, Birmingham, Liverpool and Manchester as thriving blockchain hubs.

If you’re looking at alternative finance jobs, there are plenty of opportunities available. Third Republic is seeking a Kafka platform engineer in London to work on products that facilitate the mainstream adoption of crypto assets.

In this role, you will be responsible for maintaining infrastructure, enabling data-driven decisions. You should have previous experience in a DevOps role, a passion for cryptocurrency, and can use Kubernetes to manage infrastructure releases.

Blockchain

With its initial applications in cryptocurrency, blockchain has huge future potential. It is predicted to become one of the fastest growing sectors this decade. The expected growth of Web3.0 and its reliance on blockchain technology to power its applications should spell more employment opportunities too.

Already extensively used in the wilder finance sphere for payments, remittances, digital identity, smart contracts and asset management, it also has applications in manufacturing and supply chain management, offering better ways to do traceability, transparency and accountability.

The healthcare sector uses ledger technology for secure sharing of medical records and data management, and global governments are using it for voting systems, land registry, and identity management.

There are numerous other applications: in real estate, where it can be used for property listings, property transfers, and mortgage processing, as well as retail and gaming.

IBM is a company that considers itself an early adopter of blockchain technology. It employs more than 3,000 researchers across six continents, to do pioneering work in areas such as cognitive computing, augmented intelligence, quantum computing, and blockchain. Want to work there? You can explore all of IBM’s open roles here.

Peer-to-Peer (P2P) lending

Another good bet for career advancement is the P2P sector which over the last five years has grown just over 24 per cent per year on average. In 2022, its total market size in the UK was around £283m.

There are numerous P2P lenders operating in the UK market, each with its own unique proposition: Assetz Capital funds small and medium UK businesses, BridgeCrowd offers bridging loans for the property sector, and Funding Circle specialises in funding small businesses.

Zopa is the original UK (and global) P2P company. Founded in 2005, it has grown steadily and now offers deposit accounts, personal loans and credit cards.

The company gained a full banking licence in 2020 and is hiring for a range of roles across technical and non-technical disciplines. Python developers may be interested in this backend QA engineer – Python/Kotlin job, whereas those with more traditional retail banking experience might be tempted by this compliance manager role.

For thousands of jobs in growth sectors – including more alternative finance jobs – visit the Growth Business job board.

Kirstie McDermott works for our job board partner, Jobbio. Based in Dublin, she has been a writer and editor across print and digital platforms for over 15 years.

More alternative finance jobs

3 alternative finance companies hiring now

The post This week’s jobs in alternative finance appeared first on Growth Business.

Venture debt accounted for 30 per cent of all venture capital raised in European tech start-ups in 2022, according to Dealroom – about double the percentage from the previous six years.

But what exactly is venture debt? How do you get it and with the collapse and subsequent buyout of pioneer venture debt provider, Silicon Valley Bank (SVB), is it a good option for growing businesses right now?

What is venture debt?

Venture debt is the loaning of capital to early stage, high-growth businesses which are backed by venture capital. It provides a start-up with liquidity between equity funding rounds and comes on top of venture capital, not instead of it.

Venture debt can be offered to start-ups and scale-ups that don’t have significant assets and doesn’t require them to give up a stake – minimising the risk of equity dilution.

The European Investment Bank likens the finance option to a student loan for a young business – where there are no assets to the company’s name but expect future earnings and returns.

“Venture debt is essentially the first piece of debt a young, typically tech, company which has already had some – perhaps Series A or Series B – equity is going to take on,” Brett Israel of law firm Marriott Harrison tells Growth Business.

“It offers one core benefit for a company like that: by the time you’ve had two or three rounds of equity funding, you’ll potentially have quite a complicated cap structure, which means trying to do anything with shareholders becomes more complicated because you need lots of consent – it becomes a slow and perhaps cumbersome process.

“Venture debt rides over that because there’s no need to amend the shareholder position. It means there is no dilution.”

Why and when do you need venture debt? 

Venture debt serves two main purposes: to extend the runway of the equity round and act as a start-up’s insurance policy in the event costs are higher than expected.

“You can use venture debt for a whole range of purposes,” Israel says. “Typically, it is used for something more one-off, like a strategic move to a new market or an acquisition trail.”

Founders can approach debt providers directly in between fundraising rounds, but sometimes venture capital firms will approach providers to help support a start-up.

The capital can then be used to finance R&D or purchasing equipment – the main benefactors tend to be companies in life sciences, SaaS and deep tech.

Venture debt vs venture capital

Venture capital provides capital in exchange for a slice of the business and usually a place on the board. VC investors are typically veterans in the industry who can link start-ups to contacts and provide advice.

Venture debt is an addition to venture capital and has the sole purpose of providing an early-stage business with liquidity in between funding rounds. Providers don’t require a member on the board, but in some cases can offer advice.

See also: Most active venture capital firms revealed 

Venture debt vs traditional loans 

Venture debt loans serve a different purpose to traditional bank loans. Debt serves high-growth, mostly pre-revenue start-ups backed by venture capital. So, while traditional banks require positive cashflow as proof you can pay back the loan, venture debt providers take into consideration venture capital raised and future revenue.

As this is more risky than traditional loans for the lender, debt providers tend to follow venture capital investors they trust to give them the confidence in providing the loan. The interest rate is also higher – usually ranging between eight and 12 per cent – and pay-back terms tend to be shorter, usually between one and two years.

They may also take an equity warrant – a bit like a stock option. They will want an equity kicker, which is to say if your business is doing well, they’ll have a chunk of the shares at the end of the loan period.

“Lenders are trusting what the management tells them about the trajectory of a business,” Israel says. “It’s about the business plans, projections and prospects of the young business.

“That’s risky. This is the first time these businesses take on debt. You’re pushing the lender to act as a quasi-investor because they’re taking an earlier stage risk than most banks would ever touch.”

What are the requirements?

Requirements from providers vary, but generally, they require companies to have completed one or two funding rounds from private investors before backing them. Other providers will require a business to have enough runway – usually around six months’ worth.

Lenders will also typically do the same background checks as a VC firm when looking to back a business, such as market fit, challenges and scalability.

“There are guidelines which are quite industry standard,” Israel confirms. “For example, has the business already had a few million by way of equity already invested in it over several rounds? Is the business on an improved revenue basis? You want the revenue to be increasing over the period of the loan which typically is around two to four years.”

How much can you borrow? 

The size of debt you can take on varies by provider, but some say an early-stage business can hope to achieve a loan of 20 per cent and 35 per cent of their most recent equity round. This tends to be anywhere between £1m and £10m.

Venture debt is very rarely a long-term solution. Most repayments are made anywhere from 18 months to three years and most providers expect to be repaid from the proceeds from the next funding round.

Should I be worried about the SVB buyout?

The buyout of the pioneer of venture debt, Silicon Valley Bank (SVB) caused concern in the industry, but should it affect your thoughts about using venture debt?

“If your exposure to SVB was because you had money deposited with them, that’s different than if you’re a venture debt borrower,” Israel assures. “If the latter, the problem is not so much yours, but the bank.

“Does everything that happened with SVB change venture debt in this country? The answer is no. It certainly caused a massive rupture in the market for a few days, but in fact it didn’t change anything.

“If anything, the venture debt market will be stronger because you’ll have more players coming to the fore than SVB. In fact, it’s probably indirectly a stimulus to some of the other lenders.”

Advantages and disadvantages of venture debt

Advantages 

• Can provide a start-up with significant runway
• Reduces the need to fundraise more or sell equity
• Doesn’t require a new member on the board
• Can unlock further equity down the line

Disadvantages 

• Can be difficult to pay back the high interest loan if the company fails
• Difficult to obtain for most start-ups – you’ll need VC backing in the first place

Venture debt providers UK

Silicon Valley Bank 

Request terms.

Kreos Capital

Request terms.

Flow Capital

Offering:

• Choice of 2-4-year term loan or 2-5-year bullet loan
• For businesses looking for $1-5m in first tranche in tech and SaaS

Requirements:

• Annual revenue of more than $4m or ARR greater than $2.5m
• Experienced founder with “substantial ownership positions”

Columbia Lake Partners 

Request terms.

Shawbrook Bank 

Offering:

• Quantum: £1m – £10m limit
• Term: 3-year term

Requirements:

• Debt to equity: less than 33 per cent
• Presence of existing investor (VC, PE or family office) in company shareholding
• Enterprise value +£10m (based on previous fund raising)
• Growth of 20 per cent and over forecasted for next 12 months
• Minimum existing sales revenue of more than £2m
• Existing contracts with diversified client base
• Working towards break-even

Barclays 

Request terms.

Finstock Capital 

Request terms.

More on venture debt 

Build Back Better #1 – equity vs debt, which is better?

The post What is venture debt?   appeared first on Growth Business.

The UK’s most active venture capital firms have been revealed after another impressive year for deals.

In total, there were 2,722 equity rounds in 2022 – down 7 per cent on 2021 but higher than years prior. Venture capital and private equity accounted for 1,329 of these.

It was a record-breaking year of fundraising in 2021, which saw over £29.5bn raised by UK businesses. Last year looked on course to replicate that number with more than £14.7bn raised in the first half of last year.

However, that momentum started to dip as rising interest rates, high inflation, the conflict in Ukraine and global recession concerns resulted in investors being more cautious with their cash.

According to a report by KPMG, over £3bn was raised in the final quarter of the year – the lowest level of quarterly investment since the second quarter of 2020.

The total investment total into UK start-ups and scale-ups in 2022 was 16 per cent down on 2021 but still high in relative terms.

London reaped most of the rewards. Companies based in the capital saw 69 per cent of the investment and retained its reputation as the UK’s venture capital hotspot.

The research conducted by Beauhurst found SFC Capital to be the most active venture capital investor, contributing in 99 deals in 2022.

The Cheshire-based VC invests in start-ups from all sectors at seed to Series A stage, typically investing between £100,000 and £300,000 through their EIS and SEIS funds.

Access EIS, managed by Syndicate Room, came second in the list, completing 65 deals in 2022. The Cambridge-based firm is sector agnostic and invests at seed to Series B stage.

The rest of the top five is made up by Octopus Ventures with 54 deals, BGF Growth Capital on 47 and seed fund Ascension on 34.

See also: BGF raises £80m in extra funds through Coutts

The top 10 active venture capital firms are below:

1. SFC Capital
2. Access EIS by Syndicate Room
3. Octopus Ventures
4. BGF Growth Capital
5. Ascension
6. Fuel Ventures
7. Seedcamp
8. LocalGlobe
9. Par Equity
10. Carry Back EIS Fund

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The post Most active venture capital firms revealed appeared first on Growth Business.

Almost one in five European start-ups backed by venture capital firms go bust, according to a new study.

The report by leading European business schools found 22 per cent of investments end in failure and 45 per cent do not secure returns above two-times the investment. However, on a more positive note, 28 per cent of start-ups exceed expectations and almost one in ten produce ten-fold returns.

The report discovered European venture capitalists receive on average 851 investment proposals per year, of which only six per cent lead to investments. While they expect to earn about 30 per cent internal rate of return (IRR) on these investments, the average return they effectively realise is only 13 per cent per year.

What makes a VC investment successful?

A total of 885 European VC investors were asked questions about what makes them invest in certain firms and what makes an investment successful.

The report found 72 per cent of VC investors view the management team’s ability as the most important factor influencing their investment decisions. “This confirms the view that European VCs, to a high extent, select their investments based on the jockey rather than the horse,” Benjamin Le Pendeven, associate professor at Audencia Business School and project leader of the research project, said.

In terms of post-investment success, the investors stated that the offering, such as the product, service or technology has a huge impact. After that, timing, industry conditions, business model and, interestingly, good luck contributes to a start-up’s success.

In terms of value-add offerings by VCs, 83 per cent stated they support their portfolio companies with raising follow-on financing and by providing strategic guidance. A further 75 per cent take seats on the board of directors, 72 per cent help their ventures with connections to potential customers and partners, while 69 per cent provide support in exit processes.

The most common exit route for the VCs is through sales, amounting to 40 per cent of the investments made, while 22 are failures and 7 per cent are IPOs.

More on European venture capital

European tech firms lose $400bn in market value over past year

Concentric launches second fund for European start-ups

The post One in five VC-backed companies go bust appeared first on Growth Business.

So your start-up has resisted an onslaught of initial stressors and is beginning flourish into a medium-sized enterprise. But as might be expected of any adolescent growth spurt, the walls will soon begin to feel like they are closing in and you will have to consider trading your nursery-sized office for something a bit more mature to make way for an expanding staff compliment.

But as any business owner will have come to learn, the first stages of growth can be a bit ‘sturm und drang’ at best, and committing to a bigger rental contract before actually having the bodies to fill the space, can feel reckless.

Anyone who has nursed their fledgling business through its growing pains will know that expanding a business is not necessarily a predictable process.

Small businesses rarely grow in linear, calculable fashion, nor at a pace you can determine at will. You may have set dates for recruiting new staff or deadlines for expanding teams, but often finding the right addition to your company can take months and if you have already had to set aside a desk or small office for that role, it will be wasted until you’ve made a satisfying recruitment.

Then there is the coveted geographic expansion – both exciting and terrifying in equal measure. Setting up shop elsewhere can be a bit trial and error. And if it fails to take off, you may find you have wasted significant funding on overheads you now have to abandon.

This is where business centres and serviced offices in particular should not be overlooked for their potential to offer needs-based office space and their ability to soften the blow of any false-starts.

Building-block office space

Because they can be rented on short-term contracts, serviced offices offer growing businesses the option to simply add more space when they need it and conversely, to choose not to pay for any space they don’t need.

Here it is worth doing the maths though. Depending on where you are based, it could still work out cheaper to go into a long-term contract for a big space. As for any space that goes unused whilst you’re expanding, there is always the option to reverse-engineer the serviced office model by putting your own empty desks up for short-term rent on a site like Deskcamping.

Tying yourself into a fixed contract of any nature is of course only a valid approach if you have a ballpark notion of the rate to which your team will grow.

Try before you buy

Your all-in-one media person has evolved into a three-person team and whilst it initially made sense to have media share space with sales, the crescendoing sales-PR cacophony they are now producing is making it impossible for either team to function.

A frequently undervalued and underused benefit of a temporary office space is the ability to test different office layouts and grouping models before committing to designing and populating your own more permanent space.

People looking to design their own homes are often cautioned to first live in a few houses before firing up SketchUp and expressing their architectural urges. Something similar can be said of office spaces.

With a serviced office you will be able to allocate teams their own spaces and experiment with the practicality of putting teams that frequently collaborate in proximity to each other. Or not. In other cases it may in fact make sense to intentionally put distance between teams to minimise unnecessary interruptions.

Bells, whistles and kitchen sinks

Many serviced offices come with a range of added perks – including a cafeteria or coffee making facility, breakaway spaces, kitted-out conference rooms, media centres and business lounges.

By starting out in a serviced office, you and your staff will quickly get a sense of the facilities and technology that you need and the stuff you can do without.

A sandbox for geographic expansion

Expanding your business to other locations can be risky at best. And when it doesn’t work out, you don’t want to be stuck with long-term rental agreements.

Because many of the larger serviced office companies have business centres across the country, they offer a great way of temporarily setting up a branch in a new location without committing in the long-run. Should you have to pack up, most serviced office providers will be happy with a week’s notice.

Presuming things go well however, serviced offices can make ideal sandboxes for new branches. They usually offer full conferencing and business centre facilities and are typically located close to major transport links. And when you need more space quickly, you will simply be able to add another desk or small office to your package, so you could start with skeletal structure and grow entirely as needed.

Four reasons why serviced offices can sometimes be more cost-effective than leasing

The working environment is changing. After the pandemic a lot of companies have changed their business models, become more financially scrupulous and sought out other, more cost-effective ways to run things. Serviced offices are one option.

Often, they can offer a more cost-effective method for businesses to use professional office space along with all the necessary amenities. Rather than purchasing an office or being tied into paying anywhere from one to ten years of a lease, most offer monthly rents with no need to buy all the overheads too.

Here are 4 key advantages of the serviced office:

Professional receptionists

Personalised services are one of the top benefits provided by the best serviced offices. For that professional edge, those that offer quality receptionists who will undertake tasks such as answering calls, organising the post and greeting clients on arrival are a great choice. They will give off a great first impression for potential clients and employees, without the need to hire some more staff yourself.

High speed and serviced internet

Every business needs access to the fastest, most efficient internet connectivity these days. Serviced office providers can often guarantee the fastest internet speeds, with in house (or at least on-call) IT technicians to prevent fix any issues. This will increase your business’ productivity and reduce downtime.

Available meeting rooms

If your company regularly meets with clients then you will need some professional meeting rooms to play host with. Look for a serviced office that has dedicated meeting rooms away from the general office space, and a system in process that ensures you can easily book one when it is needed. Many will have other extras, like being able to use projectors, IT equipment in the room and even arranging to have food laid on when necessary.

Desirable location

As well as having shorter rents and including all the facilities you need, serviced office companies are now able to offer desirable addresses and locations that can both impress clients and make it easy to access for employees or owners.

See also: Office space to suit

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