30 Years of Enterprise Investment Scheme: Which industries have benefited the most?
As the government-backed Enterprise Investment Scheme (EIS) celebrates its 30th birthday this week, new research has revealed the UK sectors that benefit from the most investment.
Securing funding is crucial for startups in any sector to launch and scale a business – therefore, it’s wise to know the investment landscape before venturing into an industry.
The money.co.uk business loans team has analysed government data to reveal which sectors receive the most and least investment and offered their insights on the importance of securing funding.
The sectors that have seen the biggest increase in the total amount of funds invested:
| Rank | Industry* | Funds Raised Through EIS or SEIS in 2020-21 | Funds Raised Through EIS or SEIS in 2022-23 | Percentage Change |
| 1 | Accommodation and Food | £26,000,000 | £47,000,000 | 80.77% |
| 2 | Construction | £9,000,000 | £16,000,000 | 77.78% |
| 3 | Education | £15,000,000 | £23,000,000 | 53.33% |
| 4 | Manufacturing | £207,000,000 | £294,000,000 | 42.03% |
| 5 | Agriculture, Forestry, and Fishing; Mining and Quarrying | £14,000,000 | £17,000,000 | 21.43% |
| 6 | Professional, Scientific and Technical | £322,000,000 | £383,000,000 | 18.94% |
| 7 | Health and Social Work | £38,000,000 | £44,000,000 | 15.79% |
| 8 | Information and Communication | £639,000,000 | £722,000,000 | 12.99% |
| 9 | Wholesale and Retail Trade, Repairs | £152,000,000 | £165,000,000 | 8.55% |
| 10 | Arts, Entertainment and Recreation | £33,000,000 | £34,000,000 | 3.03% |
The accommodation and food industry has seen the most significant increase in investment in recent years. Funds raised in the sector have risen by 80.77%, from £26m to £47m. The industry was one of the hardest-hit sectors during the pandemic, making it an unattractive investment prospect in the 2020-21 period.
However, a rebound in more recent years has spurred this dramatic increase in investment, with punters flocking back and allowing hospitality businesses to start to rebuild their position as a top industry.
Construction is second, with investment rising by 77.78% since 2020-21. The sector has grown significantly, thanks to increased new construction orders driven by public and private demand.
The rising cost of materials and labour could influence higher levels of investment in the industry, causing construction companies to seek investment to pull off bigger projects with lots of profit potential for firms and investors alike.
Thirdly, investment in the education sector rose from £15m to £23m from 2020 to 21, a 53.33% increase. Investment in this sector could provide funds to innovate new education solutions, such as novel education software and e-learning tools.
Kyle Eaton, money.co.uk business loans expert, comments on the value of securing financial aid in the business growth journey: “The key driver of growth is capital. If you miss out on the opportunity to secure external funding you could risk losing your competitive edge. Securing financial aid can be the boost your business needs to compete in your chosen industry for several reasons:
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Accelerating growth
“Securing financial aid allows your business to scale up faster than relying on company cash flow. This means you can hire extra staff, invest in equipment or open new locations. All of these factors can accelerate company growth and your potential to seize opportunities in new markets. Business loans can be a good alternative to accelerate the growth of your company if you operate in an underinvested sector, allowing you to secure otherwise less readily available funding.
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Reducing financial pressure
“Seeking out investment gives your business immediate access to liquidity. This can help manage cash flow when your company is scaling up. Investment can also lower financial pressures by enabling your business to weather unexpected downturns or challenges, which is crucial for new startups and SMEs. For firms in sectors will minimal or decreasing investment, business loans can help plug that gap.
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Creating new opportunities
“Businesses receiving financial aid have more opportunities to enter new markets or develop more revenue streams. This could allow your company to pivot to a new business model or even expand nationally or beyond.
“Finding the best way to fund your company venture requires plenty of research, so don’t be afraid to assess all of your options. Remember that securing funding is only one step in your business journey, and your options and needs may change as your business grows.”
