Due diligence on a SEIS investment is not the same as buying a listed share. You are backing an early-stage company where public information is limited, management accounts are the primary financial data, and the outcome is highly uncertain. The quality of your due diligence is one of the most significant factors in your eventual returns.
This checklist covers the key areas to investigate before committing capital to any SEIS opportunity.
1. HMRC qualification
- Has HMRC Advance Assurance been received? Ask to see the letter.
- Is the company within the SEIS limits? (Under 3 years old, fewer than 25 employees, assets under £350,000, total SEIS raised under £250,000)
- Will the shares issued be ordinary shares? (SEIS requires ordinary non-preferential shares)
- Has the company had any HMRC correspondence raising concerns about qualification?
- Has independent legal or tax advice been obtained on SEIS eligibility?
2. The founding team
- What are the founders' relevant backgrounds? Have they built companies before?
- What is their domain expertise in the market they are entering?
- Are all key founders committed full-time?
- What is the shareholding structure? Is there a co-founder dynamic that works?
- Have you spoken to the founders directly — not just read the pitch deck?
3. The business model and market
- Is there evidence of real customer demand — paying customers, signed letters of intent, waitlists?
- Is the market large enough to support the kind of exit that justifies SEIS risk?
- What is the unit economics story? Does the company have a credible path to contribution margin positivity?
- Who are the competitors and what is the company's genuine differentiation?
- Is the problem being solved a genuine pain point, or a nice-to-have?
4. Financials
- What is the current monthly burn rate and how long does the raise give the company before it needs more capital?
- What are the current revenue figures (if any) and growth rate?
- What is the use of proceeds — is it specific and credible?
- Have independent accounts been prepared? Are there any going concern issues?
- What is the cap table? Who else is invested and at what valuation?
5. Legal and structural
- Is the company incorporated in the UK as required for SEIS?
- Are there any outstanding legal proceedings or material disputes?
- Is intellectual property owned by the company — not by a founder personally?
- Have key employees signed appropriate IP assignment and confidentiality agreements?
- Are the subscription documents and articles of association investor-friendly?
6. The valuation
- What is the pre-money valuation and how was it arrived at?
- How does it compare to comparable SEIS-stage companies in similar markets?
- What multiple of current revenue (if any) does the valuation represent?
- At what exit valuation would you achieve a satisfactory return after the dilution of future rounds?
Editorial disclaimer: This article is produced by EIS Insider for information purposes only. It does not constitute financial advice or an investment promotion. SEIS and EIS investments carry significant risk including the total loss of capital invested. Tax reliefs depend on individual circumstances and are subject to change. Always seek independent financial advice before making any investment decision. EIS Insider is not regulated by the Financial Conduct Authority.