Introduction
You’ve just closed a successful seed round under SEIS or EIS. Congrats. Millions in the bank. But where do you park those funds? A SEIS investment policy statement can be your empty parking ticket’s saviour. Think of it as a playbook for your startup’s cash. It sets guardrails. It shows investors you take stewardship seriously. And it protects you from rookie mistakes—like leaving millions in an uninsured account.
A solid SEIS investment policy statement does three things:
- Preserves your capital.
- Ensures liquidity when payroll’s due.
- Demonstrates discipline to board members and angels.
In this guide, you’ll learn how to craft your own SEIS investment policy statement, step by step. We’ll lean on practical tips, real examples, and pointers to tools like Oriel IPO’s commission-free platform, plus features such as Maggie’s AutoBlog to help you stay organised.
Understanding SEIS and EIS
Before we dive in, let’s recap:
- SEIS (Seed Enterprise Investment Scheme) gives investors up to 50% income tax relief.
- EIS (Enterprise Investment Scheme) offers 30% income tax relief and capital gains deferral.
These schemes exist to fuel UK innovation. Your job? Keep that capital safe and accessible so you can hit milestones, not market hiccups.
Why You Need a SEIS Investment Policy Statement
Imagine showing up to your next board meeting without a plan for your SEIS funds. Yikes. No one wants that. A SEIS investment policy statement:
- Acts as your fiduciary shield.
- Sets clear roles—from CEO sign-off to CFO checks.
- Stops well-meaning founders from chasing big returns at the wrong time.
Put simply: it saves headaches and builds trust.
Core Components of Your SEIS Investment Policy Statement
A bullet-proof SEIS investment policy statement covers these core areas:
- Objectives
- Roles and Responsibilities
- Investment Guidelines
- Asset Allocation
- Liquidity
- Maturity
- Performance
- Transparency
Let’s unpack each one.
1. Objectives
Your primary goal isn’t higher yield. It’s capital preservation. Secondary? Liquidity so you never miss payroll. A sample objectives section in a SEIS investment policy statement might read:
- “Preserve capital for runway and buffer.”
- “Maintain sufficient liquidity to cover 6–12 months of burn rate.”
- “Seek a total return aligned with a short-term benchmark (e.g., 90-Day Treasury Index).”
Keep it concise. Your board will thank you.
2. Roles and Responsibilities
Who’s on deck? A clear roster prevents finger-pointing. Typical assignments:
- Board of Directors: Ratify the SEIS investment policy statement and major revisions.
- CEO: Final sign-off on all wire transfers and policy tweaks.
- CFO / Finance Team: Day-to-day execution, vendor payments, and periodic reviews.
- External Advisor (RIA): Quarterly audits, SSAE-16 reports, and benchmarking.
Pro tip: add a line on preventing wire-transfer fraud. A quick phone check to a known contact works wonders.
3. Investment Guidelines
List what you can and can’t buy. For a SEIS investment policy statement:
Approved instruments:
- US Treasuries and government agency securities
- SEC-registered money market funds (Rule 2a-7)
- High-grade commercial paper (optional)
Prohibited:
- Equities or volatile mutual funds
- Asset-backed securities and auction rate instruments
Specify minimum credit ratings: A-1/P-1 or F1 for short-term. AAA/Aaa for long-term.
4. Asset Allocation
How much goes where? Startups should lean heavily on safe bets:
- 95% in US Treasuries or government agencies
- 5% in ultra-short money market products
Why? Diversification matters, but you’re not diversifying into emerging markets here.
5. Liquidity
Your SEIS investment policy statement must guarantee that funds are market-liquid. Define your liquidity rules:
- All holdings are readily marketable daily.
- Money market and sweep accounts only.
No illiquid private placements. Ever.
6. Maturity
Time horizons need to match your runway. For most startups:
- Max maturity at purchase: 397 days.
- Weighted average maturity ≤ 90 days, if possible.
This keeps funds from being tied up while you gear for the next fundraise.
7. Performance
You’re not chasing hedge-fund returns. Still, benchmarks matter:
- 90-Day Treasury Index for short-term funds.
- Lipper Institutional Money Market Fund Average for cash equivalents.
Require monthly statements and quarterly reviews. Your CFO should meet with any external manager at least four times a year.
8. Transparency
No hidden accounts. Your SEIS investment policy statement should specify:
- Segregated third-party custodial accounts only.
- RIA-managed portfolios with SSAE-16 or SOC reports.
- Company retains direct title to assets—no co-mingling.
This reassures investors and keeps legal teams happy.
Halfway through? Time for a quick pit stop.
Drafting, Review and Board Approval
Once your SEIS investment policy statement is drafted:
- Consult your legal counsel to ensure compliance.
- Circulate to accounting and finance teams.
- Present at a board meeting.
- Record approval in board minutes.
This sign-off is your legal and operational safety net. Share the final document with your banking partners so they know exactly how to handle transfers.
Leveraging Oriel IPO (and Maggie’s AutoBlog)
Here’s where Oriel IPO fits in. Our commission-free UK marketplace:
- Curates tax-efficient SEIS and EIS investment opportunities.
- Provides educational webinars and guides on SEIS compliance.
- Offers Maggie’s AutoBlog, an AI tool that auto-generates compliant blog content—perfect for reporting on policy changes.
In short, Oriel IPO helps you build and maintain a rock-solid SEIS investment policy statement. No more guesswork. No surprise audits.
Real-World Example
Let’s say your startup, Acme Robotics, raised £2 million under SEIS. You forecast a 12-month runway, a monthly burn of £150k, and an R&D tax credit filing in month 9.
Your SEIS investment policy statement could allocate:
- £900,000 in next-day money market funds (6 months’ operating cash).
- £700,000 in 90-day US Treasuries.
- £400,000 in 180-day government agency bonds.
You’ll cover burn, keep flexibility, and earn a modest return—safely.
Common Pitfalls to Avoid
- Over-chasing yield.
- Tying funds beyond your runway.
- Missing board ratification.
- Using non-segregated custodial accounts.
A SEIS investment policy statement stops all these slip-ups.
Conclusion
Drafting a SEIS investment policy statement may feel bureaucratic. In reality, it’s your startup’s best friend. It sets clear rules, limits risk, and wins investor confidence. Combine it with Oriel IPO’s educational resources and Maggie’s AutoBlog for a smooth, compliant process.
Ready to formalise your cash strategy?
