OmnioIQ Friends & Family Investment Round

Strategic Funding Plan for Pre-Seed Success

Version 1.0 | November 2025 | UK SEIS/EIS Optimized

Executive Summary

This document outlines a structured approach to raising £50,000-£150,000 from friends and family investors while maximizing UK tax reliefs (SEIS/EIS), protecting relationships, and maintaining a clean cap table for future institutional rounds.

£75K
Target Raise
10-15%
Max Equity
SEIS
Tax Structure
12-18mo
Runway Target

Industry Benchmarks: What's Customary

UK Friends & Family Rounds Typically: Range from £50,000 to £500,000, with most B2B SaaS startups raising £50,000-£150,000. Individual investments average £10,000-£150,000 per person.
Metric UK Average OmnioIQ Target Rationale
Total Raise £50K - £500K £75,000 Conservative; maximizes SEIS ceiling (£250K)
Equity Given 5% - 20% 10-15% Preserves founder control; clean cap table
Valuation £500K - £1.5M £500K - £750K Realistic pre-revenue; avoids down-round risk
Number of Investors 3-15 people 5-10 people Manageable cap table; meaningful relationships
Min Investment £1,000+ £2,500 Ensures committed investors; reduces admin
Max Investment Varies £25,000 Diversifies risk; no single dominant investor

UK Tax Relief: The SEIS Advantage

The Seed Enterprise Investment Scheme (SEIS) offers extraordinary benefits to your investors, dramatically reducing their risk and making your raise significantly more attractive.

SEIS Tax Relief Summary

50% Income Tax Relief

Investors claim 50% of investment back immediately via tax return. £10K investment = £5K tax relief.

0% Capital Gains Tax

Any gains on SEIS shares are completely CGT-free after 3 years holding period.

Loss Relief Protection

If startup fails, investors can offset losses against income tax (up to 45% of remaining capital).

Real Example - £10,000 SEIS Investment (45% taxpayer):
  • Immediate relief: £5,000 income tax back (50%)
  • If company fails: Additional £2,250 loss relief (45% of £5K remaining)
  • True downside: Only £2,750 at risk (not £10,000!)
  • If company succeeds: 0% CGT on all gains

SEIS Eligibility Requirements

Company Requirements

  • UK-based company, < 3 years old
  • Gross assets < £350,000
  • < 25 full-time employees
  • Qualifying trade (software ✓)
  • Max £250,000 raised via SEIS

Investor Requirements

  • UK taxpayer
  • Max £200,000/year per investor
  • Not "connected" to company
  • Hold shares for 3+ years
  • Must be ordinary shares
SEIS "Connected Persons" Rule - Who CANNOT Invest:
Spouses, civil partners, parents, children, and grandchildren of founders/directors are excluded from SEIS tax relief. However, siblings, cousins, aunts, uncles, nieces, nephews, and friends CAN invest and claim full SEIS benefits.

Investment Structure Options

RECOMMENDED

SEIS Equity

Direct share purchase with SEIS tax relief

  • 50% income tax relief
  • 0% CGT on gains
  • Loss relief protection
  • Clean cap table
  • Simple legal structure

Best for: Most F&F investors

Convertible Note

Debt that converts to equity at next round

  • Defers valuation decision
  • Usually 20% discount
  • Maturity date (12-24mo)
  • Interest accrues (5-8%)
  • No SEIS benefits

Best for: Non-UK investors

SAFE Note

Simple Agreement for Future Equity

  • No interest or maturity
  • Converts at next round
  • Founder-friendly
  • Fast to execute
  • No SEIS benefits

Best for: Sophisticated angels

OmnioIQ Recommendation: Use SEIS equity for UK friends & family (maximizes their tax benefits), and offer SAFE notes only to non-UK or connected persons who cannot claim SEIS.

Investment Tiers & Allocation

Tier Investment Range Target Investors Total Allocation Equity %
Tier 1 - Anchor £15,000 - £25,000 2-3 investors £30,000 - £45,000 4-6%
Tier 2 - Core £5,000 - £15,000 3-5 investors £15,000 - £30,000 2-4%
Tier 3 - Supporter £2,500 - £5,000 3-5 investors £7,500 - £15,000 1-2%
TOTAL £52,500 - £90,000 7-12%
Why This Structure Works:
  • Anchor investors provide credibility
  • Core tier builds momentum
  • Supporter tier includes well-wishers
  • Cap table stays clean (8-13 investors max)
Key Protections:
  • £25K max prevents single-investor dominance
  • £2.5K min ensures serious commitment
  • Same terms for all (no special deals)
  • Clear communication of total loss risk

Valuation Strategy

Critical Warning: Setting valuation too high at F&F stage can create "down-round" problems at Seed/Series A, damaging investor relationships and making future raises difficult. Be conservative!
Scenario Pre-Money Valuation £75K Raise = Equity Risk Level
Conservative (Recommended) £500,000 13.0% Low
Moderate £750,000 9.1% Medium
Optimistic £1,000,000 7.0% High

Pre-Revenue Valuation Factors

✓ Value Builders (OmnioIQ Has)

  • Complete technical architecture
  • Working MVP/prototype
  • Domain expertise in logistics
  • AI/ML differentiation
  • Clear go-to-market strategy
  • Large addressable market (£2.4B UK)

✗ Pre-Revenue Reality Checks

  • No paying customers yet
  • No revenue/MRR
  • Product-market fit unproven
  • Solo founder (if applicable)
  • First-time founder (if applicable)
  • Competitive market
OmnioIQ Recommendation: Set pre-money valuation at £500,000 - £600,000. This is founder-friendly for a pre-revenue B2B SaaS with strong technical foundation, while leaving headroom for 2-3x valuation increase at Seed (£1.5M-£2M) after proving traction.

Fundraising Timeline

Week 1-2: Preparation

  • Finalize pitch deck and one-pager
  • Apply for HMRC Advance Assurance (SEIS)
  • Engage solicitor for share subscription agreement
  • Create investor prospect list (20-30 names)

Week 3-4: Soft Outreach

  • Coffee/call with warm prospects
  • Share vision, ask for advice (not money)
  • Gauge interest levels
  • Refine pitch based on feedback

Week 5-6: Active Fundraising

  • Receive SEIS Advance Assurance (typically 6-8 weeks from application)
  • Send formal investment materials
  • Host Q&A sessions for serious prospects
  • Secure anchor investors first (social proof)

Week 7-8: Closing

  • Send share subscription agreements
  • Collect funds via bank transfer
  • Issue share certificates
  • File with Companies House

Post-Close: Compliance

  • Submit SEIS1 compliance statement to HMRC (after 4 months trading)
  • Issue SEIS3 certificates to investors
  • Set up quarterly investor updates

Protecting Seed & Series A Rounds

The #1 concern for F&F rounds is creating problems for future institutional funding. Here's how to avoid common pitfalls:

DO: Best Practices

  • Use standard documents: Share subscription agreements, articles of association
  • Same terms for everyone: No special side deals
  • Keep cap table simple: Max 10-15 F&F investors
  • Ordinary shares only: No preference shares at this stage
  • Conservative valuation: Leave room for up-rounds
  • Clear communication: Document everything in writing
  • Set expectations: 7-10 year timeline, total loss possible

DON'T: Common Mistakes

  • Don't over-raise: Taking more than needed creates pressure
  • Don't give board seats: Keep governance simple
  • Don't give veto rights: VCs hate these at F&F level
  • Don't give anti-dilution: Creates future complications
  • Don't set high valuation: Down-rounds destroy relationships
  • Don't skip documentation: Verbal agreements are disasters
  • Don't take from everyone: Be selective
What VCs Look for in Cap Tables:
  • Clean structure with minimal investors
  • No complex terms or preferences
  • Founders retain significant equity (ideally 70%+ post-F&F)
  • No "dead equity" held by inactive parties
  • Proper documentation and SEIS compliance

Relationship Management

"The downside is zero dollars. I stress that the most." — Successful founder on F&F rounds

The Risk Disclosure Framework

Point What to Say Why It Matters
1. Total Loss "You could lose 100% of your investment" Sets worst-case expectations upfront
2. Illiquidity "Your money is locked up for 7-10 years" Prevents "I need my money back" situations
3. No Dividends "We won't pay dividends; all profit reinvested" Clarifies return mechanism
4. Dilution "Your percentage will decrease with future rounds" Explains future fundraising impact
5. Control "You have no say in day-to-day operations" Prevents interference expectations

Ongoing Communication Cadence

Monthly

Brief email update

  • Key metrics
  • Major wins/setbacks
  • 1-2 paragraphs max

Quarterly

Detailed report

  • Financials & burn rate
  • Product progress
  • Customer traction
  • Next quarter goals

As Needed

Direct calls for:

  • Major pivots
  • Fundraising updates
  • Bad news (proactive!)
  • Big wins

Use of Funds: £75,000 Allocation

Category Amount % Purpose
Product Development £30,000 40% Complete MVP, API development, infrastructure
Go-to-Market £18,750 25% Website, content, initial marketing, sales tools
Operations £11,250 15% Legal, accounting, SEIS compliance, tools/SaaS
Founder Salary £11,250 15% Minimal living expenses (6-9 months runway)
Reserve/Contingency £3,750 5% Unexpected costs, opportunities
TOTAL 100% 12-18 months runway to Seed metrics
Milestones to Achieve Before Seed Round:
  • 5-10 paying customers
  • £3K-5K MRR
  • Product-market fit signals
  • 2-3 strong customer case studies
  • Clear path to £50K-100K ARR

Legal Requirements & Documentation

Required Documents

Document Purpose Estimated Cost
SEIS Advance Assurance HMRC confirmation of SEIS eligibility Free (DIY) or £500-1,000 (solicitor)
Articles of Association Company governance rules £0 (standard) or £500-1,500 (custom)
Share Subscription Agreement Terms of investment for each investor £500-1,500
Shareholders' Agreement Rights and obligations of shareholders £1,000-3,000
Board Resolutions Formal approval of share issuance £0-500
SH01 Return of Allotment Companies House filing within 1 month £0
Budget Tip: Platforms like SeedLegals, Vestd, and Capdesk offer templated F&F round packages from £500-2,000 all-in, significantly cheaper than traditional solicitors while maintaining SEIS compliance.

Pre-Launch Checklist

Legal & Compliance

  • ☐ Apply for SEIS Advance Assurance
  • ☐ Confirm company structure is SEIS-eligible
  • ☐ Draft/review Articles of Association
  • ☐ Prepare Share Subscription Agreement template
  • ☐ Set up proper company bank account
  • ☐ Engage accountant for cap table management

Investor Materials

  • ☐ One-page executive summary
  • ☐ Pitch deck (10-15 slides)
  • ☐ Financial projections (3 years)
  • ☐ Use of funds breakdown
  • ☐ Risk disclosure document
  • ☐ FAQ document for common questions

Prospect Development

  • ☐ Create prospect list (20-30 names: friends, family, extended network)
  • ☐ Categorize by: relationship strength, financial capacity, SEIS eligibility
  • ☐ Identify 2-3 potential anchor investors
  • ☐ Draft personalized outreach messages
  • ☐ Schedule initial coffee/call meetings

Summary: OmnioIQ F&F Round Parameters

£75K
Target Raise
£500-600K
Pre-Money Valuation
10-13%
Equity Allocation
SEIS
Tax Structure

5-10 investors | £2.5K-£25K per investor | 12-18 month runway | Clean cap table for Seed

OmnioIQ Friends & Family Investment Strategy | Version 1.0

Prepared November 2025 | UK SEIS-Optimized