SMEs raised £1.46bn of funding through the Enterprise Investment Scheme (EIS) last year, an increase of 41%, reaching its highest ever level, according to Radius Equity, the provider of tax efficient private equity investments.

Radius said that start-ups also raised £163.5m via the Seed Enterprise Investment Scheme (SEIS) last year, nearly double the £85.9m raised in the first year of the scheme (2012/13).

Latest figures from HMRC reveal that the number of businesses raising funds from private investors through EIS has increased by 10%, from 2,465 in 2013 to 2,710 last year.

1,995 businesses raised funds through the SEIS in 2014, up from 1,155 (an increase of 73%). 1,695 businesses raised funds through the SEIS for the first time in 2014.

Gary Robins, Director at Radius Equity, said: “EIS and SEIS are proving increasingly popular amongst investors, as they are now just two of the few Government endorsed investment schemes with generous tax breaks.”

“The tax breaks the Government has put in place are attracting huge numbers of start-ups and investors which is encouraging growth and proving a boost to the economy.”

“These figures highlight the growing investor interest in small business investing. Investors are also benefitting from a wider choice of businesses to invest in, with private investors able to pick and choose from the businesses they think are most likely to deliver them the best returns.”

“EIS is doing what so many other initiatives have failed to do – get increased funding to SME businesses, a vital part of the economy that has seen its funding through banks loans fall dramatically and continuously since the credit crunch.”