After you invest: certificates, updates, follow-ons and exits
The SEIS3/EIS3 certificate and how to claim, what to expect from founder updates and what to do when they stop, how to decide on follow-on cheques, and what an exit actually looks like for a minority angel.
The money has gone and the shares are yours. What happens over the next five years is mostly waiting — but the parts that are not waiting matter: claiming your relief, reading updates, deciding whether to follow on, and eventually, if it works, being sold.
Claiming the relief
The company issues your shares and files the share allotment. Once it has traded for four months (SEIS) or spent the money, it submits a compliance statement (SEIS1/EIS1) to HMRC, and HMRC authorises it to issue you an SEIS3 or EIS3 certificate. You claim on your self-assessment return for the year of investment (or the previous year under carry-back), entering the company name, HMRC reference and amount. Certificates typically arrive three to six months after the round closes. Keep them: you need them if HMRC asks, and if you ever claim loss relief.
If the certificate has not arrived within six months, ask. Companies forget; the compliance statement is a thing a founder has to do. On Find, the founder's update feed is where to ask in public if the private message goes unanswered.
Updates
A good founder sends a monthly email: the headline number, highlights, lowlights, cash, asks. Read it. Reply to the asks if you can help — introductions are the most valuable thing an angel does after the cheque. If updates stop, ask once, politely. If they stay stopped for a quarter, something is wrong; a message to the lead investor or board member is appropriate. Silence is usually bad news the founder has not found a way to say.
Follow-ons
When the company raises again, you will usually have pre-emption: the right to invest pro rata at the new price. Decide using the updates you have read. Is the business doing what the plan said? Is the new round priced on evidence? Is there a credible lead? If yes, follow: second cheques into working companies are the best risk-adjusted money an angel deploys. If no, let your pre-emption lapse and accept dilution; do not throw good money after a story.
What an exit looks like
For most angels, exit means the company is sold. You will receive notice under the drag-along (if 75% have agreed) or the tag-along (you can join on the same terms), a share purchase agreement to sign, possibly warranties limited to title to your own shares, and money on completion — often with part deferred or in escrow. Secondary sales (selling your shares to another investor before an exit) happen but are rare at this size. After three years, gains on SEIS/EIS shares are free of capital gains tax; before three years, they are not and relief is clawed back — a reason to resist early exits unless the price justifies it.
When it fails
Most will. The company stops trading, is wound up or dissolved. You claim loss relief: the net loss (cost less relief already claimed) against income tax at your marginal rate in the year of loss or the previous year. You need evidence the shares have become of negligible value — a liquidator's letter, a negligible-value claim accepted by HMRC, or the company's dissolution. Founders who fail well send a last update saying so and what investors need for their claims. It is worth remembering which founders do that.
Questions investors ask
"The company is being acquired for shares in the buyer. What happens to my relief?"
A share-for-share exchange within three years can be treated as a disposal and claw back relief unless it qualifies for specific exemptions. Ask the company's adviser before the deal completes, not after.
"Can I sell my shares to another angel?"
Subject to the shareholders' agreement — usually pre-emption for existing holders first, and board consent. Within three years you lose relief on what you sell.
"How do I keep track of twenty of these?"
A spreadsheet: company, date, amount, relief claimed, certificate received, last update, current view. Find shows your indicated and matched deals in your inbox; a portfolio tracker is on the roadmap.