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Startup Coalition's 230 Founder Roadshow Finds the Tax System Does Not Reward Founder Risk, Ahead of the Budget

  • Writer: Shawn Jhanji
    Shawn Jhanji
  • 4 days ago
  • 4 min read
Over 230 founders, 17 roundtables, 11 cities, all four nations of the UK. Earlier this year Startup Coalition ran the kind of listening tour that policymakers usually only manage in an election year, sitting down with founders from Belfast to Cardiff and Aberdeen to Leeds to hear, unfiltered, what is actually holding them back. Tokenisingstartups.com found the findings, published this week ahead of the Autumn Budget, land on a single, blunt conclusion: the UK tax system does not reward the risk founders take. That is the structural problem, and it is worth stating plainly before getting to what is changing. Founders leave secure employment, defer income, remortgage houses and spend years building before seeing a return, if they ever do. Capital allocators, employees and even the state itself have mechanisms that recognise and reward the risk they carry. The founder, on Startup Coalition's reading of 230 conversations, does not feel proportionately recognised, and several roundtable participants pointed specifically to the renaming of Entrepreneurs Relief to Business Asset Disposal Relief as a symbol of that drift. Layered on top, a rise in employer National Insurance Contributions alongside the Employment Rights Act has left many founders feeling, in the report's words, that the government does not feel like it is on their side. What makes this worth covering here, rather than filing alongside every other pre Budget lobbying document, is the second finding: incentives that exist nationally in statute are wildly uneven in practice, because they depend on who happens to be standing next to a founder when they need to know about them. In London and Cambridge, awareness of schemes like EMI and EIS is high, because founders are embedded in advisory communities and investor circles that transmit that knowledge efficiently. Elsewhere, Startup Coalition found, the knowledge is materially thinner. Some founders only discover reliefs they were always entitled to years into trading. That is not a story about bias in who gets picked. It is a story about information infrastructure, and it sits squarely inside the geographic and network based underrepresentation this publication treats as seriously as the headline categories of race and gender.

Over 230 founders, 17 roundtables, 11 cities, all four nations of the UK.


Earlier this year Startup Coalition ran the kind of listening tour that policymakers usually only manage in an election year, sitting down with founders from Belfast to Cardiff and Aberdeen to Leeds to hear, unfiltered, what is actually holding them back.


Tokenisingstartups.com found the findings, published this week ahead of the Autumn Budget, appear to land on a single, blunt conclusion: the UK tax system does not reward the risk founders take. That is the structural problem, and it is worth stating plainly before getting to what is changing.


Founders leave secure employment, defer income, remortgage houses and spend years building before seeing a return, if they ever do.


Capital allocators, employees and even the state itself have mechanisms that recognise and reward the risk they carry. The founder, on Startup Coalition's reading of 230 conversations, does not feel proportionately recognised, and several roundtable participants pointed specifically to the renaming of Entrepreneurs Relief to Business Asset Disposal Relief as a symbol of that drift. Layered on top, a rise in employer National Insurance Contributions alongside the Employment Rights Act has left many founders feeling, in the report's words, that the government does not feel like it is on their side.


What makes this worth covering here, rather than filing alongside every other pre Budget lobbying document, is the second finding: incentives that exist nationally in statute are wildly uneven in practice, because they depend on who happens to be standing next to a founder when they need to know about them. In London and Cambridge, awareness of schemes like EMI and EIS is high, because founders are embedded in advisory communities and investor circles that transmit that knowledge efficiently. Elsewhere,


Startup Coalition found, the knowledge is materially thinner. Some founders only discover reliefs they were always entitled to years into trading. That is not a story about bias in who gets picked. It is a story about information infrastructure, and it sits squarely inside the geographic and network based underrepresentation this publication treats as seriously as the headline categories of race and gender.


The response Startup Coalition is proposing is where the piece turns constructive, and it is a genuinely good idea. Rather than one more awareness campaign, the suggestion is to use the moments founders already have with the state, a registration at Companies House being the obvious one, as deliberate delivery points for the right information at the right time.


Good social policy has understood this trick for years: target the touchpoints people already have with the state rather than asking them to seek out a separate campaign. Applied to enterprise policy, that means a founder registering a company could be shown, at that exact moment, what SEIS, EIS and EMI actually mean for them, rather than discovering it informally, or not at all, depending on their postcode.


The roadshow also produced a set of founder personas, built from what Startup Coalition heard across the country, to help policymakers stop treating founders as a single homogenous group. Some are globally mobile and venture backed from day one. Others begin with SEIS and EIS, building steadily before graduating to larger rounds. Others are SMEs on an entirely different trajectory.


A tax system, or a piece of enterprise policy, that treats all three the same will underserve all three, and that mismatch becomes more acute as the UK's startup base shifts from software heavy companies toward a more mixed set of hard tech and deep tech businesses with longer, more capital intensive paths to revenue.


Where this is heading matters as much as where it started. New Prime Minister Andy Burnham has spent much of August outside Westminster on his own listening tour, gathering material for a ten year plan, which gives Startup Coalition's findings an unusually direct route into government thinking at the moment they were published. The organisation is explicit that the ten year plan cannot be allowed to overshadow the more immediate opportunity: a Budget less than three months away, where targeted fixes to how founder risk is recognised and how scheme awareness is distributed regionally could be made without waiting for a decade long strategy to land.


There is also a quieter opening here for the infrastructure this publication follows most closely. A founder registering a company today has no reliable way to know, at that moment, whether SEIS, EIS or a tokenised route to early liquidity might suit their situation.


Better delivery of existing scheme information at the point a company is formed is a precondition for any of that working well, tokenised or not. Startup Coalition's proposal to use state touchpoints as information delivery points is, in effect, an argument for building better plumbing before adding new capital mechanisms on top of it. That is a sequencing point worth taking seriously as PISCES and tokenised SEIS shares continue to mature.


Key Takeaways


  • Startup Coalition convened 17 roundtables across 11 UK cities and four nations, hearing from more than 230 founders ahead of the Autumn Budget.

  • The central finding is that the tax system does not proportionately reward the risk founders take, a concern sharpened by the renaming of Entrepreneurs Relief to Business Asset Disposal Relief and by rising employer National Insurance Contributions.

  • Awareness of schemes like EMI and EIS is high in London and Cambridge but materially thinner elsewhere, meaning some founders only discover reliefs years into trading, a geographic and network based access gap this publication treats as core editorial territory.

  • Startup Coalition proposes using existing state touchpoints, such as Companies House registration, as deliberate moments to deliver the right scheme information to founders, rather than relying on informal networks.

  • The findings arrive as Prime Minister Andy Burnham conducts his own nationwide listening tour, giving Startup Coalition a direct route into government thinking ahead of a Budget less than three months away.


This piece reflects Startup Coalition's own reporting on its roadshow and is general commentary, not tax advice.


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