Although the age of angel investors and venture capitalism is still strong, the wide breadth of available opportunities means that software leaders need to make their company stand out in any way they can. CFOs can make significant strides in creating appeal by developing a robust R&D tax credit strategy.
Let’s take a look at what investors are looking for and how R&D tax credits can help.
Investors are looking for firms that are compliant and able to adhere to the regulations they interact with. If your firm makes a long-winded R&D tax claim with many challenges and setbacks, it can convey a lacklustre attitude. However, with a robust R&D strategy in place that’s handled by professionals, you can generate investor trust.
Claiming R&D tax credits can be fraught with complexity and can dissuade CFOs from even attempting the process. However, by conquering such complexities you show investors that you have the ability to keep your books in order. You have to show a lot of evidence to satisfy HMRC, including staff wages, IT investment and training spend, plus much more. When investors decide to examine the finer details of your proposition, having everything in order will only work in your favour.
Though it may seem obvious, there’s a clear cash benefit from a reduced tax bill. Cash in the business also means you don’t have to release as much equity during your various rounds of funding. And not only that, but cash can be the primary driver behind future profitability as it can be used to support your firm’s growth.
Investors are looking for firms on the rise that have the potential for a high rate of growth; such potential profitability may even lead to higher valuations in the future.
Raising funds can take a long time so it’s important to have money in place to help see you through the ups and downs of funding. Sometimes it can take months to secure the funds you need to grow, and a well thought out R&D tax credit strategy could mean you have money in your business at a faster rate. Investors like to see money on the books and you could be buying yourself crucial time that enables you to secure that ideal investment.
Investors will want to be involved with a company that will yield long term gains. Using R&D tax credits you can provide tangible evidence that you have the desire to invest in your own innovation and development; that you want to stay ahead of the curve. Investors will want to know whether they will be receiving a short windfall or decent returns year on year, and proving that you're committed to your own development will be indispensable.
Ultimately, involving a professional in the process can lead to a smooth and compliant application to HMRC. When everything is finetuned in your favour, you can spend less time worrying about satisfying complex criteria and more time focusing on delivering your projects.