Building an SEIS portfolio: spread, pacing and position size

In short: an SEIS portfolio should be built from a number of small, deliberately sized positions across several companies and more than one tax year, on the assumption that any individual holding can go to zero.

Why spread is structural, not optional

Returns at the seed stage are not normally distributed. A minority of holdings account for most of the value, and a meaningful proportion return nothing. That is why the reliefs exist in the shape they do: loss relief softens the write-offs and the capital gains exemption leaves the winners untaxed.

The consequence is that a portfolio of one or two companies is not a diluted version of the strategy. It is a different, worse strategy, because it removes the exposure to the outcome the model depends on.

Sizing a position

A workable test: size each position so that a total loss would be an irritation rather than a problem, before any relief is considered. Then treat the relief as improving the outcome, not as permission to write a larger cheque.

The right row depends on how much diligence you can genuinely do. Twenty positions you have not examined is not diversification; it is volume.

Pacing across tax years

The £200,000 limit resets each tax year and can be extended backwards by one year through carry back. Deploying across several years also spreads vintage risk: you are not committing everything into one market environment.

It also spreads the three-year holding periods, which matters if you expect to want liquidity at some point. Nothing about SEIS is quick.

Reserve capacity

Companies that do well raise again, and the next round is usually EIS rather than SEIS. If you want to follow your winners, that capacity has to be planned rather than found. Investors who commit everything at seed often find they cannot take part in the round that mattered most.

Where the deals come from

Portfolio construction is only half of it. Consistent access to companies worth backing is the other half, and it is the harder one. Companies created inside a venture builder come with a defined process behind them, which is a different starting point from an inbound pitch - see why invest in venture-built companies and how GCV Labs and GCV Invest work together.