Although VCTs (Venture Capital Trusts) have been around since 1995, the amount of money raised over the last three years has exploded. VCTs raised £1.13 bn in the 2021/22 tax year. That's 65% more than in the previous year and the second-highest amount raised since the VCT scheme was launched. So why have they been such a popular investment choice in recent times?
Howard Kennedy is the UK’s leading VCT law firm and sponsor, advising on 80% of all VCTs launched in the last season. Because of our unique English legal and sponsor capability, we ensure a smoother and faster process for them. That's why all the VCTs listed in the Sunday Times article linked below are clients of the firm. As such, we are uniquely positioned to provide insight into this uptick.
We see that investors are increasingly comfortable with investing in VCT funds that support UK start-ups and private businesses, with many of the more mature VCTs offering a diverse portfolio and a healthy dividend yield. There will, undoubtedly, in any portfolio of start-ups and growth businesses, be winners and losers. That’s also true of VCT funds, but overall on a broad, diverse, and carefully selected portfolio, VCTs are generating solid returns year on year. That is what's attracting investors... with the added advantage of the tax reliefs offered to counter the risk investors are taking by investing in such early-stage businesses, which is usually only for the very brave.
At a time when UK businesses are suffering from the cost of living crisis, VCT support and investment is crucial to help them through these tough times. For that reason, in particular, we very much welcome and are proud of our deep association with the VCT community.
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