Venture Capital Trusts (VCTs) raised an impressive £882 million during the 2023/24 tax year, making it the third-highest fundraising period on record. This achievement is noteworthy, considering the decline in fundraising experienced by many other funds in the market during the same period, along with virtually no IPOs. This resilience highlights the value of VCTs to investors and to investment managers seeking alternative methods of raising capital.
What are VCTs?
VCTs are a form of investment company listed on the London Stock Exchange which invest in early stage growing UK businesses. VCT Investors enjoy substantial tax benefits, to encourage them to take the risk of investing in early stage ventures: This is in the form of income tax relief when investing, capital gains tax relief upon selling VCT shares, and tax-free dividends.
VCTs have been credited with being a key driver of the UK economy thanks to such substantial investment in smaller businesses which require a capital injection to grow, but are unable to access other sources of funding due to their lack of maturity and size. VCT investment has seen a handful of these investee businesses reaching Unicorn status (a valuation of $1 billion), with the UK boasting the highest number of Unicorn companies out of any nation in the European Union. Albion’s participation in Quantexa’s Series E funding round saw it become the first British unicorn of 2023.
How has the money been deployed?
More than £505 million was deployed into early stage UK companies in the 2023/2024 tax year alone, across a variety of sectors, including Technology, FinTech, Consumer and Healthcare. This highlights how important the continued growth of the VCT scheme will be for the UK and its startup ecosystem.
Is there space for new VCTs?
Yes. This year has seen two new entrants to the VCT sector: Fuel Ventures VCT and Praetura Growth VCT. Howard Kennedy were delighted to assist with the establishment of both of these new VCTs.
I am interested in setting up a VCT, who should I contact?
The Capital Markets team at Howard Kennedy can guide any investment manager through the process of establishing a VCT, uniquely offering support as both a legal adviser and FCA sponsor. We represented over 80% of VCT funds raised in FY2023/2024 and have strong relationships with the other necessary professional service providers, including a rich contact list of potential directors.
Want to hear more from us? 
