Venture capital trusts raise £1bn for the second time

The Association of Investment Companies (AIC) announced that the amount of money raised by venture capital trusts (VCTs) in the 2022-23 tax year passed the £1 billion milestone for the second time.

The AIC said £1.08 billion was raised “to be invested in young and ambitious UK companies.”

This is the second highest fundraising ever by VCTs and represents a 5% decrease on 2021-22 tax year (£1.13 billion) which was a record year for fundraising.

“During the 2022 calendar year, VCTs invested £700 million in new and follow-on investments in small private companies and Alternative Investment Market (AIM) companies in the UK,” said the AIC.

“The lion’s share, £652 million (93%), was invested in private companies with £48 million invested in AIM-quoted companies.

“In 2021 VCTs invested £672 million in new and follow-on investments. Of this, £539 million (80%) was invested in private companies and £133 million was invested in AIM companies.”

AIC CEO Richard Stone said: “This VCT fundraising is close to record levels which will be highly beneficial to the UK’s innovative small businesses in a challenging year.

“Last year VCTs invested £700 million in small private companies and AIM companies. This much-needed support to the UK’s fast-growing companies helps deliver vital economic, social and environmental advantages to the country.

“It’s crucial VCTs can continue to fund young businesses which create jobs, develop skills and knowledge, increase exports and raise the tax take across many sectors including  healthcare and technology.

“During a tough year for investors, demand for VCTs remains near record levels demonstrating the numerous benefits they bring.

“VCTs have been around for over 25 years and are a trusted tax-efficient scheme.

“They have strong long-term performance, with the average VCT returning 108% over ten years. Following the pandemic, private investors are particularly interested in supporting the UK’s entrepreneurs and their innovative high-growth companies.”