UK SMEs Secure Half A Billion In VCT Funding

Good news for growing businesses in the UK this week, with the announcement that a total of £505m was invested via Venture Capital Trusts (VCTs) in 2023. 

The total marks a significant increase on the previous year figures, and is a clear demonstration of the continued strength of the start up funding landscape in the UK. 

VCTs are closed-end funds created by the U.K. government in the 1990s to help direct investment into local private businesses. These funds are tax-efficient and allow individual investors to access venture capital investments via capital markets. 

VCTs seek out potential venture capital investments in small unlisted firms that are in their early stages to generate higher-than-average, risk-adjusted returns.

The VCT Association said that 2023 saw a number of notable investments, including Albion’s participation in Quantexa’s Series E funding round which saw it become the first British ‘unicorn’ of 2023, and Transreport’s £10m funding round which included investment from Pembroke and Puma VCTs. 

Importantly, the timescale of investments has changed, with companies being given longer on average to grow, develop and deliver returns.  The VCTA says this has been an additional benefit to UK start-ups and scale-ups in recent years, as SMEs continue to weather the turbulent economic environment; from Brexit, through Covid and into the recent inflationary pressures. 

The most up to date figures show that that the average age of firms receiving follow-on investments from VCTs rose to 7.8 years, up from 7.2 in 2022, further highlighting the need for patient capital across the UK to bridge the growth funding gap. 

Chris Lewis, Chair of the VCT Association, said that, “VCTs continue to provide much needed growth capital to many of the UK’s most promising young and early-stage companies. The Government’s recent decision to extend the VCT scheme by a further ten years demonstrates the significant economic value being driven through this model of patient capital investment.

This data highlights how important the continued success and growth of the VCT scheme will be for the UK and its growth companies. VCTs offer a patient approach to investing, backing companies throughout their scale-up journey regardless of economic cycles. As the economic picture improves, UK entrepreneurs know they can count on the VCT industry to be a steadfast partner in realising their growth ambitions, providing both funding and advice.

Chris Lewis, Chair of the VCT Association

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