VCTs hit 30 year milestone

29 November 2024

Venture Capital Trusts (VCTs) are 30 years old, having been launched by then-Chancellor Ken Clarke in November 1994.

Marking the three decade milestone, Chris Lewis, Chair of the Venture Capital Trust Association (VCTA), flagged VCTs as a cornerstone of the UK’s investment landscape, providing essential financial support to the nation’s most forward-thinking businesses, creating stable jobs, and managing a significant amount of patient capital.

Lewis said: “What began as a specialised initiative to connect private investors with high-growth businesses has evolved into an indispensable pillar of the UK’s startup funding ecosystem. VCTs have transformed the growth trajectory of thousands of SMEs while delivering consistent value for shareholders.”

The VCTA aid that since 2016, its members had invested over £3.6 billion, fostering innovation across sectors in which the UK has become a world leader, such as fintech, life sciences, and AI, supporting the ambitions of entrepreneurs, while also driving wider economic benefits.

Key highlights of the VCT’s impact include:

• Job creation: More than 106,000 people are currently employed by VCT-backed companies.
• Regional economic growth: Investments have supported businesses across all regions of the UK, helping to address funding disparities outside London and the South East.
• Scale: VCTs now manage over £6.5bn in assets, demonstrating the scale and significance of the VCT industry in supporting the UK’s entrepreneurial ecosystem

Lewis continued: “The recent Budget has highlighted the importance of VCTs as one of the three pillars of tax-efficient investing in the UK, alongside pensions and ISAs. With the overall tax burden increasing, VCTs offer a unique opportunity for investors to align their financial goals with the broader ambition of stimulating growth in SMEs and creating high-quality jobs.”

The VCTA said that the potential to expand the scheme further to support a broader range of innovative businesses is a key area of focus, particularly in addressing emerging opportunities in green energy, life sciences, and advanced manufacturing.

Lewis added: “Lord Clarke’s vision of creating a dynamic, entrepreneurial economy has stood the test of time. As we celebrate this milestone, we’re excited about the future, ensuring VCTs remain at the forefront of funding innovation and growth in the UK. Together, we can build an even stronger foundation for the businesses of tomorrow.”

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