VCT fundraising up 11 per cent in 2020-21 tax year

During the pandemic and at a time when the UK’s young companies have needed it most, the VCT sector has raised GBP685 million for investment in small, innovative UK businesses, according to data released by the Association of Investment Companies (AIC).

This represents an 11 per cent increase compared with the 2019/20 tax year when the outbreak of the pandemic hit VCT fundraising and GBP619 million was raised. It is 6 per cent below the year of 2018/19, when funds raised by VCTs totalled GBP731 million. A table of historic VCT fundraising can be found below.
Ian Sayers, Chief Executive of the Association of Investment Companies (AIC), said: “It’s really positive that during the pandemic 11 per cent more was raised to support the UK’s most innovative and fast-growing businesses than the year before. This investment will support healthcare, science and technology businesses which have helped in the battle against coronavirus and supported us to adapt to life in lockdown. It demonstrates that demand for VCTs and the benefits they bring investors remains high at an extremely difficult time.”

Recent research by the AIC offered new insight into private investors’ motivations for using VCTs.
Tax relief is the primary reason for investing in VCTs for 72 per cent of private investors, while for the remaining 28 per cent other reasons are more important.
Almost nine in ten VCT investors (88 per cent) said it was important to them that VCTs help support the UK economy and more than four-fifths (84 per cent) believe that by using VCTs they’re helping UK entrepreneurs.

81 per cent of VCT investors feel that by using VCTs they’re supporting cutting-edge science such as healthcare and technology innovations.4 74 per cent invest in VCTs for the growth potential of backing young companies early and two thirds (67 per cent) appreciate they can support green technologies by using VCTs.
More than four-fifths of VCT investors (81 per cent) feel the pandemic has made supporting smaller UK businesses more important.
The goal of most VCT investors is saving for retirement (56 per cent), whilst 44 per cent use them for saving for their families. The AIC’s survey found that more than four-fifths of VCT investors (84 per cent) are satisfied with their experience of VCTs and just over three-quarters (76 per cent) would recommend VCTs to other investors.