Thursday 8 April 2021 11:17 am

Venture capital trusts fundraised £685m last year in bid to support small businesses

Venture capital trusts (VCTs) managed to bolster fundraising by 11 per cent last year, raising £685m in funds for small businesses.

The fundraising, only six per cent below pre-pandemic levels, is set to give some companies some breathing room after a fiscally tough year.

“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,” chief executive of the Association of Investment Companies (AIC), Ian Sayers, said.

“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.”

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VCTs raised £731m in the year ending in 2019, after climbing steadily since 2008 and have been raising funds since 1995 with the help of private investors.

72 per cent of private investors support VCTs for the tax relief, research by the AIC found.

Meanwhile, 88 per cent of investors said it was important to them that VCTs bolster the UK economy, as 84 per cent looked to them as a way of supporting entrepreneurs.

Backing young companies has attracted 74 per cent of investors, as others want to support new science and green technologies.

The pandemic has stifled the growth of smaller companies, which is why 81 per cent of investors feel it’s more important to support smaller businesses, now more than ever.

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