Investments in venture capital trusts (VCTs) accounted for £225m of funding for 115 small and medium-sized enterprises (SMEs) in 2015, research by the Association of Investment Companies shows.
The AIC Annual VCT Investment review found that the average initial investment in VCTs was £2m with additional investments averaging around £1.5m. The support of VCTs proved to extend beyond funding, with a VCT representative joining the board of two thirds of SMEs.
The top sectors for investment in 2015 were business services; digital, creative and information services and retail and manufacturing – which received £114m between them.
Ian Sayers, chief executive of the AIC, says: “VCTs are a boost to the UK economy providing vital finance and expertise to smaller British companies and stimulating high levels of job creation.
“VCT investment is risky and not all VCT-backed companies will be a success, but the performance of VCT backed businesses is impressive nevertheless. VCT backed businesses have high levels of innovation and significant levels of exports, indicative of their potential value to the UK economy. Moreover, VCTs are good value for taxpayers, as investee companies contribute more in tax than the cost of the initial tax relief.”