Venture capital trusts (VCTs) continue to attract strong levels of investment, with assets under VCT management increasing £4.1bn to £6.3bn over the past five years, according to a report released by the Association of Investment Companies (AIC) on Monday.
During a webinar hosted by AIC, James Livingston, partner at Foresight Group, predicted that 2023 will be another good year following a record-setting 2021/22 season, citing the attractive tax advantages that make VCTs popular among high-net-worth investors.
“Most of the major investors have already launched fundraising rounds and we do not see a reason for VCT investor demand to materially drop in the coming year- there aren’t many alternatives offering a similar level of tax relief for investors,” said Livingstone.
Ewan MacKinnon, investment partner at Maven Capital Partners, noted a degree of caution among investors and advisors due to uncertain macroeconomic conditions. “However, we are still seeing strong investor appetite,” he stated.
MacKinnon reckoned that “earlier stage businesses, of the sort and size backed by VCTs, will typically be run by innovative and ambitious management teams looking to exploit new market opportunities.
“They do this through the development of new or enhanced products and services, often underpinned by ground-breaking new technologies and ideas which keep the UK at the forefront of global entrepreneurialism and innovation,” citing Mavern’s £1.6mln investment in Glasgow-based drug discovery company BioAscent as an example.
Increasing diversity
Panellists also discussed the importance of supporting female entrepreneurs in their investment strategies under the Investing in Women Code.
Will Fraser-Allen, managing partner at Albion Capital, said: “To increase the amount of funding that goes to women founders we apply a diversity lens when sourcing deal opportunities. This includes taking part in female founder office hours, working with female angels, partnering with seed-stage funds that focus on women and diverse teams.”
Regional investments were another field of discussion, with Livingstone noting that London and the southeast currently net over 75% of VCT investments across the UK and Ireland.
Livingstone cited Hospital Services Limited in Dublin, Mowgli Street Food in Liverpool, Roxy Ball Room in Leeds eHealth in Manchester as examples of Foresight Group’s regional investments.