Venture Capital Trusts plugged a £664 million black hole in small-cap investments in 2022, new data from the Venture Capital Trust Association has revealed.
This marked an 8% increase from 2021 when VCTs invested £538.5 million in new and follow-on investments in small, private businesses.
A total of 345 investments were made through the £664 million deployment.
Total sales of VCT-backed companies totalled £18.18 billion, up 54% from 2021, while VCT-backed export sales of £3.7 billion marked a 29.8% increase, according to the VCTA.
VCTs, which have government-approved tax advantages baked into them, have emerged as an important piece of the UK growth puzzle amid a wider decline in the capital markets and venture capital funding.
Funding from the wider VC industry fell by 23% in 2022 according to KPMG data, as the markets turned away from risky startups due to global economic uncertainty.
Meanwhile, VCTs raised over £1 billion for the second tax year in a row throughout 2022/23.
In contrast, the London capital markets raised just £1.6 billion across all segments in 2022, down from £16.3 billion the year prior.
Will Fraser-Allen, chair of the VCTA and managing partner at Albion Capital Group, commented: “I am delighted to see that our data continues to show strong performance among VCT-supported companies, which are not only boosting economic growth but providing countless high-quality employment opportunities and social benefits around the UK.
“UK PLC is increasingly in need of innovative young businesses to push the economy forwards and help to drive growth by investing in new technologies such as artificial intelligence.
“With government policy also looking to bolster UK growth by encouraging investment in fast-growing companies, the vital role of VCTs in the investment ecosystem has never been clearer.”