Update
By October, venture capital trusts (VCTs) had raised fewer funds in the current tax year than in 2021/22. Wealth Club figures suggest VCTs had raised £201m by 20 October 2022. At the same point in 2021, they had already raised £237m. Wealth Club founder and chief executive Alex Davies told Money Marketing ‘While this is slightly down on last year, that’s more to do with the timing of offers than any loss of investor appetite for VCTs.’
Mobeus VCTs, for example, opened on Monday 17 October, and raised £45m within 24 hours. This is the fastest fundraising on record in the VCT market. On 20 October, the total invested into the Mobeus VCTs was £52m. Puma Investments chief executive officer David Kaye agreed that ‘Offers opened a little later than last year, but are filling up fast. To put that in context, our Puma VCT 13 opened 15 days later and yet is up 97%. So we’ve raised very nearly twice the amount in three-quarters of the time.’
While the economic climate has become more challenging, the reasons why investors flock to VCTs have not changed. Davies said ‘The tax burden is back to the highest it has been for many years, and if you are wealthy you can put very little in a pension. VCTs are the next best thing. Investors are increasingly realising that growth and innovation are not likely to come from large corporates but from young, ambitious entrepreneurial start-ups. Not all will succeed, but there’s much more support now from incubators and accelerators to public and private funding – so they should have a better chance.’
VCTs raised £1.13bn in the 2021/22 tax year, the largest amount in a single tax year since the launch of this closed-end collective investment scheme in 1995/96. The sunset clause for VCTs, enterprise investment scheme (EIS), and seed enterprise investment scheme (SEIS) was extended in the mini budget. VCTs, EIS and SEIS were set to expire on 6 April 2025. It remains to be seen whether that decision will stand.
Links: https://www.moneymarketing.co.uk/news/vcts-fundraising-behind-schedule-due-to-late-offer-openings