VCT fundraising up 11% in 2020/21 tax year

VCTs raise £685 million in the tax year to 5 April 2021.

MoneyUp

Today the Association of Investment Companies (AIC) published the amount of money raised by VCTs for the 2020/21 tax year. During the pandemic and at a time when the UK’s young companies have needed it most, the VCT sector has raised £685 million for investment in small, innovative UK businesses.

This represents an 11% increase compared with the 2019/20 tax year when the outbreak of the pandemic hit VCT fundraising and £619 million was raised. It is 6% below the year of 2018/19, when funds raised by VCTs totalled £731 million. A table of historic VCT fundraising can be found below.

Ian Sayers, Chief Executive of the Association of Investment Companies (AIC), said: “It’s really positive that during the pandemic 11% more was raised to support the UK’s most innovative and fast-growing businesses than the year before. 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.”

Historic VCT fundraising excluding enhanced share buy-backs

Tax year

Fundraising (£millions)

2020/21

685

2019/20

619

2018/19

731

2017/18

728

2016/17

542

2015/16

457

2014/15

429

2013/14

420

2012/13

269

2011/12

267

2010/11

354

2009/10

338

2008/09

154

2007/08

220

2006/07

267

2005/06

779

2004/05

505

2003/04

50

2002/03

65

2001/02

125

2000/01

433

1999/2000

270

1998/99

165

1997/98

190

1996/97

170

1995/96

160


Why do private investors invest in VCTs?

Recent research by the AIC offered new insight into private investors’ motivations for using VCTs.1

Tax relief is the primary reason for investing in VCTs for 72% of private investors, while for the remaining 28% other reasons are more important.

Almost nine in ten VCT investors (88%) said it was important to them that VCTs help support the UK economy2 and more than four-fifths (84%) believe that by using VCTs they’re helping UK entrepreneurs.3

81% of VCT investors feel that by using VCTs they’re supporting cutting-edge science such as healthcare and technology innovations.4 74% invest in VCTs for the growth potential of backing young companies early and two thirds (67%) appreciate they can support green technologies by using VCTs.5

More than four-fifths of VCT investors (81%) feel the pandemic has made supporting smaller UK businesses more important.6

The goal of most VCT investors is saving for retirement (56%), whilst 44% use them for saving for their families. The AIC’s survey found that more than four-fifths of VCT investors (84%) are satisfied with their experience of VCTs and just over three-quarters (76%) would recommend VCTs to other investors.

 

For more information on VCTs, read the AIC’s guide Going for growth
or watch ‘Venture Capital Trusts Explained’.

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Notes to editors

  1. The research was completed by Research in Finance on behalf of the AIC between 1 and 9 February 2021. The research consisted of an online survey of 108 private VCT investors.
  2. 54% agreed that VCTs help support the UK economy, which is important to them. 34% strongly agreed.
  3. 47% agreed that by using VCTs they feel they’re helping UK entrepreneurs. 37% strongly agreed.
  4. 61% agreed that by using VCTs they feel they’re supporting cutting-edge science such as healthcare and technology innovations. 20% strongly agreed.
  5. 49% agreed they can support green technologies by using VCTs. 18% strongly agreed.
  6. 45% agreed the pandemic has made supporting smaller UK businesses more important. 36% strongly agreed.
  7. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 361 members and the industry has total assets of approximately £237 billion.
  8. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance.  The value of investment company shares, and the income from them, can fall as well as rise.  You may not get back the full amount invested and, in some cases, nothing at all.
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