In a boost to the UK’s tech sector, Venture Capital Trusts (VCTs) invested £505 million into early-stage companies across the UK in 2023, according to the Venture Capital Trust Association (VCTA).
This influx of capital provided a critical lifeline amid a broader downturn in venture funding, which saw an overall decline of nearly one-third.
VCTs play a crucial role in the UK’s entrepreneurial ecosystem by offering patient capital and strategic support to scaling businesses. These investments are vital for driving economic growth, job creation, and technological innovation. Notable investments in 2023 included Albion’s participation in Quantexa’s Series E funding round, making it the first British unicorn of the year, and a £10 million round for Transreport, backed by Pembroke and Puma VCTs.
VENTURE CAPITAL TRUSTS: Small is beautiful
The VCTA’s latest data underscores the industry’s commitment to nurturing early-stage firms. In 2023, the average age of companies receiving their first VCT investment dropped to a record low of 5.2 years. This trend reflects a growing emphasis on providing young businesses with the resources they need to thrive.
Moreover, VCTs are supporting companies for longer periods, which is crucial as SMEs navigate ongoing economic challenges. The average age of firms receiving follow-on investments rose to 7.8 years, up from 7.2 years in 2022. This extended support helps bridge the growth funding gap, ensuring that promising companies can weather uncertainties and continue to expand.
Gresham House launches private equity fund to back UK growth companies
Chris Lewis, chair of the VCT Association, said: “The Government’s recent decision to extend the VCT scheme by a further ten years demonstrates the significant economic value being driven through this model of patient capital investment.
VCTs offer a patient approach to investing, backing companies throughout their scale-up journey regardless of economic cycles. As the economic picture improves, UK entrepreneurs know they can count on the VCT industry to be a steadfast partner in realising their growth ambitions, providing both funding and advice.”
In total, £3.6 billion has been deployed by VCTA members since 2016, helping to fuel the ambitions of entrepreneurs across all regions of the country.
