Managers of venture capital trusts are increasingly realising that allocating cash to socially responsible investments can boost investor outcomes, according to several industry players.
Patrick Reeve, managing partner at investment manager Albion Ventures, said there is evidence to suggest the growing number of investee companies within the £3.5bn VCT sector are now at the forefront of developments across a number of industries.
Over recent years, VCTs have become increasingly active in environmental, educational and healthcare sectors where the dynamics driving change have been huge, particularly with climate change and the increased health demands of an aging population.
Mr Reeve said: “Our job, as venture capitalists, is see where the world is changing, and then to work out whether that change will result in the creation of value.”
For value to be lasting rather than temporary, he said these types of investment need to enhance the way that we live in a socially positive manner.
Andrew Garside, partner at Livingbridge and manager of the Baronsmead VCTs, said: “The healthcare sector faces obvious challenges, but entrepreneurs are particularly well suited to provide the innovation that is desperately needed to deliver strong outcomes and cost efficiencies.”
He said professional investors can support these businesses with value that goes far beyond pure financial investment.
VCT investments in the healthcare sector include healthcare staffing platform Network Locum, backed by the ProVen VCTs, and clinical trial database Antidote, backed by Octopus Titan VCT.
Women’s health is another area which has seen VCT involvement, including IVF specialist Create Health, backed by the Baronsmead VCTs, and cervical screening service Dysis Medical, backed by the Albion VTCs.
In the environmental sector, VCTs have contributed to the 25 per cent of UK power which now comes from renewable sources.
They have also helped towards agri-science, enabling more food to be produced for growing populations in a fast-changing environment.
VCT investments in this area include agricultural laboratory testing service Cawood Scientific, backed by the Northern VCTs, and Silent Herdsman, backed by Albion Ventures, which provides electronic monitoring products that are designed to improve dairy herd management.
There are a number of areas where VCTs support the education sector, both in the provision of technology and in the actual ownership and management of schools.
On the technology side, Firefly Learing, backed by the ProVen VCTs, provides software to schools in 32 countries, while Aim-listed Wey Education, backed by the Baronsmead VCTs, offers both a combination of both of both technology and physical teaching.
Tim Levett, chairman of NVM Private Equity, said VCTs are playing an active role in improving the way we live.
“Over the past year we’ve been seeing more and more good management teams coming to us with investment proposals where value can be created in a socially positive manner.”
Mr Levett said the industry is “supremely conscious” that creating value and social enhancement are “absolutely complimentary”.
katherine.denham@ft.com
