Venture Capital Trusts 

Investments safe from Brexit

Investments safe from Brexit

Britain’s small to medium-sized enterprises are in rude health, currently accounting for at least 99.5 per cent of the businesses in every main industry sector and contributing an impressive £1.9tn to UK GDP annually.

Their success has been due in part to their ability to meet the rapidly changing needs of UK consumers, who increasingly require flexibility across many aspects of their lives.

With no Brexit deal yet in place, this disruptive approach and ability to adapt will also serve SMEs well as the UK enters an era of unprecedented change and uncertainty following its divorce from the EU.

Regardless of whether we end up having a hard Brexit or a soft Brexit, SMEs will remain the lifeblood of the UK economy and a significant provider of jobs and growth.

However, support for growing companies is not always widely available, with traditional lenders remaining parked on the sidelines.

The venture capital trust structure is ideal for supporting Britain’s start-ups. Not only does it help fund the UK’s entrepreneurial spirit, but early exposure to promising businesses can generate exceptional returns for investors.

Innovation generation

The growth of mobile technology and the ‘gig’ economy has revolutionised the way Brits buy products and services.

This has created a Darwinian dynamic where static, established firms are losing sales to innovative young start-ups whose disruptive models can quickly adapt to an increasing need for flexibility.

This trend has been evident across the range of consumer-facing sectors we focus on, and we have been making the most of it through our investments.

For example, in the health and fitness space, pay-as-you-go brands like KXU and Boom Cycle have become popular alternatives to traditional gym chains as weak consumer spending has hit conventional monthly payments.

KXU lets customers book fitness classes and spa treatments whenever they wish. Boom Cycle offers studios at sites across the capital where Londoners can book individual or multiple fitness sessions to suit them.

Likewise, in the services sector, the rise of the gig economy has led more and more tradespeople to switch permanent employment for a freelance approach.

This allows them to work as little or as much as they want. Apps and websites like RatedPeople.com have arisen to meet the increasing demand for DIY platforms that match homeowners and tradesmen on the most convenient terms possible.

It is not just retailers that are changing either; flexible working has allowed many to exchange the traditional 9am to 5pm working window for around-the-clock employment at their own convenience.

Temporary and co-inhabited office providers like Second Home are becoming a significant force as flexible working replaces the need for a permanent office, and many firms avoid committing to London on Brexit fears or want to avoid being tied to lengthy and expensive permanent office contracts.

According to a recent report by Cushman & Wakefield, in central London alone, flexible workplace providers accounted for 21 per cent of office space in 2017 and the pattern is beginning to be replicated across the UK’s major cities.