Investors ploughed £731m into Venture Capital Trusts in the 2018/19 tax year, the highest level since 2006, according to data from the Association of Investment Companies.
About a third of the total cash raised came from just one VCT, Octopus Titan, which raised £228m of the total, having twice increased the amount of capital it was seeking from investors.
Venture Capital Trusts are listed investment funds that own shares in other businesses. Investors receive a 30 per cent income tax break if they hold the shares for five years, and any income and capital gains from the shares is tax free.
The tax breaks are only available on newly issued shares, so investors have very limited ability to sell their shares on within the five year time period.
In the previous tax year, VCTs raised £728m.
Alex Davies, founder at tax efficient investment specialists Wealth Club, said: "The majority of this funding was raised in January.
"This is in contrast to the previous tax year when money was hurried in before rumoured budget changes to tax relief, meaning two-thirds of VCT investment was raised before Christmas."
The VCT rules have been tightened in recent years, with restrictions on the types of companies into which the funds can invest, and a bar on investing in management buyouts of companies.
Jason Hollands, managing director for business development and communications at Tilney, said the rule changes have benefited the longer established VCTs, as those companies can retain the investments they made in previous years that would not be permitted under the current rules.
This means those companies have, according to Mr Hollands, a portion of the capital invested in older businesses that have matured and are likely to be lower risk.
He added: "Octopus took almost £4 of every £10 raised by VCTs this year."
Francis Klonowski, an adviser at Klonowski and Co in Leeds, said he tends not to invest in VCTs as "the problem is when you take away the tax breaks the underlying investments tend not to perform that well".
He added: "Generally I do not like the idea of investing in something just for the tax reasons."