VCT managers have had to adapt to challenging economic circumstances to seek out the opportunities in both the short and long term, according to one manager.
Although VCT managers have adapted, fundraising is currently moving at a slower rate compared to the previous two years, said Peter Dines, managing director of Mercia Ventures.
Dines said: “VCT fundraising is currently at a slower rate than in the 2021/22 and 2022/23 tax years, but these were record years and at £375mn so far for this tax year, this is still a strong performance considering the economic environment.”
According to the Association of Investment Companies the average VCT was down 5 per cent in 2023.
However, over the longer term VCTs have performed better, with total returns of 22 per cent and 85 per cent over the past five and 10 years respectively.
Nic Pillow, senior ventures manager at Blackfinch, said a volatile economic climate is something VCTs have faced for a number of years.
The Blackfinch Spring VCT was launched in 2019 and therefore battled the Covid-19 pandemic in its first few years.
Pillow said: “It’s important for VCT managers to understand how to work with whatever conditions they face and demonstrate they can adapt to find the best investment opportunities – not just to weather the storm but to thrive in the long term.
“This is ultimately what gives investors confidence and sustains inflows. We’re delighted that despite everything over the last year, our inflows are up a little on the previous year.”
The AIC also found assets managed by VCTs have increased from £4.3bn to £6.2bn over the past five years.
Ian McLennan, partner of Triple Point, said the Triple Point Venture VCT focuses on early-stage technology-driven companies.
He said the firm has a focus on increasing diversity in its investments.
McLennan added: “The Treasury committee’s report over the summer of 2023 underlined the need for greater regional, ethnic, and gender diversity in the industry.
“We support enhanced diversity reporting, a practice essential across all investment sectors. 18 per cent of our initial investments are in businesses with female founders or co-founders, and 28 per cent of initial investments are outside London.”
tara.o'connor@ft.com
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