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VCTs SUPPORT THE ECONOMY
THERE ARE A VARIETY OF VCT INVESTMENTS
The Octopus High Growth Small Business (HGSB) Report (2015) picked out some key
statistics emphasising the importance of small businesses:
Most investors and advisers are going
to be attracted to the sector by the tax
benefits, which of course are the same
for all VCTs, and they are all governed
by the same set of rules which ensures
the capital is employed with small and
medium sized enterprises. However,
the underlying investments, the
strategies that the managers employ,
the risk profile and the objective of
the VCT can all vary greatly. Some are
focused on high potential, high growth
firms and offer the prospect of higher
returns if the investor is prepared to
take on more risk. Some specialise
in particular sectors, or in AIM listed
companies; others look to invest in
larger, more established businesses
that are asset backed, or have secure
revenues. These are lower risk, but have
lower potential returns than their high
growth cousins. Many VCTs have long
investment horizons, putting ‘patient’
capital to work for long periods of time;
other Limited Life VCTs choose to invest
in assets they know they can liquidate
soon after the minimum holding period
required for the Income Tax relief, giving
investors a clearly defined exit. We look
at Limited Life strategies on page 38.
“Small firms accounted for 99.3 per cent of all private sector businesses in the UK, 47.8 per cent of
private sector employment and 33.2 per cent of private sector turnover (2014)”
Federation of Small Business
“A VCT can provide investors with an opportunity to invest in
some of the UK’s most exciting smaller companies and the chance
to play an important and active role in supporting the next
generation of UK businesses”
Paul Latham, Octopus Investments
Source: The Centre for Economics and Business Research
UK SMEs ACCOUNT FOR
(2014)
99%
BUSINESSES
IN THE UK
50%
GROSS ADDED
VALUE
69%
EMPLOYMENT
47%
TURNOVER
LESS THAN
1%
of UK companies
are HGSBs
3x
the number of new jobs
created by the FTSE 100
companies
1 in 3
jobs created were
created by HGSBs
in 2014
GENERATES
NEW JOBS FOR
4,500
people every week
3/5
HGSBs are located
outside London and
the South East
ONLY
1 in 10
HGSBs is a technology
company
ONLY
15%
of HGSBs want the
UK to leave the EU
MORE THAN
70%
of HGSB turnover comes
from outside London
ALMOST
20%
of the economic growth
(
measured as increase in GVA
)
was thanks to HGSBs