23 / 92
23
8%
11%
27%
20%
20%
13%
22%
19%
CHANGES IN REGIONAL FOCUS:
TURNOVER
GROWTH*
(£m)
* Growth in 2013 for companies receiving first VCT investments in 2012
EMPLOYMENT
GROWTH*
GROWTH SINCE INVESTMENT:
GROWTH SINCE INVESTMENT:
34%
26%
119.4
2012
1,598
2012
165.8
2013
1,937
2013
39%
21%
INVESTMENTS PRE
2014
INVESTMENTS
2014
CONCLUSIONS
VCTs are clearly here to stay and
serve an important purpose in the
investment universe - incentivising
investment into smaller companies that
would otherwise struggle to secure
the financing they need to grow. This is
important for the UK economy, as it is
this same cohort of smaller companies
that is the engine of job creation.
Octopus Investments paint a compelling
picture of the importance of small
business to job creating in their “High
Growth Small Business Report (HGSB)”.
HGSBs created 68% of employment
growth between 2012 and 2013,
while accounting for just 2% of total
employment.
VCT fundraising has experienced
some great years when the reliefs
were increased and some poor years
following market volatility, but overall
it has grown strongly since 1995,
reflecting increased demand from
investors and more supply - in terms
of deals available for VCTs - since the
retrenchment in bank lending post
2008. We’ll talk about some of the
drivers we think will lead to increased
demand in the future, in later sections.
The closed-ended structure VCTs use
is absolutely the right structure for the
kinds of investments they make. The
ability to think long-term and make
investments into less liquid assets is
exactly what managers need when
investing in smaller companies, and
is not something that open-ended
structures engender. But there is still
plenty of choice within the sector
as managers have developed niche
KEY POINTS
VCTs are a particular type of
closed fund governed by special
rules
They are usually less risky than
EIS and SEIS investments
Fundraising has been strong,
and they have helped to plug the
funding gap as banks withdrew
from small business lending post
2008
The evidence suggests that they
have a net benefit for the Treasury
Nationwide turnover
increases
Scotland
78%
North
of England
47%
London
118%
South
East
53%
Rest of UK
74%
Nationwide job
increases
Source: AIC, Nurturing Success, Delivering Growth (2015)
Investments (and their subsequent benefits) are distributed around the UK
Scotland
132%
North
of England
231%
London
272%
South
East
95%
Rest of UK
147%
products, particular specialisms and
the Limited Life options that attempt
to address the issue of how investors
can successfully exit. We’ll look at these
investment options and their pros and
cons in the following section.