VCT millions await growth opportunities

Venture capital trusts (VCTs) still have more than £1 billion to invest in fast-growing companies, according to research from GrowthBusiness sister title Business XL.

Stuart Veale, MD of VCT manager Beringea, says: ‘Smaller companies offer very attractive growth opportunities even if the economy is slowing.’

The research shows that there is £1.02 billion of VCT money available for investment in growing UK companies, both quoted and private. On top of that figure, new and still-open VCTs have an estimated £116 million.

Once funds have been raised, VCTs are obliged to invest at least 70 per cent of their cash in qualifying companies within three years, and can invest a maximum of £1 million in any one venture.

To qualify for investment, companies must have fewer than 50 staff and gross assets of no more than £7 million. There are other stipulations, with certain sectors excluded including financial services and some property-based businesses.

According to Veale, the economic downturn has not had much impact on the valuations of successful growing companies. He adds: ‘Businesses get an idea of what they’re worth, so even when the cold winds of an economic slowdown start to blow they are reluctant to change their valuation.’

The 2008 VCT Special Report contains comprehensive information about venture capital trusts, including the amount of cash available for investment in every single VCT, as well as performance data and complete contact details for each fund together with a mine of other invaluable research.

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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