The letter, led by Conservative MP Alan Mak, has received backing from MPs across the political spectrum and senior figures in the VCT industry.
It highlights the role VCTs have played since 1994 in directing private investment into innovative UK businesses, helping entrepreneurs scale and providing longer-term growth capital.
The letter notes that when VCT relief was cut from 40% to 30% in 2006/07, fundraising dropped 65% year-on-year and took 16 years to return to its previous peak.
The Venture Capital Trust Association estimates the latest reduction, introduced in April, could lead to a 20–40% fall in fundraising.