Venture capital trust hopes have been buoyed by the government’s commitment to extend the lingering sunset clause, experts told Investment Week, as the sector aims to build on its strong fundraising track record, despite the poor performance of the market in recent months.

Peter Hicks, research analyst at Chelsea Financial Services, described his outlook for VCTs from both an economic policy and performance perspective as “positive”.

From a wider economic perspective, he said VCTs “remain necessary stimulators of economic growth” and that it was likely that the Treasury will continue to back them.

“The cross-party and government consensus is that removal of VCTs would negatively impact the venture market and limit support to younger growing businesses,” he added.

Trevor Hope, CIO of Gresham House Ventures and manager of the Baronsmead VCTs, argued that for the last three decades, VCTs have “proved instrumental in supporting home-grown British innovation”, noting that VCTs had invested over £11.5bn across numerous early-stage and entrepreneurial companies in the country.

At this year’s Autumn Statement, Chancellor Jeremy Hunt reiterated that the government would legislate to renew the sunset clause on VCTs from 2025 to 2035, having confirmed the extension back in October.

Hope pointed to this as proof that VCTs had “further cemented their role in the financial landscape”.

Malcolm Ferguson, fund manager at Octopus Investments, said there was a “key facet” to consider in the VCT landscape, which is “undergoing a dynamic evolution, marked by increased talent availability and funding scarcity”.

“This convergence creates an opportune moment for early-stage companies to flourish, provided they demonstrate capital efficiency and a drive for innovation,” he said.

By contrast, Hicks said the UK VCT industry was “a far more developed and experienced ecosystem compared to 20 years ago”, pointing to the range of established VCTs with experienced management teams.

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