It is no secret that venture capital trusts have experienced success this year. So far, more than £800mn has been raised, already eclipsing the record of £779mn in 2005-06.

Changes to pensions taxation and rising inflation have certainly increased investment appetite, as has the opportunity to back high-quality exciting start-ups at attractive valuations.

But what is really driving the rising demand?

Rising demand for VCTs stems from a variety of factors rather than any single one.

The current economic climate is a significant contributor. With inflation hitting 5.5 per cent in January, the highest level in 30 years, and predictions suggesting it could reach as much as 8 per cent by April, investors are increasingly seeking alternative sources of income, not least because more will face the annual and lifetime allowance limits on tax-free pension saving.

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