Venture Capital Trusts which allow savers to make tax-savvy early-stage investments have bucked a funding slowdown this year and boosted the amount of cash they are pushing into start-ups.

VCTs, which provide a vehicle for retail investors to access venture capital, ramped up their investment by eight per cent to some £664m into firms in the financial year to April, according to data from the industry group the Venture Capital Trust Association (VCTA).

The figures come despite a major slowdown in the wider venture capital landscape over the past 12 months as investors grapple with rising interest rates and a shuttered IPO market. Figures from KPMG found that wider VC funding slumped 23 per cent in the second quarter.

Will Fraser-Allen, chair of the VCTA, said that the country was “increasingly in need of innovative young businesses to push the economy forwards” and drive the development of technologies like artificial intelligence.

VCTs have been the subject of fierce political debate over the past 18 months with the vehicles currently due to be wound up by 2025 under current government policy.

City minister Andrew Griffith in June refused to commit to extending the trusts beyond the current wind-down date when quizzed by MPs at a committee session in June.

“With government policy also looking to bolster UK growth by encouraging investment in fast-growing companies, the vital role of VCTs in the investment ecosystem has never been clearer,” Fraser-Allen added.

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