In the 2023 calendar year, Venture Capital Trusts (VCTs) invested £506 million in new and follow-on investments in small private companies, and in companies on the Alternative Investment Market (AIM). This was a 28% decrease from 2022 when VCTs invested £705 million in new and follow-on investments in private companies and AIM companies.

The wider venture capital industry in the UK and Ireland in 2023 suffered a 46% decline in investment (deal activity) to €19.4 billion from €35.6 billion in 2022, according to the Pitchbook European Venture Report1. The lion’s share of VCT investments in 2023, £454 million, was in 251 private companies, with a further £52 million in 24 AIM companies. In 2022 VCTs invested £658 million in 341 private companies and £48 million in 22 AIM companies.

Over the last three years (2021 to 2023), VCTs invested a total of £1.89 billion in private companies and AIM companies, providing vital support for these companies to achieve their growth ambitions.

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said

“Last year VCTs’ investment in private companies slowed due to challenging investment conditions. It took time for businesses to adapt to higher interest rates and sluggish economic growth which impacted valuations and deal times. However, VCT investment activity held up better than the broader venture capital industry.

“VCTs have many advantages for investors, including attractive tax benefits and good long-term performance, and their investee companies create jobs and social benefits for local communities across the UK. These advantages help to shore up capital raising in difficult economic conditions and give VCT managers confidence to continue investing in tough times, when other venture capital investors are pulling back.”

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