In its 2017 Patient Capital Review, the government made its position clear – tax incentives would only be on offer where capital was genuinely at risk. This has seen the venture capital trust (VCT) sector undergo a number of key changes in recent years, designed to steer it towards smaller, higher-risk companies.

Investors are understandably nervous. They worry that the sector now comes with far higher risk, too many VCTs will be competing for too few deals, and the trusts don’t have the in-house experience to analyse smaller opportunities. These concerns are valid and should be front of mind for investors during this year’s VCT fundraising season.

There have been two lots of significant change in the VCT sector. The first wave happened in 2015, when management buyouts and acquisitions were banned, not only for new money but for rollovers of existing capital in the funds. This removed an important lower-risk option for VCT managers.

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