Figures released by the AIC last week show the amount of money invested in VCTs for the 2021/22 tax year crossed £1bn for the first time, raising £1.13bn sterling. This is 65% more than in 2020/21 and 45% more than in 2005/06, which was previously the biggest fundraising year on record.
VCTs are widely regarded as one of the best ways for investors to gain exposure to the UK’s growing number of high-growth private companies. To receive VCT funding, a company must be young, typically under seven years old, typically have gross assets of £15m or less and fewer than 250 full-time employees. Investors are generally wealthier individuals, who can claim tax relief to compensate for the higher risks of investing in younger companies.
Alex DaviesCEO and Founder of Wealth Club, said: “While the past two years have been incredibly challenging for many businesses, VCTs have been a shining light – enabling young businesses to access the funds they need to thrive. and grow, creating new jobs and strengthening the economy growth.Having passed the £1billion mark, VCTs have finally entered the mainstream.Bringing together some of the UK’s fastest growing and fastest growing start-up companies more exciting, they have become a viable alternative to pensions for many of the wealthiest investors, now effectively excluded from pensions thanks to restrictions imposed by successive governments over the past 12 years.
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The most popular offers were filled well before the end of the tax year, with 13 of the year’s 27 offers fully subscribed by the end of March. The biggest fundraiser this year was £200m (Octopus Titan VCT) – up from £120m last year.
Records set for top-selling fundraisers
The year set two records for top-selling fundraisers. First Amati AIM VCT took £8m a day in the summer of 2021, opening its bid on Friday July 30 and closing on Wednesday August 4 after raising £40m. Then in January 2022, Mobeus VCT completed its £35m fundraiser in 24 hours – the fastest fundraiser by far.
AIM VCTs were in particularly high demand during the year, with £170m raised across four bids, 68% more than the previous year. Research by the AIC found that 88% of VCT investors said it was important to them that VCTs helped support the UK economy. 84% said that by using VCTs they helped UK entrepreneurs.
The average VCT customer is 58 years old and the average amount invested in VCT by women in the last tax year was £28,681 on an average of 2.4 VCT and £42,457 for men in 3.1 VDC. The average amount invested in a VCT by Wealth Club clients is £13,000.