{"id":4952,"date":"2018-09-12T10:00:37","date_gmt":"2018-09-12T09:00:37","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=4952"},"modified":"2026-01-29T10:31:12","modified_gmt":"2026-01-29T10:31:12","slug":"right-venture-capital-trust","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/right-venture-capital-trust\/","title":{"rendered":"How to choose the right venture capital trust"},"content":{"rendered":"
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\n\t\t\t\t\t\t\tMoney Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
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\n\t\t\t\t\t\tHow to choose the right venture capital trust\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t

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\n\t\t\t\n\t\t\t\t\"\"\t\t\t\tStacey McIntosh<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

For small business owners, a venture capital trust (VCT) investment could be a game changer. It could fast-forward your company\u2019s growth, help you hire more employees, and achieve incredible results.<\/p>\n\n\n\n

As the venture capital firm that invests in your company will have some sway over your business decisions and expect to see returns, choosing the right venture capital trust fund requires careful consideration.<\/p>\n\n\n\n

What is a venture capital trust?<\/strong><\/h2>\n\n\n\n

A venture capital trust<\/a> or VCT is an already established company with publicly traded shares on the London Stock Exchange.<\/p>\n\n\n\n

It collects money from investors which is then used to support qualifying small businesses in the UK. HMRC has strict VCT investment rules to monitor how venture capital companies operate and how they make investments.<\/p>\n\n\n\n

As VCTs are inherently high-risk, the UK government provides a number of tax incentives to encourage investors.<\/p>\n\n\n\n

According to the latest reports, the VCT market is experiencing its highest investment rates in 12 years with \u00a3728m<\/a><\/u> invested in 2017\/2018 \u2013 a 34% increase since the previous tax year. As such, now might be a good time to think about securing a VCT investment for your company.<\/p>\n\n\n\n

What are the benefits of VCT investments for your company?<\/strong><\/h2>\n\n\n\n

If your company qualifies for a VCT investment, you could be eligible for 15% of a VCT\u2019s funds and receive up to \u00a35m per annum or \u00a312m in total VCT investments. Money that could completely transform your company.<\/p>\n\n\n\n

Companies that received venture capital trust funds typically experienced, on average, an increased annual turnover of \u00a32.2m for every \u00a31m received in investments. Most companies receive between \u00a32m and \u00a310m in investments, which would result in between \u00a34.4m and \u00a322m in revenue growth.<\/p>\n\n\n\n

Business connections and expertise<\/strong><\/h3>\n\n\n\n

In addition to increased revenue, companies benefit from a venture capital company\u2019s business connections and expertise. As venture capital companies only profit from your company\u2019s success, they\u2019re invested in supporting you to achieve the best results.<\/p>\n\n\n\n

In most cases, a representative from the venture capital firm will join your board to provide expert insight, mentoring and ultimately help your business to grow.<\/p>\n\n\n\n

Increased workforce<\/strong><\/h3>\n\n\n\n

VCT investments help promote a strong economy and encourage companies to increase their workforce. Overall, venture capital trust funds have allowed for the creation of 27,000 new jobs and increased the UK workforce by 116%. Nearly 50,000 people are currently employed by VCT-backed companies.<\/p>\n\n\n\n

Overall market success<\/strong><\/h3>\n\n\n\n

Since being introduced in 1995, VCTs have helped to grow and bolster the UK economy. They\u2019ve created jobs and supported innovation.<\/p>\n\n\n\n

Companies that received VCT investments have become well-known brands like Groupon or Alibaba, been listed on the London Stock Exchange, or sold to internationally renowned companies like Microsoft, Amazon, or Twitter.<\/p>\n\n\n\n

Disadvantages of VCT investments for companies<\/strong><\/h2>\n\n\n\n

Despite the wonderful benefits of VCT investments, there are a few disadvantages. When you accept a VCT investment, you\u2019ll need to accept some loss of control over your business.<\/p>\n\n\n\n

While you\u2019ll certainly still play a key role, venture capital firms need your company to succeed and will have strong opinions and insights about ways of working and the company\u2019s direction. You\u2019ll need to collaborate with them and sometimes make compromises to achieve the best results.<\/p>\n\n\n\n

VCT rules: Conditions your business must meet<\/strong><\/h2>\n\n\n\n

HMRC has established strict VCT rules to ensure that VCT investments are spent wisely. To qualify for an investment, you\u2019ll need to meet a number of conditions:<\/p>\n\n\n\n