VCTs increase support for businesses amid wider decline in VC funding
The Venture Capital Trust Association (VCTA) has published new data gathered from over 600 early-stage companies that have benefited from VCT funding, which shows that deployment of capital into early-stage startups grew 8% year-on-year to £664 million, proving resilient in context of wider UK venture capital funding, which fell by almost a quarter (23%) in 2022.
Annual data collected and analysed by the VCTA, members of which make up more than 90% of the VCT industry by value, shows that the industry continues to grow its positive impact, with the £664 million of capital deployed across 345 investments, and raised in excess of £1 billion of new capital for the second year running.
The continued strong growth among investee companies is set against a backdrop of volatile markets and economic uncertainty. In the wider VC industry, funding fell by 23% according to KPMG data, as investors were forced to take a cautious approach amid global economic turmoil.
Will Fraser-Allen, Chair of the VCTA, commented: “UK PLC is increasingly in need of innovative young businesses to push the economy forwards and help to drive growth by investing in new technologies such as artificial intelligence. 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.”
Total sales of VCT supported companies totalled £18.18 billion in 2022, growth of 54% versus 2021. Exports also rose significantly, with export sales totalling over £3.7 billion in 2022, up 29.8% from £2.9 billion in 2021, illustrating the growing number of businesses which are expanding overseas.
Will Fraser-Allen added: “I am delighted to see that our data continues to show strong performance among VCT supported companies, which are not only boosting economic growth but providing countless high quality employment opportunities and social benefits around the UK.
“VCTs provide truly patient capital, supporting businesses with multiple rounds of investment supporting the changing needs of VCT supported businesses as they grow and innovate.”