Thirty years after their launch, Venture Capital Trusts are entering a new phase of maturity. In this Maven perspective, Ewan MacKinnon explores how scale, diversification and hands-on SME expertise are shaping the evolution of VCTs — helping investors manage risk while supporting the growth of the UK’s most innovative early-stage businesses.
Thirty years on from their creation, Venture Capital Trusts (VCTs) are firmly established as part of the mainstream investment landscape. What is striking, however, is the way the market is evolving.
The defining trend is scale and diversification: the leading managers are not only building large, diversified portfolios that help manage risk but also leveraging their SME expertise to identify and support high-potential businesses by adding value to the businesses they back.
This matters because VCTs operate in a very different space to listed equities. They invest in early-stage, often pre-profit companies that are innovating in their markets. That inevitably carries higher risk, but with risk comes opportunity. For the best managers, that balance is achieved by harnessing deep SME expertise to invest in a wide range of companies to provide diversification. By spreading exposure across companies, sectors and geographies, VCTs can participate in the success of the winners that achieve scale while cushioning the impact of any that do not.
Our belief is that portfolio construction at scale is one of the most effective tools for risk mitigation, which is why our Income and Growth VCTs together hold interests in around 130 private and AIM-quoted companies across the UK.
However, diversification alone is not enough, and investors need a manager with proven expertise in understanding the challenges of running private companies, identifying those which have the potential to deliver sustained growth, and then working closely with those companies to harness their potential. Maven’s team includes professionals from a variety of commercial, financial and scientific backgrounds who have extensive experience of helping early-stage businesses scale. Crucially, our regional business model ensures we can source a regular flow of high quality VCT investment opportunities, across a range of sectors, and then closely support those businesses as they scale through active portfolio management, including taking a non-executive board seat in order to provide strategic and operational support.
The impact and value of VCTs in supporting the UK’s fastest-growing SMEs is becoming more evident. VCTs now manage over £6.5 billion of assets, supporting more than 1,000 companies and helping to sustain over 100,000 jobs across the UK. [1] The breadth of sectors is constantly evolving too, with more investment in areas such as AI, fintech and cyber security; areas that will be fundamental to help improve the UK’s economic growth. [2]
It is clear that VCTs are widely recognised as a valuable tool for portfolio building and tax efficiency, with £895 million raised from investors in the 2024/25 tax year[3]. Policy certainty is also playing its part, with the Government legislating to extend VCT Income Tax relief until 6 April 2035, providing long-term certainty for investors and the companies they back.[4]
At Maven, our experience demonstrates how diversification, both sectoral and geographical, combined with active portfolio engagement, delivers strong results for VCT investors. Our investment in Quorum Cyber, a fast-growing cyber security company, delivered an 8.2x return on exit. Similarly, partial exits from digital archiving platform MirrorWeb (4.0x return) and governance software specialist Novatus (4.7x return), where Maven identified businesses with strong growth potential and then provided support to the management teams as they expanded, illustrate the benefits of exposure across multiple growth sectors in tandem with a manager providing hands-on support. This integrated approach ensures that our portfolios are well balanced and that investee companies have access to the expertise, market insight and guidance needed to realise their potential.
For investors, the attraction of VCT investment is clear, at a time when more individuals are finding themselves in higher-rate brackets. Alongside generous tax benefits, including 30% initial Income Tax relief, tax-free dividends and exemption from Capital Gains Tax, VCTs provide valuable diversification through exposure to high-growth companies, sourced by specialist managers, that are otherwise hard to access for individual investors.
In 2025, VCTs continue to evolve, reflecting their growing maturity, portfolio scale and role in supporting SME growth. Diversification has always been a cornerstone of sound investment practice, but in today’s VCT market it has become more important than ever. Due to the VCT rules, the pool of UK companies eligible for VCT funding is younger and earlier stage, which naturally raises the risk profile. As a result, generalist VCTs with broad portfolios are able to balance the higher risk through wide-ranging sectoral and geographic exposure. Yet diversification alone does not drive success – it is the blend of regional coverage and specialist SME insight that enables managers to identify the brightest businesses and provide support as they scale to become the next generation of market leaders.
The ability to construct large, diversified portfolios of innovative UK companies with high growth potential is what continues to raise the profile of VCTs as an investment option and, in my view, is the defining trend for VCTs today. With policy and tax certainty to 2035, healthy fundraising momentum, and compelling success stories across the SME sector, VCTs are not only a good option for investors seeking returns and tax efficiency, but also for the entrepreneurs and businesses whose growth is being fuelled by this investor capital, and for the wider economy.
Ewan MacKinnon, Partner at Maven Capital Partners
Ewan has 25 years’ experience managing, advising and investing in SMEs. He joined Maven in 2009, having previously worked in Johnston Carmichael’s corporate finance team. Ewan has extensive industry experience, having been managing director of MacKinnons of Dyce Limited, a specialist retail business which was sold to a FTSE 250 listed company in 2006. He has a first-class honours degree from the Aberdeen Business School and is a Fellow of the Association of Chartered Certified Accountants.
[1] https://www.vcta.org.uk/news/success-of-vct-backed-companies-fuels-%C2%A3895m-funds-raised-in-2024-25-tax-year
[2] https://privatebank.barclays.com/insights/navigating-the-uk-venture-capital-landscape-08-2025
[3] https://www.vcta.org.uk/news/success-of-vct-backed-companies-fuels-%C2%A3895m-funds-raised-in-2024-25-tax-year
[4] https://orielipo.com/uk-startup-investment-boosted-by-extension-of-eis-and-vct-schemes
