VCTs bolster UK tech with £500m invested into high-growth early-stage companies

– VCTs provided vital funding in 2023 for over 300 emerging companies set to become UK tech’s future success stories. 

New data from the Venture Capital Trust Association (VCTA) shows that its members invested £505m in early-stage companies across the UK during 2023. VCTs therefore provided a vital source of funding amid a broader venture downturn, which saw total venture funding in the UK fall by almost a third in 2023.  

VCTs provide patient capital and investment expertise to scaling businesses throughout the UK. In turn, these start-ups and scale-ups will often have an outsize impact on economic growth, job creation, technological innovation, and productivity. 

2023 saw a number of notable investments, including Albion’s participation in Quantexa’s Series E funding round which saw it become the first British ‘unicorn’ of 2023, and Transreport’s £10m funding round which included investment from Pembroke and Puma VCTs. 

Backing earlier, for longer

The data published today by the VCTA highlights the industry’s resilient focus on providing evergreen patient capital to breakthrough businesses, providing early-stage firms with the funding, time and support needed to reach their growth potential. Across all investments, the average age of a company receiving its first funding from a VCT in 2023 dropped to 5.2 years, the lowest figure on record, and consistent with the trend over recent years.

VCTs are also able to back companies for longer. This has been an additional benefit to UK start-ups and scale-ups in recent years as the SMEs continue to weather the turbulent economic environment; from Brexit, through Covid and into the recent inflationary pressures. The average age of firms receiving follow-on investments from VCTs rose to 7.8 years, up from 7.2 in 2022, further highlighting the need for patient capital across the UK to bridge the growth funding gap. 

Chris Lewis, Chair of the VCT Association, said:

“VCTs continue to provide much needed growth capital to many of the UK’s most promising young and early-stage companies. The Government’s recent decision to extend the VCT scheme by a further ten years demonstrates the significant economic value being driven through this model of patient capital investment.

“This data highlights how important the continued success and growth of the VCT scheme will be for the UK and its growth companies. VCTs offer a patient approach to investing, backing companies throughout their scale-up journey regardless of economic cycles. As the economic picture improves, UK entrepreneurs know they can count on the VCT industry to be a steadfast partner in realising their growth ambitions, providing both funding and advice.”

In total, £3.6 billion has been deployed by VCTA members since 2016, helping to fuel the ambitions of entrepreneurs across all regions of the country.