The chancellor’s Mansion House speech has sparked calls for streamlined rules on Venture Capital Trusts (VCTs) to drive investment into UK businesses. Experts suggest that reforms to the Enterprise Investment Scheme (EIS) and VCTs could effectively channel investment into early-stage companies. Mark Cunningham, partner at Blick Rothenberg, said, “Most retail investment is directed toward larger, listed companies due to the risk appetite of everyday investors.
However, this means smaller businesses driving UK growth often miss out on investment.”
Cunningham proposed updating these schemes by raising company and investor caps, relaxing sector restrictions, and improving liquidity to better support growth-focused SMEs. Richard Stone, chief executive of the Association of Investment Companies, emphasized the importance of streamlining VCT rules. “The intention to create an ambitious package of reform for venture capital is crucial,” Stone said.
Streamlining VCT investment rules
“VCTs have a record of funding small businesses that struggle to secure development capital through traditional means. Streamlining the rules will enable VCTs to support a broader range of innovative and entrepreneurial companies.”
The Venture Capital Trust Association (VCTA) published a policy paper urging the Treasury to make changes to the VCT scheme.
The paper, supported by the AIC, advocated for increasing investment limits and extending age limits at no additional cost to the government. Chris Lewis, VCTA chair, said, “We have a proven model that delivers results, but the scheme must evolve to keep pace with contemporary challenges and opportunities. These reforms will unlock capital for the UK’s most promising businesses, ensuring that their success benefits the domestic economy.”
The call for investment reform comes as businesses across the UK face significant challenges and opportunities.
Addressing these investment barriers could be critical for ensuring sustainable economic prosperity.