A venture capital trust (VCT) is set to launch a £50m fundraise on the London Stock Exchange next month in one of the first major moves since the Chancellor shelved plans to wind down the schemes last year, City A.M. can reveal. London-based Fuel Ventures, the manager of the new VCT, will announce the fundraise to the market in February after winning a commitment from investment outfit Titan Alternatives to provide anchor funding. Fund managers at Fuel say they have plans to back 30 tech firms over the next three years with the new cash. VCTs were introduced by the government in 1995 and pool investors’ cash and back unlisted start-ups and private firms.
Investors are able to reap major tax relief via the vehicles, including tax-free dividends and an exemption from capital gains tax on any returns. The sector has been gripped by uncertainty in recent years however after the Treasury indicated it would wind down the schemes from 2025. However, Jeremy Hunt announced at the Autumn Statement in November that he would extend the so-called “sunset clause”on VCTs to 2035. Fuel Venture’s founding partner Mark Pearson said the firm now had plans to grow the new fund beyond £100m in the coming years.
“The Fuel Ventures VCT is an important addition to our investment strategy, giving us the opportunity to back our winning companies as they scale, throughout the year,” Pearson said.
VCTs have swelled in popularity in recent years as investors look to capitalise on tax breaks. The amount of income tax relief claimed on VCT investment increased by 61 per cent between 2021 and 2022, according to figures from HMRC. The number of investors backing the funds also surged by 32 per cent in the same period to 25,800.
