Venture Capital Trusts, also known as VCTs (see definition) are collective investment vehicles, which use investor funds to make unlisted equity investments.
Venture Capital Trusts provide access to a diverse portfolio of small, high growth companies, at a much lower investment level than would be possible through direct investment. In our guide how to become an angel investor, we show why an investor needs a net worth of £4m to build an efficient portfolio when directly investing in businesses.
About this listing
This UK VCT comparison is not a financial promotion or a recommendation to invest into any of the funds listed below. Neither the author nor the wider website has any financial interest in the VCTs listed in the comparison. This list is journalistic in nature and is provided for informational purposes only. Financial Expert is not authorised to provide financial advice or to conduct investment business. Consider finding a financial adviser, or visiting the website of a regulated intermediary to receive financial advice or review the specifics of any financial promotions offered by the Venture Capital Trusts below.
Please remember that VCTs are high-risk investments, and are generally only suitable for sophisticated investors.
The top venture capital trusts in the UK
We’ve listed the best venture capital trusts below, to help you compare, contrast and discover more about the VCTs favoured by UK investors.
About this listing
This shortlist of VCTs was compiled impartially, after our consideration of the following factors:
- Track record of returns
- Industry awards and accolades
- The reputation of the partners who lead the fund
- Fund longevity
Accessibility & VCT information
Please be aware that VCTs open for funding for short windows and therefore not all of the VCTs listed below will be currently open to new investors.
Some VCTs below may have closed since this article was written. Information on fees, charges and past performance were correct at the date of original publication (20 March 2021) but may become out-of-date if managers change their offerings. Please contact us to suggest any changes or updates.
The best UK VCTs: The full list
This list is in no particular order. We’ve provided source links where possible to facilitate further research by you or your financial adviser.
Draper Esprit VCT
Draper Esprit VCT PLC invests in a diversified portfolio of smaller, unquoted companies with a particular focus on the
technology sector. It is managed by Elderstreet Investments.
Draper Espirit also offer a publicly listed vehicle Draper Esprit PLC, which can be bought by retail investors through their stockbroker or stocks & shares ISA. The PLC’s core investment portfolio includes Aircall, Aiven, Allthings, Apperio, Bitwala, Freetrade, Hadem, Ledger, TransferWise, Socialbakers, Unbound and Peak Games.
Minimum investment: £6,000 is given as the retail investor range in the key information document.
Maven Income and Growth VCTs
Maven operates a group of Income & Growth VCTs, including Maven Income and Growth VCT PLC. The VCT is a generalist with a vast, diversified portfolio and a history of generating positive shareholder returns and regular dividends. It is publicly quoted on the London Stock Exchange, allowing investors to buy shares using their favourite stockbroker without incurring entry fees to the fund.
Maven Income and Growth VCT 5 PLC is also open for new investment from retail investors at the date of publication.
Past Maven investment targets have included Mirrorweb, Nano Interative, Hublsoft, Symphonic, Bio Ascent and Coniq.
Ongoing investment costs: 2.57% is given in the key information document.
Minimum investment: £5,000 is quoted on Maven’s latest offer information page.
British Smaller Companies
British Smaller Companies VCT PLC and British Smaller Companies VCT 2 PLC successfully completed their £7m fundraising rounds in early 2021, and are no longer open to new investment. These are closed funds which are managed by YFM Private Equity Limited.
In their letter to shareholders & investors in February 2021, the Chairmen of the funds highlighted that since 2016 “the Companies have focussed on investing in businesses that are at an earlier stage of their development
with investment structures largely comprising equity instruments.”
British Smaller Companies VCT was launched in 1996. On 19 March 2021 it has a market cap of £82m and trades at a 4% discount to NAV.
British Smaller Companies VCT 2 was launched 15 years later in 2001. On 19 March 2021 it has a slightly lower market cap of £66m and trades at a steeper discount to NAV of 7.6%, compared to its older sibling.
Ongoing investment costs: As stated in a recent offer document, the manager charges a c2% annual fee plus a 20% performance charge.
Minimum investment: N/A Fund was closed to new investors at the date of publication.
Downing reports £1bn in assets under management across its range of collective investment schemes, and 25,000 investors. Downing manages multiple VCTs, however only one or two are generally open for investment at any one time.
Downing ONE VCT is a generalist venture capital fund, with Downing LLP as an investment adviser and administrator. The portfolio of approx 60 companies is balanced between income and growth opportunities. The fund considers both equity and debt investments. Some samples of more recent investments made by Downing ONE VCT include:
- StreetHub Limited
- Ecstase Limited
- Lineten Limited
- FundingXchange Limited
- JRNI Limited
- Hummingbird Technologies Limited
- Cambridge Touch Technologies Limited
- ADC Biotechnology Limited
In a recent annual report, Downing One VCT managers confirmed that the dividend policy of the fund is to target 4% of NAV, although this is not guaranteed.
Ongoing management costs: Capped at 2.75% p.a
Minimum investment: £5,000 or £1,000 per month.
As you’d expect from their brand name, Octopus Investments manage multiple VCTs:
- Octopus Apollo VCT
- Octopus Titan VCT
- Octopus AIM VCTs
- Octopus AIM VCT 1
- Octopus AIM VCT 2
Let’s take a look at two of their largest venture capital trusts:
Octopus Apollo VCT is an established generalist VCT with a portfolio of 50 businesses.
Companies that have received investment from Octopus Apollo VCT include Natterbox, Veeqo, SimplyCook and
One Team Logic. Octopus states on its website that this fund targets a dividend yield of 5% of NAV, although this is not guaranteed.
Minimum investment: £5,000
Ongoing management costs: 2% plus a 20% performance fee
Octopus Titan VCT invests in tech start-ups with high growth potential. It currently has a portfolio of over 80 early-stage companies operating in a diverse range of sectors. Previous investments include:
- Big Health
- Bought by Many
- Quit Genius
- Wave Optics
Minimum investment: £3,000
Ongoing management costs: 2% plus a 20% performance fee
Hargreave Hale AIM VCT
Hargreave Hale opened their AIM VCT in 2004. The fund investments primarily in quoted companies listed on the AIM market of the LSE.
Hargreave Hale AIM VCT PLC is a larger VCT with a market cap of £204m at March 2021. One transaction which bolstered its size was its previous merger with a sister fund; Hargreave Hale AIM VCT 2 PLC in March 2018.
The key selection criteria listed on their website, which they cite as being used in making investment decisions include:
- the strength and depth of the management team;
- the business strategy;
- a prudent approach to financial management and forecasting;
- a strong balance sheet;
- profit margins, cash flows and the working capital cycle;
- barriers to entry and the competitive landscape; and
- the balance of risk and reward over the medium and long term.
Minimum investment: N/A – PLC.
Ongoing management costs: 2.33%
Baronsmead VCT Venture Trust
Baronsmead VCT Venture Trust PLC is a successful venture capital trust managed by Gresham House. Its 2020 Annual Report reference the following fund performance highlights:
- 396% total return on invested capital since the launch of the fund in 1998.
- 9.1% annual tax-free dividend yield for the year-ended
The sector allocation of the fund at 31 December 2020 was 47% technology, 20% business services, 22% healthcare & education, 11% consumer markets.
Its 2020 Fact Sheet lists the following companies as its largest holdings by Net Asset Value (% of total fund NAV).
- Cerillion PLC (3.9%)
- Carousel Logistics Ltd (3.5%)
- Ideagen PLC (3.0%)
- Netcall PLC (2.5%)
- Custom Materials Ltd (2.1%)
Gresham also manages a second VCT under the Baronsmead brand; Baronsmead Second Venture PLC.
Minimum investment: £3,000
Ongoing management costs: Capped at 2.5%, plus 10% performance fee
Unicorn AIM VCT
Unicorn AIM VCT PLC is a venture capital trust managed by Unicorn Asset Management Ltd. On its website it claims to be the largest AIM-focussed VCT in the UK market.
The current Unicorn AIM VCT is a combination of the original AIM VCT launched in 2007, and Unicorn AIM VCT II plc, which merged in 2010.
Its website also lists its top 10 investments as:
- Interactive investor
- Surface Transforms
Its annual report discloses that it invested £3.4m into Interactive Investor, which is now valued at £30.2m. Curiously, this is the VCT’s most profitable current investment in absolute £ terms but is actually an unquoted investment rather than an AIM-listed business. It typically tries to restrain unquoted investments at 20% of total fund NAV.
Minimum investment: N/A – PLC
Ongoing management costs: 2.2%
Other notable UK Venture Capital Trusts
In no particular order, here are the names of other UK VCTs which you may be interested in researching.
- Northern VCTs
- Northern Venture Trust
- Northern 2 VCT
- Northern 3 VCT
- Amati AIM VCT
- ProVen VCTs
- ProVen VCT
- ProVen Growth & Income
- Foresight VCTs
- Foresight VCT
- Foresight 4 VCT Ordinary Shares
- Foresight Solar & Technology VCT Ordinary Shares
- Foresight Solar & Technology VCT Williams Technology Shares
- Albion VCTs
- Albion Venture Capital Trust PLC
- Albion Technology & General VCT PLC
- Albion Development VCT PLC
- Crown Place VCT PLC
- Albion Enterprise VCT PLC
- Kings Arms Yard VCT PLC
- Hazel Renewable Energy VCTs
- Hazel Renewable Energy VCT1 PLC
- Hazel Renewable Energy VCT2 PLC
- Pembroke VCT
- Blackfinch Spring VCT
- Calculus VCT
- Puma Alpha VCTs
- Puma Alpha VCT
- Puma VCT 13
- Seneca Growth Capital VCT
- Triple Point VCT
What gives venture capital firms an edge?
Venture capitalists are experienced professionals who are experts at a wide range of financial and management disciplines:
- Analysing financial statements (See financial statement analysis books)
- Performing due diligence (See due diligence books)
- Assessing the effectiveness of management (See management books)
- Valuing a business (See valuation books)
- Executing exit strategies (See corporate finance textbooks)
- Advising businesses on financial management (See financial management books)
Perhaps even more transformative is the social and professional networks of top VC firms, which opens doors to investment opportunities which are closed off to direct investment altogether.
As any of the best venture capital books will point out; sometimes its who you know, rather than what you know.
How to access VCT investments
If you meet the definition of sophisticated investor, you can access VCT investments:
- Via an introducing broker, such as a specialist or even some of the mainstream brokers such as Interactive Investor.
- Via a venture capital platform, such as Further.Finance. (See our review of the upcoming Further venture capital platform).
- Directly. Some VCTs accept direct investments if you contribute a large enough amount.