New independent survey of British entrepreneurs, conducted by Focaldata, highlights the vital role that Venture Capital Trusts (VCTs) have played in the growth of their businesses, and underscores the risks that proposed tax relief cuts and policy uncertainty could create for the growth, resilience and long-term success of the UK economy.

The UK-wide survey, conducted independently by Focaldata and based on responses from 124 founders across current and former VCT-backed companies, provides some of the strongest evidence to date of the economic and strategic value delivered by VCTs.

VCT funding is “extremely important” to business success: 91% of founders say their business would be smaller without VCT funding, whilst 27% believe it would not exist today had they not been able to access VCT investment. The research finds that 68% of founders report that VCT investment has been extremely important to their company’s growth, rising to nearly 80% among businesses that have successfully exited from VCT funding.

Reduced VCT funding would have direct consequences for UK growth, indicating a material risk to employment, innovation and the UK’s competitiveness as a hub for scaling businesses. If less funding were available from VCT investors:

• 62% of founders would scale back growth plans;

• 45% would reduce headcount;

• 25% would consider relocating their headquarters abroad.

VCT backing boosts ability to secure further investment: Founders consistently cite VCT capital as essential in bridging the funding gap between early-stage tax-advantaged schemes and later-stage venture or private equity financing. Most founders reported that VCT involvement strengthened their credibility with later-stage investors and lenders, with the effect particularly strong for Knowledge Intensive Companies*, where 64% reported a positive impact on future fundraising.

VCTs provide far more than capital as founders highlight the breadth of non-financial benefits delivered by VCT managers, including support during periods of uncertainty and rapid expansion:

• 79% said VCT support enabled the hiring of senior talent or specialist advisors;

• 77% reported improved governance, financial reporting and board effectiveness;

• 64% received strategic mentoring that shaped decisions at key growth moments;

• 52% said VCT involvement accelerated product development and R&D.

Policy changes will materially shape future growth: The research shows strong support for the Government’s decision to raise VCT investment limits, with 81% of younger firms (under five years old) expecting a positive impact. However, founders also expressed concern about the upcoming reduction in VCT income tax relief from 30% to 20%, which is set to take effect in April 2026. Concerns were highest among earlier stage firms and smaller businesses, with 57% of companies with fewer than 50 employees worried about the impact on their scaling plans.

Founder/CEOs of VCT-backed businesses surveyed, commented:“VCT funding for us, apart from the financial benefit, added a step change in the operational quality of the business – in what was already a company managed by experienced and qualified professionals – and resulted in a significant improvement in strategic planning, and much faster achievement of the goals and financial success of the business.“

“VCT funding is a critical part of the UK's startup funding infrastructure. World-leading angel investment schemes (EIS/SEIS) need a bridge between them and traditional VC/PE funds. Without VCT funds that are able to write significant cheques and patient capital, many businesses will fall into the valley of death for not being high-growth enough for VC funds or large/profitable enough for PE.”

Chris Lewis, Chair of the Venture Capital Trust Association (VCTA), commented: “This latest research confirms that VCTs remain one of the UK’s most effective engines of innovation, backing founders who are building the companies that will shape our economy for decades to come. We will continue working alongside the wider industry and policymakers to ensure the VCT scheme remains fit for purpose and continues to empower the next generation of British entrepreneurs.”