Venture Capital Trusts
A venture capital trust (VCT) is a collective investment scheme designed to provide private equity capital for small expanding companies. VCTs are a form of publicly traded private equity, listed on the Stock Exchange.
A venture capital trust (VCT) is a collective investment scheme designed to provide private equity capital for small expanding companies. VCTs are a form of publicly traded private equity, listed on the Stock Exchange.
VCTs usually manage money in the hundreds of millions, and so below a particular sized company they cannot invest as transaction costs make it uneconomic. One fund manager specialising in the creative industries told a DEMOS report: ‘We don’t really invest in companies that have less that £1 million in turnover, and our preferred size of company to invest in is around £2 million to £5 million turnover.’ Most VCTs only invest if there is a clear, timed exit strategy, and their exit timescale is usually around five years.
Creative propositions more suited to Angel and VCT Investment:
• Firms without a steady revenue stream from existing customers or commitments to pay from business customers (this may be particularly true for start-up music, TV, film and video games companies)
• Firms where the potential reward-to-risk ratio is high, in particular when bringing a constant stream of new and unpredictable creative products to market.
• Young businesses, especially those without their own capital to invest.
Average loan value: £2m – £5m
Average Exit terms: Five years
Restrictions: Most will not consider investments under £1m
Web:
www.startups.co.uk
www.ingeniousmedia.co.uk
www.edge.uk.com