The Financial Times has today published its list of the top 1,000 fastest growing companies across Europe. Investors who feel locked out of this fast lane of high growth companies should look no further than a VCT or EIS, often the only way to access companies on the list.
VCT and EIS Funds invest in ‘baskets’ of young, privately owned fast-growing companies. Their purpose is to support early-stage businesses to grow and create employment opportunities whilst also aiming to make a good return for investors. Investors looking to back the UK’s growing crop of innovative early-stage companies would be hard pressed to find a better avenue than a portfolio of VCTs or EIS backed investments.
Jonathan Moyes, Head of Investment Research at Wealth Club said:
“The FT 1000, which ranks Europe’s 1,000 fastest-growing companies, shows just how compelling an investment into private companies can be. There are 195 UK-based companies in the list, and many of these will have been backed by private investors using their venture capital trust and EIS allowances. Examples include Thriva, the at-home finger-prick blood test platform, it ranks 7th in the list of Europe’s fastest 1000 companies with revenues rising from £0.25 million to £18.2 million in the three years to 2020. It is currently one of the largest holdings within the Pembroke VCT.
Another example is Popsa, which happens to be the largest position within the Pembroke VCT. It ranks 16th in the FT 1000, having grown revenues from £0.45m to £21.5 million in the three years to 2020. Investors can also invest in Popsa via the Guinness EIS fund, if applying via Wealth Club before the 7th March 2022. Whilst clearly not all EIS and VCT investments will be as successful, those that are often boast rates of growth public market investors can only dream about.”
VCTs and EIS schemes are establishing themselves as the UK’s growth asset class. Despite the UK having a leading position in Europe for the creation of innovative high-growth companies, this area is woefully underrepresented in the UK main market, as measured by its 350 largest constituents by market capitalisation.
VCTs have raised record sums this year and are expected to reach £1billion of investment by the end of the tax year. Whilst the 30% rebate tax rebates are a key driver of this demand, the ability to back some of the UK’s brightest early-stage companies is clearly finding favour with investors.
Moyes continues:
“The continued success of the VCT sector may help to sow the seeds of future entrepreneurial success. We are seeing an increasing number of founders startingsecond or third businesses having already enjoyed success with other ventures, either as founders or senior employees.
In addition the support available for companies via incubators and accelerators has never been greater. Taken together, it is easy to see why the UK is an attractive destination for investors. The more experienced the UK venture ecosystem, the more capital it attracts, the more capital it attracts, the more successes it generates, the more successes it generates, the more experienced entrepreneurs it creates. This is an exciting time for the UK and its venture capital ecosystem.”
