He notes that ‘this time last year VCT monies raised over the tax year were already above £300 million, the same figure this year is just £70 million’.

Contributing to an Association of Investment Companies (AIC) roundtable discussion on the outlook for the VCT sector, Davey attributes the fall-off largely to the Chancellor’s cutting of the income tax rebate from 40 per cent to 30 per cent but also suspects that ‘a number of investors feel they already have ample VCT exposure, having filled their boots over the previous two tax years’.

One of the main themes of the AIC dialogue was of risk control. Mark Wignall, manager of the Matrix range of Income & Growth VCTs, expounds: ‘There is a growing trend in VCT investment strategy towards risk mitigation and income generation as investors see the attraction of a long term investment that can pay out regular and growing dividends, tax free.’

Philip Cammerman, chairman of YFM Private Equity, observes that ‘the increasing trend of venture capital trusts to raise money as a top up to their existing portfolio gives investors access to a known range of maturing and exciting investments which help decrease their risk’.

2007 research carried out by Business XL has shown that Venture Capital Trusts (VCTs) currently have over £1 billion to invest in young, growing companies.