British companies would get a boost if the government were to revise the current venture capital trust and enterprise investment scheme limits, according to Richard Power.
Speaking at Octopus Live in the Capital on September 23, the head of Octopus quoted companies at Octopus Investments, said: “We would like to see a change to the VCT and EIS limits.
“This would be good as it would attract a wider range of companies back into the market.
“We also need to champion business relief and provide more scale-up capital for companies.”
The maximum annual VCT investment is currently £200,000, while for EIS, the maximum is £1mn, a year, although this rises to £2mn if the excess is invested in a knowledge-intensive company.
However, according to the government’s website, a company needing money to grow cannot raise more than £5mn in total in any 12-month period from the following:
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Enterprise Investment Schemes
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Venture Capital Trusts
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Seed Enterprise Investment Scheme
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Social investment tax relief
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State aid approved under the risk finance guidelines.
Nor can a company raise more than £12mn from these sources in a company’s lifetime.
But to boost the UK economy, such limits will have to be addressed, as well as introducing programmes to help more retail and institutional investors put their money into such companies.
Power added: “We need to get more retail participation in UK companies, alongside institutional support from pension funds.”
In conversation with Leigh Stephens, investment specialist for Octopus Investments, Power also discussed whether AIM was the most successful growth market in the world.
Power told delegates at the Barbican Centre in London: “Aim has proved to be astonishingly successful at providing a home for pioneering technology companies that might have been too early stage for private equity and so there was nowhere else for them to go.”
Indeed, shortly after AIM launched, Paris launched its own version, the Nouveau marché, a French equity market that was a division of the Paris Bourse, now called Euronext Paris.
Power highlighted the successes of family businesses, such as Youngs and Nichols plc, as well as spinouts from universities, such as Oxford Biometrica and Frontier IP Group.
There are also strong entrants in the fields of AI and technology. “AIM has been an excellent feeding-ground for these sort of businesses.”