Real Assets
We build future energy systems and resilient infrastructure, backing emerging opportunities in technology, land and water.
Insights
February 2026
The vital role of VCT and EIS funding in driving UK SME growth
Anastasia Sagaidachna, Senior Investment Manager, discusses how Venture Capital Trusts (“VCT”) and the Enterprise Investment Scheme (“EIS”) support UK innovation, encourage regional economic development and create opportunities for investors seeking exposure to early‑stage growth companies.
For early‑stage businesses, obtaining growth capital is often difficult. Limited collateral, a lack of trading history and investor caution around higher‑risk start-ups can restrict access to traditional lending channels. This is where VCTs and EIS funds make a meaningful difference.
Both schemes were designed to mobilise private capital towards young, innovative businesses by offering investors incentives that help balance risk and reward. Alongside the tax benefits, investors gain access to specialist fund managers with deep experience sourcing, supporting and scaling promising companies.
Making early‑stage investing more accessible
Tax benefits are not the only reason these schemes appeal to investors, but they do help offset the inherent risks of backing smaller businesses. These incentives ensure that promising companies, which may not meet the criteria for traditional funding, are still able to raise capital to pursue innovation and scale.
VCTs and EIS funds also provide more than financial backing. Their involvement often includes hands‑on strategic support, governance input and access to networks that can help founders refine business models, pursue commercial partnerships and accelerate growth.
Supporting business growth across the UK
From green infrastructure to digital transformation, VCT and EIS‑backed companies often sit at the forefront of emerging sectors. This has significant implications not just for the businesses themselves, but for the UK economy more broadly.
Key areas where these schemes make demonstrable impact include:
1. Enabling innovation and R&D
Many SMEs supported by these schemes are developing breakthrough technologies, improving productivity and helping solve long‑term societal challenges. For many of these companies, early‑stage funding is essential to progress research, validate markets and bring products to commercial scale.
2. Driving regional economic development
Contrary to the perception that innovation is concentrated in a handful of cities, VCT and EIS funding is distributed widely across the UK.
- Over £20bn has been raised through EIS since launch
- Funding has supported businesses across multiple UK regions, helping stimulate local job creation and economic diversification
As a result, these schemes help ensure that high‑growth opportunities are not limited to traditional innovation hubs but supported nationwide.
3. Positioning the UK as a leader in global innovation
With sustained investment into high‑growth sectors, including AI, digital health, climate technology and advanced manufacturing, VCTs and EIS continue to strengthen the UK’s standing as a leading environment for innovation‑driven entrepreneurship.
Looking ahead: the future of VCT and EIS backed growth
UK SMEs remain pivotal to economic progress, but their ability to scale depends on reliable access to long‑term growth capital. VCTs and EIS provide exactly this - combining investor incentives with deep sector expertise to help early‑stage businesses thrive.
As the economic landscape continues to evolve, these schemes will remain vital in ensuring the UK retains its competitive edge, fosters innovation and supports the next generation of high‑growth companies.
