The Venture Capital Trust Association is lobbying the government to make it easier for firms to invest in innovative companies.
Chris Lewis, chair of the trade body, took up the top job in January and has worked in the industry for the past 15 years - he is also currently chief financial officer and operating officer at Pembroke.
Lewis said the VCTA has been meeting with the new government, elected in July, to promote the sector and lobby for changes the body would like to see.
“VCTs are 30 years old next year,” said Lewis, “That means there is 30 years of fiddling of the rules every five years and no one has the courage to make changes because they don’t really understand them.
“There are a lot of interesting quirks of the system, the current rules were last looked at in 2015.
“We want to highlight to MPs and civil servants what we are about and what we are trying to do.
“We have got a good scheme and it can be made great with a few tweaks.”
The VCTA wants to see the age limits on companies VCTs can invest in increased.
It currently stands at seven years (10 years for knowledge intensive companies), which Lewis said disadvantages many regional companies.
He said companies outside of London can be too old by the time they would typically consider going for VCT funding.
The body proposes raising the age limit by three years.
“We feel that we are missing out on a whole generation of companies,” added Lewis.
It also wants to see increases in the limits of funding companies can receive annually and throughout their lifetimes from VCTs.
Currently, a company can receive up to £5mn of VCT or other tax-efficient funding in any 12-month period, with a cap of £12mn over its lifetime.
Lewis said the impact of inflation on these limits means the trusts have become more limited in companies they can invest in.
He said: “Lifetime limits were last looked at in 2015 and since then inflation has eroded that by 30 per cent.
“If the new government doesn't do something about that soon, the companies we are looking at now would effectively be half as big as the ones we were looking at 10 years ago.”
Ideally these limits would be updated every three years to increase with inflation, added Lewis.
“[The VCT scheme] has come a long way in the past 30 years and I hope it will continue to grow,” said Lewis.
“I hope the new government will help us iron out some of these quirks so we can get back to investing in the size of businesses we did in the past.”
tara.o'connor@ft.com
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