The venture capital market

Treasury Committee Closed Inquiry
Opened: 28 Apr 2022 Closed: 16 Jan 2024 Parliament page
The Committee is holding a short inquiry into the venture capital market. Read the call for evidence to find out more about the inquiry
8 Recommendations
10 Conclusions
1 Report
6 Letters
4 Events
Activity timeline 12 events
20 Oct
2023
Report published
20 Oct
2023
Correspondence
24 Jul
2023
Report published
24 May
2023
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
10 Mar
2023
Correspondence
10 Mar
2023
Correspondence
10 Mar
2023
Correspondence
31 Jan
2023
Formal meeting (oral evidence session) · The Thatcher Room, Portcullis House
14 Sep
2022
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
7 Sep
2022
Correspondence
7 Sep
2022
Correspondence
27 Jun
2022
Formal meeting (oral evidence session) · The Wilson Room, Portcullis House
Title HC No. Published Items Response
Nineteenth Report - Venture Capital HC 134 24 Jul 2023 18 Responded
Recommendations & Conclusions
7 results
Clear
1 Conclusion Accepted
Nineteenth Report - Venture Capital
Venture capital tax reliefs (EIS, SEIS, VCTs) positively impact UK small businesses
Industry and government are aligned in their assessment that venture capital tax reliefs have had a positive impact on UK small businesses. They argue that the EIS, SEIS and VCTs are internationally competitive schemes that attract investors, which in turn … Read more
Government Response
The government agrees that EIS and VCT sunset clauses should be extended, and the Chancellor has publicly stated his firm intention to do so beyond April 2025. Further details will be provided at a future fiscal event.
HM Treasury
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2 Conclusion Accepted
Nineteenth Report - Venture Capital
Lack of clear plan for extending EIS and VCT sunset clauses is damaging
The Treasury continues to express the importance of the EIS and VCT schemes and a desire to extend their sunset clauses. The Chancellor has told us he does not see a barrier to doing so. However, despite our raising concerns … Read more
Government Response
The government agrees that EIS and VCT sunset clauses should be extended, and the Chancellor has publicly stated his firm intention to do so beyond April 2025. Further details will be provided at a future fiscal event.
HM Treasury
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3 Recommendation Accepted
Nineteenth Report - Venture Capital
Extend EIS and VCT sunset clauses beyond April 2025, announcing length and timeline
We recommend that HM Treasury extend the EIS and VCT sunset clauses beyond April 2025 at the earliest opportunity. HM Treasury should provide more certainty for founders and investors alike by announcing the length of the extension and a clear … Read more
Government Response
The government accepts the recommendation, stating the Chancellor has a firm intention to extend the EIS and VCT sunset clauses beyond April 2025, and will provide further details on the schemes at a future fiscal event to offer certainty.
HM Treasury
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10 Conclusion Accepted
Nineteenth Report - Venture Capital
Woeful venture capital diversity record presents strong case for specific diversity-focused funds.
The British Business Bank has active funds designed to target specific market failures in venture capital, such as its regional funds. Representatives from the BBB have suggested that diversity-focused funds could theoretically be used in the same way, if there … Read more
Government Response
The government agrees on the importance of promoting diversity in venture capital and highlights ongoing British Business Bank programmes that assess and support diverse fund managers and founders. It also notes DSIT's recent commitment of £12 million for a two-year Digital Growth Grant programme, launched in April 2023, specifically to support underrepresented tech entrepreneurs.
HM Treasury
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11 Recommendation Accepted
Nineteenth Report - Venture Capital
Consult on creating venture capital funds specifically promoting greater diversity in allocation.
We recommend that the Government and British Business Bank consult on the creation of one or more venture capital funds with the specific purpose of promoting greater diversity in venture capital allocation. (Paragraph 55) Regional inequality in venture capital Read more
Government Response
The government acknowledges the importance of diversity and highlights existing British Business Bank programs that support diverse founders and fund managers, as well as new DSIT funding for underrepresented entrepreneurs, but does not commit to consulting on creating new dedicated diversity-focused venture capital funds.
HM Treasury
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12 Conclusion Accepted
Nineteenth Report - Venture Capital
Venture capital investment remains disproportionately concentrated in London, hindering regional growth.
The evidence we have received suggests that venture capital investment is concentrated in London, strongly disproportionately to its share of the UK SME population. This means that throughout most of the UK regions and nations, opportunities for investment in high-growth … Read more
Government Response
The government agrees that regional businesses should not be disadvantaged and acknowledges the concentration of venture capital in London. It highlights several existing British Business Bank programmes, such as the Regional Angels Programme and regional investment funds, specifically designed to address regional imbalances in access to finance. The government also defends the current age limits on EIS and VCT schemes, arguing that extending them would risk displacing investment from smaller, early-stage companies.
HM Treasury
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18 Recommendation Accepted
Nineteenth Report - Venture Capital
Enhance domestic capital access to make UK business ownership more attractive.
Access to UK domestic capital has been a barrier for British businesses wishing to grow their operations beyond early venture capital funding stages. The US has deeper pools of capital for venture capital investment, and this has often led to … Read more
Government Response
The government acknowledges the importance of supporting scale-up businesses and details existing initiatives like the British Business Bank and British Patient Capital. It states that current EIS and VCT schemes are kept under review but argues against revising funding limits to target scale-ups, citing risks to policy rationale and value for money.
HM Treasury
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Government Response AI assessment · 18 of 8 classified
Accepted 7
Accepted in Part 1
Acknowledged 5
Not Addressed 1
Rejected 4
Total 8 recs + 10 conclusions
Correspondence 6 letters
20 Oct 2023 To committee Letter from the Chair to HM Treasury, relating to the 'Venture Capital' report Government response, dated 20 October
Parliament page
10 Mar 2023 Correspondence from the Chair to the Chancellor, relating to the sunset clause on EIS/VCT, dated 14 February
Parliament page
10 Mar 2023 Correspondence from the Chancellor, relating to the sunset clause on EIC/VCT, dated 7 March
Parliament page
10 Mar 2023 Written evidence from the Association of Investment Companies
Parliament page
7 Sep 2022 To committee Letter from the Permanent Secretary, HM Treasury, relating to Venture Capital, dated 16 August
Parliament page
7 Sep 2022 To committee Letter from the Chair to the Permanent Secretary, HM Treasury, relating to Venture Capital, dated 18 July
Parliament page