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
5 results
Clear
5 Conclusion Acknowledged
Nineteenth Report - Venture Capital
Lack of transparent and consistent data hinders comprehensive venture capital diversity understanding.
It is difficult to understand comprehensively the diversity breakdown of staffing and investment decisions across the venture capital market and its many small organisations. These firms do not have consistent policies on diversity or associated reporting, and a heavy emphasis … Read more
Government Response
The government acknowledges the importance of improving transparency and consistency of diversity data in the venture capital market. It notes HMRC is reviewing ways to obtain additional demographic data and the Integrated Data Service may offer future information, but does not commit to making it a requirement for EIS, SEIS, and VCT eligibility.
HM Treasury
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6 Conclusion Acknowledged
Nineteenth Report - Venture Capital
Venture capital tax reliefs remain unacceptably opaque regarding fair deployment of public funds.
Venture capital tax reliefs are uses of public funds. It is only right and proper that their use is open to public scrutiny, including whether such funds are deployed fairly to women and people from ethnic minorities. At the moment, … Read more
Government Response
The government acknowledges the importance of public scrutiny of venture capital tax reliefs and the need to understand diversity in funding allocation. It states HMRC is reviewing ways to obtain additional demographic data and the Integrated Data Service may offer a future source of information, but it does not commit to making diversity data a requirement for EIS, SEIS, and VCT eligibility.
HM Treasury
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8 Conclusion Acknowledged
Nineteenth Report - Venture Capital
Voluntary diversity initiatives show slow progress due to low take-up rates.
We support the Women in Finance Charter and the Investing in Women Code. However, we are concerned that as a voluntary initiative with a low rate of take up, progress in improving diversity in venture capital is too slow and … Read more
Government Response
The government agrees the Women in Finance Charter and Investing in Women Code are essential for improving diversity and highlights their positive impact and increasing signatory numbers. It notes a 'comply or explain' approach is already in place for British Business Bank applicants, but does not commit to extending this to EIS, SEIS, and VCT eligibility.
HM Treasury
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13 Conclusion Acknowledged
Nineteenth Report - Venture Capital
EIS and VCT age limits disadvantage regional businesses, hindering economic growth and innovation.
The 7 and 10 year company age limits on EIS and VCTs serve to disadvantage businesses outside prime investment zones in London and the “Golden Triangle”. Firms from other regions can take longer to become established and therefore may 28 … Read more
Government Response
The government agrees that regional businesses should not be disadvantaged and highlights existing British Business Bank programs to address regional imbalances. However, it defends the current EIS and VCT age limits, stating that extending them would displace investment from smaller companies and is not the appropriate policy to address regional imbalances.
HM Treasury
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15 Conclusion Acknowledged
Nineteenth Report - Venture Capital
EIS and VCT scheme funding limits impede company growth and scale-up.
The funding limits on tax-beneficial venture capital funding through the EIS and VCTs schemes limit their utility in helping companies grow and scale-up in today’s economy. Altering these limits presents an opportunity to support domestic business growth through established policy … Read more
Government Response
The government acknowledges the importance of supporting scale-up businesses and highlights existing initiatives like British Patient Capital, but implicitly rejects altering EIS and VCT funding limits to target scale-ups, arguing it risks undermining the schemes' policy rationale and displacing investment from their intended beneficiaries.
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