Partner insight: How do VCTs seek to maximise returns for investors?

Venture capital trusts are known for their tax advantages, but a lot of work goes into giving investments the best chance of success, says Puma Investments' Rupert West

clock • 2 min read
Rupert West, Puma Investments
Image:

Rupert West, Puma Investments

The relationship between a VCT manager and business owner will be long term and can be intense. They will need to work together through good and bad moments.

Puma Investments will typically hold its investments for five to seven years, says Rupert West, managing director of Puma's Private Equity division. "This gives us time to get in and work closely with the business, and put in place some of the processes that will yield better value or lead to them being more valuable over time," he says.

It is an intense process. Puma assigns two people from its own team to work closely with the company. "We will be on the board, so we will have a board director and a board observer," explains West.

"We work with the company on the business plan, we sign off the budget each year, and they send us monthly management accounts. We put those into our base monitoring system and that produces lots of analytics.

"On top of that, we will speak to them weekly if not daily, and we will be involved in almost all hiring and strategic decisions. We do lots of coaching and advising."

Unusually, the team at Puma don't see themselves as venture capitalists. They want to find businesses with the clear intention of growing, developing high-grade corporate structures and becoming well-run businesses. They back scale-ups rather than start-ups. They consciously avoid aggressively entrepreneurial businesses, as the risks are far greater.

"We will miss out those really superstar opportunities that are all about innovation, new and amazing returns," says West.

"But equally we will miss out on MySpace, and we will miss out on all the entrepreneurs that go rogue and cannot be controlled, making their businesses unviable." 

For more on investing in VCTs, complete your details on the form below and you will automatically be emailed the full spotlight guide.

More on Economics / Markets

Nadia Halila, Puma Investments

Partner insight: Looking for diversification? Consider VCTs

Venture capital trusts have a number of characteristics which allow them to complement a wider portfolio, says Puma Investments' Nadia Halila

Puma Investments
clock 30 September 2022 • 1 min read
Port in a storm: Five holdings giving funds protection today

Port in a storm: Five holdings giving funds protection today

Reassurance from top fund managers during economic turmoil

Darius McDermott
clock 29 September 2022 • 5 min read
The central bank said it was ready to “restore market functioning and reduce any risks from contagion” to UK households.

BoE intervenes with temporary QE to stem sell-off

30-year gilt yield slumped to 4.4% from above 5% this morning

Elliot Gulliver-Needham
clock 28 September 2022 • 1 min read

In-depth

Truss must not ignore Gen X pension crisis

Truss must not ignore Gen X pension crisis

Phil Brown says a 'stark generational divide' is clear

Phil Brown
clock 05 September 2022 • 2 min read
The pursuit of (post-acquisition) independence

The pursuit of (post-acquisition) independence

Acquirers 'want investment revenue'

Jon Yarker
clock 07 April 2022 • 8 min read
What should adviser firms do when a SIPP provider goes bust?

What should adviser firms do when a SIPP provider goes bust?

A port in a storm

Hannah Godfrey
clock 09 March 2022 • 7 min read