Industry Voice: 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, click to read the spotlight guide.

More on Economics / Markets

Market outlook 2023: Is the glass half full or half empty?

Market outlook 2023: Is the glass half full or half empty?

Time to acknowledge the 'foggy nature' of current conditions

Laith Khalaf
clock 08 February 2023 • 3 min read
The Bank of England

Bank of England meets expectations with 0.5 percentage point hike

UK domestic inflationary pressures had been 'firmer than expected'

Elliot Gulliver-Needham
clock 02 February 2023 • 5 min read
OBR intendeds to reduce these forecasts by between 0.2% and 0.5% because of weakness in the economy and labour market shortages

Britain growth forecast to be downgraded before March impacting Budget

Due to weakness in the economy and labour market shortages

Kathleen Gallagher
clock 25 January 2023 • 1 min read

In-depth

Could the annuity revival mean retirement advice decline?

Could the annuity revival mean retirement advice decline?

Recent shift to annuities could hit advice business status quo

Julia Bahr
clock 07 February 2023 • 3 min read
Educating the FCA: How industry bodies have responded to the SDR

Educating the FCA: How industry bodies have responded to the SDR

Comparison viewed as 'the thief of joy' when it comes to the SDR

Sian Barnett Wike
clock 07 February 2023 • 9 min read
A day in the life of an adviser: Coventry-based Vicki Skinner

A day in the life of an adviser: Coventry-based Vicki Skinner

PA hears how advisers all across the nation structure their workdays

Hope William-Smith
clock 03 February 2023 • 3 min read