Criteria
The managers of the VCT have three years in which to choose companies to invest in and during this time often place the money into cash, gilts or bonds. As they become more sophisticated VCTs are investing in funds such as smaller company funds or funds of hedge funds, to maximise returns.
Within three years of the share issue at least 70% of the VCT's assets must be invested in 'qualifying' holdings. These are defined as holdings of shares or securities, including loans of at least five years duration, in unquoted companies and those whose shares are traded on the alternative investment market (AIM). These companies must carry out a qualifying trade wholly or mainly in the UK. The balance of 30% can be invested into areas such as government securities, gilts or blue-chip shares.
VCTs may invest up to £1m in a qualifying company but each individual investment cannot make up more than 15% of VCT assets. The gross assets of the company into which the VCT invests must not exceed £7m or £8m following the investment. If an investment is held in a company that becomes quoted on the London Stock Exchange then it can continue to be treated as a qualifying VCT investment for up to five years.
Read more about this topic: Venture Capital Trust
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—Hubert H. Humphrey (1911–1978)
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—Steven Levy, U.S. writer. Hackers, ch. 2, “The Hacker Ethic,” pp. 27-33, Anchor Press, Doubleday (1984)