The VCT investment landscape is evolving but we believe only a subset of VCTs are positioned to take advantage of the opportunities emerging. As Lead Fund Manager, I believe Octopus Apollo VCT is amongst those best placed to benefit.
In the Autumn Budget 2025, the government confirmed a number of updates to the VCT investment rules, many of which affect how UK growth companies raise capital. These changes will shape the market over the coming years and in this article I share what the changes mean in practice and why we believe the structure of Octopus Apollo VCT’s portfolio and scale suggests it is among the VCTs most able to respond to these changes.
Addressing the UK’s scale-up funding gap
For many years, the UK has faced a well-documented scale-up capital gap. Whilst early-stage venture funding is relatively strong, fewer investors are able to support companies as they mature. As a result, many UK businesses have looked to the US for later-stage capital to fund expansion.
To tackle this, from 6 April 2026, the Treasury is increasing company investment limits for VCT and EIS schemes. These limits had remained unchanged for a decade, despite sustained calls from the industry for reform. For Knowledge Intensive Companies (KICs), the annual fundraising limit will double from £10 million to £20 million and the lifetime cap will rise from £20 million to £40 million. Alongside other threshold adjustments, these changes will enable greater support for scaling businesses – an area where Octopus Apollo VCT is already active, focusing on companies at the more mature end of the early-stage ecosystem.
Why Octopus Apollo VCT is well-positioned to take advantage of these changes
Octopus Apollo VCT’s sweet spot is B2B software businesses that have already proven their product in the market in which it operates and is looking for investment capital to scale. In that part of the ecosystem, funding rounds naturally get bigger: hiring Go-To-Market (GTM) teams and expanding internationally often requires more than a £10 million cheque in a single round to match the ambition of the company’s growth plans.
The new investment limits make it easier for Octopus Apollo VCT to back companies and entrepreneurs for longer, supporting them through larger Series B and C rounds and becoming a longer-term investment partner for them.
Why not all VCTs are positioned to capitalise on the new investment limits
Even with higher investment limits, VCTs remain constrained by diversification requirements and their own size. No VCT can hold more than 15% of its portfolio value in a single company. For smaller VCTs, a £10–£20 million investment would rapidly overexpose and concentrate their portfolio in a manner that makes these rules difficult to navigate effectively.
This is where Octopus Apollo VCT’s scale is significant. It has £523 million in funds under management (as at 31 July 2025), meaning it could comfortably invest up to £40 million into a single company, whilst staying comfortably within concentration limits.
Octopus Apollo VCT’s competitive advantage
Octopus Apollo VCT is managed by a specialist B2B software investment team within Octopus Ventures, the UK’s largest VCT manager and one of Europe’s most active venture capital teams. The VCT benefits from the resources and network of this broader ecosystem, as well as a longstanding reputation within the venture market. This position provides early visibility on attractive investment opportunities, whilst benefiting from deep operational expertise in talent, Go-To-Market (GTM) strategy and international expansion.
The rule changes play directly to Octopus Apollo VCT’s strengths—backing commercialised early-stage software businesses with the momentum and model to potentially scale into dominant category leaders.
Learn more about Octopus Apollo VCT’s new share offer
What this means for investors
The upcoming reduction in VCT income tax relief, from 30% to 20%, from 6 April 2026, makes the current tax year an important window for investors considering an investment into a VCT.
Octopus Apollo VCT is already investing at the scale the new rules are designed to support, with a focus on more mature B2B software businesses. Investing at this stage typically involves companies with more established revenues, customer bases and operating histories, providing greater clarity around potential business performance.
As larger, later‑stage funding rounds become more common, Octopus Apollo VCT’s strategy positions it well to benefit.
For advisers who want to understand how Octopus Apollo VCT can support long‑term tax‑efficient investment planning, further information on the share offer, the investment process or the range of portfolio companies available, please visit the Octopus Apollo VCT Product page.
Key risks to keep in mind:
- Capital at risk: This is a high-risk investment. The value of an investment, and any income from it, can fall as well as rise. Investors could end up getting back less than they put in
- Tax treatment: Tax treatment depends on individual circumstances and tax rules could change in the future
- Volatility and liquidity: VCT shares could fall or rise in value more than other shares listed on the main market of the London Stock Exchange. They may also be harder to sell
- VCT qualification status: Tax reliefs depend on the VCT maintaining its qualifying status
