British Smaller Companies VCTs

British Smaller Companies VCT (BSC) and British Smaller Companies VCT 2 (BSC2) are longstanding generalist VCTs managed by YFM Equity Partners. They have combined net assets of £470.5 million (June 2025) and a portfolio of 43 companies.

The VCTs share the same investment strategy and focus on technology companies, with a bias towards data, tech-enabled services, and new media – sectors in which the manager has built an enviable track record.

In the five years to 30 June 2025, the two VCTs generated a NAV total return of 74.3% (BSC) and 68.6% (BSC2). Over the same period, the VCTs have paid cumulative dividends equivalent to 48.4% (BSC) and 48.0% (BSC2) of the starting NAV of each VCT – dividends are variable and not guaranteed.

• Seeking to raise £60 million with a £25 million overallotment facility
• The VCTs do not specify a dividend target
• Available for the 2025/26 tax year
• Minimum investment £6,000 (you can split your investment 60/40 between the two VCTs or invest in just one)
• Early bird deadline: 0.125% effective saving available on the first £25 million raised (see below)

The British Smaller Companies VCTs are among the longest-standing Venture Capital Trusts – BSC launched in 1996 and BSC2 in 2001.

The manager, YFM Equity Partners (“YFM”), has been investing in young, fast-growing companies for more than 40 years. It was one of the first asset managers to launch a VCT and is now one of the most recognised and well-regarded names in the industry.

Established in Yorkshire in 1982, YFM is a specialist private equity business independently owned by the senior management and investment team, with over £750 million in assets under management across its VCTs and private equity funds (June 2025).

YFM’s 60+ team, including more than 40 investment professionals, are located across five offices (Leeds, London, Manchester, Birmingham, and Reading).

The investment team is led by Executive Chairman David Hall, a chartered accountant who joined YFM in 2000 and has over 30 years of private equity, venture capital, and fund management experience. The investment team is split into four sub-teams, covering two areas (North and South) and responsible for new investments or support to portfolio companies.

Since 2010, the VCTs have co-invested alongside one another and now follow the same growth capital investment strategy.

The British Smaller Companies VCTs seek to invest in innovative businesses in established and emerging industries. Companies will typically be headquartered in the UK and have ambitions to expand internationally. At the point of investment, they will usually generate at least £1 million in turnover, but do not need to be profitable. Founders must have a clear strategy to scale the business.

The VCTs typically invest £2 to £6 million in each company.

Whilst the VCTs will consider any sector, there is a strong bias towards business services and, as a result, the combined portfolio is heavily weighted towards companies operating in the data, application software and tech-enabled services sectors.

BSC and BSC2 VCTs have combined net assets of £470.5 million (June 2025). 

Due to its performance, Matillion has become the largest holding in both VCTs’ portfolios, accounting for 7.4% (BSC) and 10.0% (BSC2) of net assets. The top 10 holdings account for 34.4% (BSC) and 38.4% (BSC2) of each VCT’s net assets. 

The VCTs chiefly invest across three sectors: data, application software and tech-enabled services, which together account for 76% of the combined investment portfolio (June 2025).

The current sector breakdown is shown below.

Both VCTs have a history of exits. Over the two years to June 2025, the VCTs have achieved five full and two partial exits, generating proceeds of £58.5 million, on an investment cost of £26.2 million, an average 2.2x return. There was also one failure during the period. In February 2024, the VCTs realised their fourth largest position, DisplayPlan, for a total 9.6x return, detailed below. Past performance is not a guide to the future. 

As is to be expected, not all investments work out. One example is Wooshii. Wooshii is a global video production platform, helping brands create, manage, and measure video content. YFM invested a total of £7.6 million, with the first investment in 2019. 

Post investment, revenue grew from £1.6 million to £5.8 million in 2023.

Despite this – and increasing demand during the pandemic – the business suffered when advertising spend from key blue chip clients slowed down and cheaper, faster AI solutions became available. The business was acquired by media company MSQ Partners in Q1 2025. As a result, the VCTs wrote their investment down to nil.

Dividend Re-investment Scheme (DRIS)

A dividend re-investment scheme is available if shareholders wish to reinvest dividend payments by way of subscription for new shares. As these are new shares they should be eligible for tax relief (you will need to claim this on your tax return or directly with HMRC) and the shares will count towards the VCT annual subscription limit. 

Share buybacks

The boards intend to buy back shares at up to a 5% discount to the prevailing net asset value. This is not guaranteed – please see the offer documents for details.

Discount history

VCT shares are traded on the London Stock Exchange. Similar to investment trusts, the share price can fluctuate and can be different from the VCT’s net asset value (NAV), i.e. the value of the VCT’s underlying investments. The difference between the share price of a VCT, and its net asset value per share, is called a discount.

Based on data from Morningstar, the average discount to NAV as at 30 June 2025 was -5.6%. Over the previous five years, the average discount to NAV was -7.1%.

The discount history is based on the closing share price of the VCT at the end of each month, divided by the latest net asset value at the time. Past performance is not a guide to the future. Investors looking to sell their VCT shares may get a better price using the VCTs’ share buyback facilities, although this is not guaranteed.

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. 

VCTs are high risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

To retain the tax benefits, VCTs should be held for at least five years. If you sell VCT shares and reinvest in new shares of the same VCT (including any mergers) within six months, tax relief can be restricted. Tax rules can change and benefits depend on circumstances.

Both VCTs have significant exposure to one company, Matillion.

Annual rebate when you invest through Wealth Club

The British Smaller Companies VCTs include an annual rebate for Wealth Club investors, payable for the first three years. 

This is a rebate of our renewal commission and should be equivalent to a percentage (shown in the table above) of your subscription. Terms and conditions apply. 

Deadlines

• Early bird: the first £25 million of commitments will receive additional new shares equivalent to 0.125% of their commitment
• First allotment: once £25 million is raised, in January 2026. Please note: to the extent possible, applicants will receive additional new shares equivalent to a c.2.36% p.a. return on funds awaiting allotment, calculated by reference to the number of days between the acceptance of an application (including full receipt of cleared funds) and the date of allotment. This rate is subject to change.
• Deadline for 2025/26: 27 March 2026 (5pm)

The British Smaller Companies VCTs are among the most established in the market. They provide investors with exposure to a portfolio of companies with a focus on data, application software, tech-enabled services, and new media sectors. The manager, YFM, has an experienced and well-resourced team, and has built an enviable track record within the VCTs’ favoured sectors.

The VCTs’ portfolio includes several promising companies, such as Unbiased, the financial adviser review site, Vypr, the consumer intelligence platform, now the third largest holding in the VCTs and Summize, a contract management software provider.

In our view, YFM continues to build on its established reputation as an experienced investor in B2B software and data & analytics businesses. The team’s area of expertise and investment strategy is well reflected in both the existing portfolio and recent investments. We believe this offer could be worth considering – experienced investors should form their own view.

This financial promotion has been communicated and approved by Wealth Club Ltd on 25 September 2025

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.