Online investment proves its appeal to VCT investors
Maven’s most recent VCT Offers have again closed early, fully subscribed, with around 20% of this year’s investors applying online. Steve Marshall, Maven's Sales and Marketing Director, discusses how this recent development, the first of its kind in the VCT sector, has accommodated the burgeoning demand among investors for improved and quicker access to new VCT investment.
VCTs have been a feature of tax efficient investing since 1995 and have become more of a mainstream option for investors. It is also pretty much the same period where we’ve seen online finance and communication come to dominate how we manage our personal affairs.
The digital customer experience
Online banking has set the pace, with the ONS (Office for National Statistics) reporting it as the fastest-growing area of UK internet use, having doubling in just 10 years to 2018, and customers not only checking balances and making payments, but also increasingly using phones and other mobile devices to do so on the move. That point was echoed by statista.com (2019) which noted that the banking and financial services industries have typically been in the vanguard for embracing technological advances, since the first large-scale secure Internet systems became available for financial operations, with myriad Fintech solutions now available to help investors and the smartphone becoming the preferred device.
This trend reflects the fact that investors are looking for flexibility in tailoring their finance requirements around busier lifestyles, work and family commitments, and the financial sector has harnessed new technologies to attract new customers and improve the customer experience, allowing us to open bank accounts or apply for pensions, ISAs and other investments online.
For many investors the advent of easily accessible online finance has generally meant that they no longer need to visit bank branches or financial advisers’ offices for a series of meeting, or post offices to ensure important documents are sent securely. In the case of VCTs there is the added pressure of tax-year deadlines, allied to the fact that popular fundraisings by the leading managers usually see significant demand and can be available for fairly short periods, which means that reliance on traditional methods such as cheque payment and postal applications can see investors miss out on VCT Offers.
VCTs jumping on board
Perhaps the most defining characteristic of VCTs as an asset class, beyond their unique tax breaks, is that they invest in innovative cutting-edge businesses that are addressing rapidly changing customer needs. So there is a certain irony in the fact that the VCT industry itself has been slow to innovate in accommodating digitally active investors.
Whilst it’s become possible to manage and monitor a VCT investment online, through some platforms used by investors and financial advisers, just two years ago the VCT sector had made little progress in the move towards allowing electronic application, with paper applications and cheques continuing to dominate. Yes, the specialist nature of VCTs does present challenges in the adoption of new technologies, but there was clearly scope to innovate and improve the digital options for VCT investors.
A key goal for Maven, in enhancing the experience for our VCT investors, has been to continually evolve the range of investment options and introduce online opportunities to improve the security and speed of investing. Over the years we have had numerous investors tell us they are looking for a more streamlined, modern investment process, as they are frustrated with the hassles of trying to organise VCT applications when deadlines are looming, they are inundated at work or are out of the country.
The VCT sector’s first online application portal
That’s why, in late 2017, Maven developed the first truly online VCT application system in the market, and now offers an innovative solution that allows our investors to subscribe quickly and securely for new VCT shares online, including the option to pay by UK debit card or bank transfer. Maven’s application portal provides a convenient way to complete and submit an application within minutes, which is validated in real-time, and allowing investors to apply 24/7 from anywhere in the world and the device of their choice. It also allows an investors chosen financial advisor or broker to securely access the application and submit on behalf of their client.
Crucially, and particularly in the run up to a tax-year end or when there is a subscription deadline as a fundraising approaches capacity, it avoids many of the postal, banking and processing delays that can make investment in VCT share issues uncertain when using paper applications and cheques.
Our online application portal has been an important addition to the sector’s investor offering, and take-up has already more than doubled since its launch just two years ago. We do recognise that it will take time to change long embedded VCT investment habits – but VCT investors now have the opportunity to align their subscription into VCTs with their other investment and savings.