Founder-led businesses securing Venture Capital Trust (VCT) investment need to ensure their governance evolves as quickly as their growth ambitions, according to arch.law CoSec, the company secretarial and governance advisory team within leading legal business arch.law.
Changes introduced in April 2026 have significantly increased the amount businesses can raise through VCT and Enterprise Investment Scheme (EIS) investment. For most qualifying companies, the annual investment limit has doubled from £5 million to £10 million and the lifetime limit from £12 million to £24 million, with higher limits applying to knowledge-intensive companies.
The changes are designed to increase the availability of capital to growing UK businesses – but arch.law says greater access to institutional investment also brings a need for businesses to think differently about governance.
Ben Harber, Company Secretarial Director, who leads arch.law CoSec, said:
“VCT investment can be transformational for an ambitious founder-led business, but the focus understandably tends to be on the capital, the growth plan and what happens next commercially. What can receive less attention is the change taking place around the boardroom table.
“As external investment comes into a business, governance inevitably becomes more formal. There may be new directors or board observers, enhanced reporting requirements, investor consent or reserved matters and greater scrutiny around how and why key decisions are made.
“That shouldn’t be regarded simply as an administrative consequence of taking investment. Done properly, good governance is an enabler of growth.”
Research commissioned by the Venture Capital Trust Association (VCTA) and independently conducted by Focaldata among 124 founders of current and former VCT-backed companies found that 77% reported strengthened reporting, governance and board effectiveness, while 79% said VCT backing enabled them to hire senior talent or specialist advisers.
The arch.law CoSec team says the challenge for growing companies is to make sure the governance infrastructure develops alongside the business rather than attempting to retrofit it later.
This can include establishing clear board and management responsibilities, improving the quality and consistency of board information, ensuring decisions and delegated authorities are properly documented, managing potential conflicts and creating appropriate processes around investor and stakeholder reporting.
For founders accustomed to making decisions quickly and relatively informally, the transition can require a significant change in approach.
Ben continued:
“Governance can sometimes be perceived as something that slows an entrepreneurial business down. In a well-run growth company, it should do the opposite.
“Clear responsibilities, good information and effective decision-making give founders, boards and investors greater confidence to move quickly. They also become increasingly important as a business adds senior management, takes on further investment or prepares for its next stage of growth.
“The objective isn’t to impose big-company bureaucracy on an entrepreneurial business. It is to put in place governance that is proportionate to where that business is now – and where it wants to go.”
The Government’s expansion of the VCT and EIS investment limits is intended to support more UK companies as they scale, with qualifying knowledge-intensive companies now able to receive up to £20 million annually and £40 million over their lifetime.
arch.law believes this makes the conversation about governance for growth increasingly relevant for founders, boards and investors.
Ben added:
“Investment and governance shouldn’t be viewed as two separate conversations. If capital is being introduced specifically to accelerate growth, the governance supporting that growth needs to be considered at the same time.
“For founders, the question shouldn’t simply be ‘are we investment ready?’ It should also be ‘is our governance ready for what comes next?’”
Contact marketing@arch.law for enquiries and further information.
Research source: VCTA/Focaldata – independent UK-wide research among 124 founders of current and former VCT-backed companies. The findings are also cited in the Association of Investment Companies’ February 2026 response to HM Treasury’s VCT Call for Evidence.
AIC – VCT Call for Evidence response, February 2026
VCT-backed businesses urged to put governance at the heart of growth