Venture Capital Schemes: companies receiving risk finance investments: exceptions to the basic age condition: introduction
The risk finance rules are intended to support earlier stage companies that are subject to a market failure because they are relatively new. However there are two discrete and specific situations in which a company beyond the age limit may be subject to a market failure substantial enough to be eligible for tax-advantaged venture capital investment. These are Condition A (follow-on funding) as explained at VCM8154 and condition B (investment to enter new product market or geographic market) as explained at VCM8155.
However, most older companies are expected to access funding from the market. This is because they have developed a track record on which a prospective investor can decide whether or not to invest in the company. For example, a company may be continuing with a business activity as a natural extension of earlier growth or development activities. It may be moving into a somewhat new but overlapping market, and therefore its existing track record can be used to assess its suitability for funding by the market.