Venture Capital grows in Guernsey

Challenging market headwinds aside, inflows into venture capital (VC) continue to grow, as does Guernsey’s reputation as being a leading fund domicile.

Simon Gordon, Senior Director – Fund & Corporate Services, looks at some of the dynamics shaping the VC industry today, and why Guernsey is so well-positioned to support the asset class.

An asset class on the road to recovery

Tough macro conditions made for a difficult VC fundraising environment in 2024, but green shoots are slowly beginning to emerge for the asset class.

Data shows the VC industry attracted $104.7 billion in 2024, down from $128 billion in 2023, mirroring trends seen in other private market strategies, as higher borrowing costs, inflation and political uncertainty all took their toll on exits and LP distributions¹.

Although 2025 is priming to be equally, if not more, volatile than previous years, Preqin is sufficiently confident to predict that assets under management (AuM) controlled by VC funds will grow from $1.85 trillion to $3.59 trillion by 2029, with early-stage VC firms expected to see the strongest annualised growth².

The abundance of investment opportunities, particularly in the emerging technology sector, is a major factor behind why VC has been so resilient lately.

In terms of investments, we are seeing a lot of impact investing happening with a big focus on sustainable energy companies and green technology. Similarly, a lot of VCs are ramping up their allocations to Artificial Intelligence (AI) start-up companies, health-tech, namely businesses specialising in advanced diagnostics and hyper-personalised medicine, and fin-techs, principally companies trying to facilitate greater financial inclusion amongst unbanked populations or digital payment providers.

A number of VC managers are zeroing in on discounted UK and European start-ups, amid concerns that US companies are overvalued. The compelling VC dealmaking environment is prompting other types of alternative asset managers, i.e. large and mid-sized private equity, private credit and hedge funds, to branch out into the asset class, as they look to diversify their return and capital sources.

After a tumultuous few years, the VC market looks like it is now firmly in recovery mode.

Guernsey proves its mettle

Guernsey is uniquely placed to capitalise on the VC renaissance.

Together with Jersey, Guernsey has a long and seasoned track record of supporting VC funds, with Proskauer noting that 39% of European VC funds are domiciled in the Channel Islands³.

Guernsey resonates with VC managers, particularly SMEs, as it has a pragmatic, approachable regulatory regime and is often seen as being a more cost-effective jurisdiction, at least when benchmarked against some of the onshore European fund hubs.

In contrast to the UK’s Financial Conduct Authority (FCA) or Luxembourg’s CSSF, fund approvals by the Guernsey Financial Services Commission (GFSC) take between six to eight weeks, giving managers a much faster speed to market. The fund structures available to VC managers in Guernsey are also considered to be more flexible and cost efficient than some of the European onshore options.

Take Guernsey’s Private Investment Fund (PIF) model, for instance, which is designed to fast track early stage VC managers to market.

The PIF has a number of strategic benefits, including one day regulatory approvals, no requirement to appoint a Guernsey manager, no minimum subscription amounts, and no constraints on marketing (although the number of investors in the fund is capped at 50)⁴.

Guernsey is popular with VC managers for other reasons too. With the growing focus on sustainability, Guernsey has also adopted a Green Funds Regime, which enables VC managers to demonstrate their green credentials to clients.

Although there has been some pushback on Environment, Social, Governance (ESG), it is a metric which many investors, particularly in Europe, still take seriously.

Owing to its robust regulatory regime, best-in-class fund structures and low set-up costs, Guernsey is in an excellent position to win greater VC fund domiciliation market share moving forward.

How JTC can help

To thrive, however, VC managers will need to work with service providers, who have extensive subject matter expertise.

JTC offers a full suite of services in Guernsey, including a dedicated Management Company (ManCo), fund directors and administration services. We also have excellent relationships with the LP community, so we can help facilitate LP-GP connections.

In Guernsey, we have an incubator fund platform, which is designed to reduce costs and improve speed to market for first-time or early stage VC fund managers. We also provide FCA Appointed Representative umbrella services for any proposed UK based investment advisor to the Guernsey Manager. This depth of offering will be crucial in helping VC firms get off the ground.

For more information visit our dedicated location page or contact:

Simon Gordon: Senior Director – Fund & Corporate Services
[email protected]

[1] Venture Capital Journal – January 13, 2025 – VC fundraising hits six year low

[2] Asia Asset Management – September 30, 2024 – Preqin industry forecast predicts private equity growth despite declining performance and continuing challenges

[3] Proskauer – March 26, 2024 – Proskauer releases European Venture Capital Fundraising Market Report

[4] Carey Olsen  – September 3, 2024 – Guernsey: The Choice for Venture Capital Funds