Cyber & Venture Capital Trust (VCT)

Why is Cyber Security Is Critical for VCT Trusts

When you invest in a Venture Capital Trust (VCT), you’re not buying into a single company—you’re acquiring a stake in a portfolio of businesses. This diversification is a key advantage, but it also introduces a unique challenge: cyber security risk is multiplied across every company in the trust.

The Shared Cyber Risk Across the Portfolio

Unlike more traditional investments where exposure is limited to one entity, VCT shareholders are indirectly connected to dozens of early-stage or growth businesses. Each company has its own systems, processes, and vulnerabilities. A single cyber incident in one portfolio company can:

• Impact valuations across the trust.

• Trigger reputational damage for the entire VCT.

• Reduce investor confidence, affecting future fundraising.

Why Cyber Posture Matters

The overall cyber posture of the trust—how well it enforces security standards across its portfolio—is vital. Weakness in one company can cascade into operational disruption, regulatory penalties, financial loss and prevent growth. For VCT managers, this means cyber security isn’t optional; it’s a strategic investment decision

Key Considerations for VCTs

• Portfolio-wide standards: Implement baseline cyber security requirements for all investee companies.

• Continuous monitoring: Regular audits and threat assessments across the portfolio. Think continuous monitoring!

• Incident response planning: A coordinated approach to mitigate and recover from breaches quickly for the trust.

• Investor transparency: Communicate cyber risk management strategies to build trust and provide assurance to investors that your trust is the one to invest in.

The TPCS Takeaway

Cyber security isn’t just a technical checkbox—it’s a portfolio-wide risk factor. For VCTs, every company represents a potential entry point for attackers, and one breach can ripple across valuations and investor confidence. The truth? A strong cyber posture is as critical as financial performance.

Action for investors: Ask your VCT manager how they assess and enforce cyber security standards across the portfolio. If it’s not part of your investment conversation, it should be.