Octopus Investments, part of Octopus Group and the UK’s largest VCT manager, has announced the launch of a new £25 million fundraise for its Apollo VCT.
Apollo VCT currently has £141m assets under management and invests predominantly in commercialised B2B technology businesses with a growing customer base, repeating revenues and the potential for significant expansion. This latest fundraise, therefore, provides an opportunity for Apollo to capitalise on the significantly increased technology adoption among businesses since the appearance of Covid-19.
Apollo VCT is managed by Richard Court, Head of Development Capital at Octopus Investments. Court has had a 17-year career, including 14 years in mid-market and SME lending and investing.
As Fund Manager for Apollo VCT at Octopus Investments, Court said: “The long-term investment outlook for technology was already extremely positive, but over the past 6 months we’ve seen a significant acceleration in the adoption of tech by businesses as they have adapted to new ways of working. I firmly believe this is a permanent shift and we’ve seen a strong pipeline of businesses well positioned to take advantage of this.
“For Apollo, we typically look for proven companies at a later stage in their development, but where there are also significant opportunities for expansion which can be unlocked by growth financing. Our investment should allow them to reach greater scale and, in time, profitability. This is often by investing in R&D to improve existing products, enlarging the sales team, or expanding internationally.”
In April 2018 Apollo VCT invested in Natterbox, which offers cloud telephony services to corporate customers. The funding has allowed Natterbox to invest in its sales and marketing function and to expand successfully into the US market, resulting in revenues almost trebling in Apollo’s period of investment so far.
Apollo VCT also exited its investment in City Pantry in July 2019, after it was acquired by FTSE 100 food delivery giant, Just Eat Plc. Apollo’s funding allowed City Pantry to more than double the number of customers it served and significantly increase revenues. The exit achieved an annualised return in excess of 40%, which was a record for the fund.
Paul Latham, Managing Director at Octopus Investments, commented: “Apollo presents a great opportunity for those investors who prefer to invest in slightly later stage companies that are already generating significant revenues. Many people are also keen to play their part in supporting the UK’s economic recovery, and VCTs can be a great way to do that. Smaller companies tend to be more adaptable, which means they can take advantage of new opportunities as they arise, creating new jobs in the process. VCTs act as a vital source of growth capital to make this possible.”