Crowdcube, the world’s largest equity crowdfunding platform, and Octopus Investments, the largest provider of Venture Capital Trusts (VCTs) in the UK*, launch a partnership that aims to lower the barriers to entry facing retail investors wishing to invest in VCTs.
VCTs are investment companies, listed on the London Stock Exchange, that allow retail investors to invest in a diversified portfolio of early-stage UK businesses. Since they were introduced by the UK government in 1995, VCTs have helped to create jobs, reward innovation, bolster the UK economy and support retail investors in their financial goals.
Until now, the typical minimum investment into a VCT has been between £3,000 and £5,000, meaning thousands of retail investors are excluded from the asset class. Together, Crowdcube and Octopus have created a solution that lowers, significantly, the minimum level of investment into VCTs to £500.
Under the terms of the partnership, Crowdcube makes Octopus Investment VCTs available for investment via the Crowdcube platform to include their flagship funds, such as Titan VCT and Apollo VCT. Apollo will be the first VCT to become available, with a 2% initial fee upon investment and an ongoing annual fee of 0.4%.
The UK is home to some of the most exciting, high-potential businesses in the world. These businesses have been powering growth and innovation in UK PLC. This partnership provides great access to this exciting pool of companies for a much wider, more diverse group of retail investors.
VCTs allow UK investors to claim up to 30% upfront income tax relief and generate tax-free capital gains and dividends. These attractive tax reliefs are offered to compensate investors for taking the risk associated with investing in smaller companies.
Matt Cooper, Co-CEO at Crowdcube, says: “Over the last ten years, we have transformed the landscape for retail investing by creating more pathways for retail investors to invest in high-performing private companies than ever existed before. We took something that was the preserve of the few and made it accessible to the many.
This partnership is a natural continuation of that effort. Octopus has an excellent track record of delivering competitive returns for its VCT investors and is one of the biggest names in the business. We’re excited that two leading UK financial technology companies can come together to engage with a new generation of UK retail investors for the very first time.”
Ruth Handcock, Board Director, Octopus Investments, says: “Investing in companies at initial public offering (IPO) stage was the tried and tested route for many retail investors to boost their wealth in years gone by, but increasingly, as companies stay private for longer, this source of investment is drying up. Retail investors have been largely locked out of the private company access that many institutional investors have enjoyed. This needs to change and it’s up to the investment industry to break down those barriers.
“Crowdcube has long championed greater access for retail investors to private companies, a philosophy that we too have wholeheartedly supported since Octopus began investing in high-growth, early-stage companies at the turn of the millennium. Our partnership provides an exciting opportunity for investors who might be new to the VCT asset class, but have the appropriate risk appetite, to invest in a diversified range of future technology stars.”
Octopus Titan VCT, the UK’s largest VCT*, invests in tech-enabled businesses with high growth potential and currently has a portfolio of over 115 early-stage companies operating in a diverse range of sectors. Two examples of current portfolio companies include fashion rental platform, HURR, which is limiting the fashion industry’s impact on the planet; and Orbex, which launched the first rocket from UK soil using advanced, low-carbon, high-performance technology.
Octopus Apollo VCT, the UK’s second largest VCT*, invests in a diversified portfolio of more than 40 business-to-business (B2B) software companies with high growth potential. Two examples of current portfolio companies include Sova, which helps companies improve transparency and diversity in their hiring processes; and TRI, a Cambridge-headquartered business whose software helps organisations that conduct clinical trials to manage their risks and improve the operational efficiency of those trials.
Octopus has an impressive track record of providing retail investors with access to some of the UK’s biggest success stories, including Zoopla, Secret Escapes, Graze and Depop, through VCT investments.
Crowdcube has raised over £1.2bn from a community of over 1mn retail investors for 1,300 businesses that include Monzo, Brewdog, Revolut and What3Words.
Octopus and Crowdcube are also united by their B Corp status, demonstrating that both companies make decisions with the interests of all their stakeholders – employees, customers, communities, environment and shareholders – in mind.