Octopus Investments, part of Octopus Group and the UK’s largest Venture Capital Trust (VCT) fund manager1, has announced the launch of a new £35 million fundraise for its Octopus Apollo VCT (Apollo VCT).
Apollo VCT aims to accelerate the growth of smaller business-to-business (B2B) software companies. The companies, while early-stage and therefore high risk, tend to be established having already brought their product or service to market, with existing recurring revenues and the potential for significant expansion.
Octopus Apollo VCT is managed by a specialist investment team of 13 that sits within Octopus Ventures, one of the largest venture capital teams in Europe2. The team has significant collective investment experience in sourcing investment opportunities, executing deals, and managing portfolios in the B2B software sector.
Apollo targets a dividend yield of 5% per year, as well as offering investors the potential for special dividends and capital growth, although these are not guaranteed. Since its launch in 2006, it has paid total cumulative dividends of 86p per share to investors.
Richard Court, Fund Manager for Apollo VCT said:
“Over the past year, Apollo VCT has demonstrated its ability to maintain robust performance through the current challenging macroeconomic backdrop. This is aided by the fact that the technology companies Apollo invests in sell their products to other businesses, which often means their revenues are contracted and recurring, making them more predictable and less vulnerable even in difficult economic circumstances.
“Looking ahead to next year, with entry valuations having already reset, we should hopefully see a good environment for another strong cohort of investments as well as improving exit opportunities.”
Apollo VCT has an existing portfolio of around 45 companies. Typically, the team considers over 600 investment opportunities a year, and whittles that down to around 10 new investments. Apollo typically invests between £2 million and £10 million into each business. Notable portfolio companies include:
VaultSpeed: a firm whichhelps large and mid-market companies to automate their complex and time-consuming data activities by integrating their datasets into data warehouses. This means businesses are able to analyse, understand and store their data more easily and securely, saving both time and resource.
SOVA: a human resources technology (HRTech) company designed to manage the assessment of candidates for large organisations, helping them improve transparency and diversity. By combining psychometric science and a compelling digital experience, SOVA helps companies more accurately identify top talent and create personalised candidate experiences. SOVA’s platform helps companies rapidly adjust their approach to hiring in a virtual working environment.
Jess Franks, Head of Investment Products, Octopus Investments commented:
“Over the past five years we have seen VCTs become a more mainstream product for advisers, and we don’t expect that trend to change. VCTs remain a great investment for advised clients that are looking for smart tax planning and want access to private market investments, even for those with smaller amounts to invest or who are starting to add this asset class to their portfolio.
“A recent survey we carried out found that 45% of investors are interested in exploring investment opportunities in early-stage companies3, suggesting the opportunity to provide access to growth companies via VCTs would be valued by a large number of clients comfortable with the risks”.
The minimum investment amount for Apollo VCT is £5,000. The new share offer is open until the 1st April 2024 for the 2023/2024 tax year and 15 November 2024 for the 2024/2025 tax year. The offer will close earlier if it becomes fully subscribed.