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The journey of a Venture Capital Trust and the Octopus Future Generations VCT
Venture Capital Trusts (VCTs) were introduced in 1995 to support the UK’s fledgling, entrepreneurial companies with vital capital growth.
In the 30 years since launching, VCTs have delivered more than £12 billion in funding to start-up companies.[1] Today, more than 50 VCTs manage over £6 billion in assets under management (AUM)[1], each with its own investment approach and points of difference.
Take Octopus Future Generations VCT, which launched in 2022. The VCT invests in businesses across three investment themes; building a sustainable planet, empowering people, or revitalising healthcare. Though still young, the VCT offers investors exposure to innovative companies early in their journey.
Remember, VCTs are high-risk investments placing investors capital at risk.
The Venture Capital J-curve and Octopus Future Generations VCT
VCTs invest in early-stage companies which means successful investment performance tends to follow a specific pattern. In investment jargon this is often referred to as the ‘J-curve’, because it looks like a capital J.
The VCT performance follows the shape of the hockey stick as its value initially dips before recovering later in the VCT’s lifespan.
The dip occurs because some early-stage companies will fail early on while others incur high upfront costs. Meanwhile, those companies that survive and prosper tend to grow rapidly once they’ve established their businesses – potentially delivering attractive returns as a result.
Octopus Future Generations VCT is in its early-stage dip. While returns have been negative so far this is to be expected and may present an opportunity for new investors to benefit as the portfolio matures.
Investing now means exposure to companies potentially reaching key milestones, scaling up operations and attracting further rounds of funding – and, ultimately, accelerating their growth to generate outsized returns.
Due to the nature of smaller company investing, the value of a VCT can be volatile, and they may be difficult to sell.
Driving returns by building a better world
Octopus Future Generations VCT invests in companies tackling global challenges – an approach that not only solves some of the biggest problems but is increasingly attractive to investors for hard-nosed financial reasons. These businesses are positioned to become increasingly relevant, creating new industries and potential long-term returns.
For more information on the Octopus Future Generations VCT, visit the webpage here
This advertisement is not a prospectus. Any decision to invest should only be made on the basis of the information contained in the prospectus and KID available at octopusinvestments.com/fgvct.
This communication does not constitute advice on investments, legal matters, taxation or any other matters.
Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London EC1N 2HT. Registered in England and Wales No. 03942880.
[1] Venture Capital Trusts statistics: 2024 – GOV.UK
