Review - Calculus VCT D Share top-up

Calculus Capital has invested in small unquoted companies since 1999, primarily through their EIS funds. The Calculus VCT launched in 2009. This top up is seeking to raise a further £4 million for the D share class. There are three share classes which in 2017 should merge to form one larger portfolio. Calculus intend for the EIS and VCT to invest alongside each other.


  • Growth-focused companies
  • Wide range of sectors covered
  • More mature private businesses sought
  • £5,000 minimum investment
  • Consistent dividends have been a feature of previous share classes

The manager

Calculus Capital was founded by John Glencross and Susan McDonald in 1996; both are still actively involved with the firm today. They made their first EIS investment in 1996 and launched the UK’s first approved EIS fund in 1999 (it raised £1 million). Calculus manages over £120 million, predominantly in the EIS with a smaller amount in the VCT.

Target return and strategy

The VCT aims for a minimum target return of 2.5 times the invested capital and a dividend target of 4.5% of net asset value per annum. Both returns and dividends are variable and not guaranteed. 

Past dividend track record

Calculus VCT dividend track recordSource: Calculus. Please remember past performance is not a guide to the future. 

Calculus’s focus has always been on pre-IPO businesses or, more accurately, mature private companies. The main reason behind this choice, according to Mr Glencross, is the risk/return profile. 

Calculus aims to build a portfolio that is lower risk than other VCTs by targeting companies that share these characteristics:

  • Some mileage on the clock, so even if not profitable, it is clear where profits might come from 
  • Predictable cash flows, recurring revenues and a strong balance sheet 
  • Primary constraint is access to finance 
  • Proven successful products or services 
  • Offer a clear route to exit 
  • Can achieve in the manager’s opinion a target IRR of 20% 

The new VCT rules have reduced the general number of deals available, but this has not affected Calculus, according to Mr Glencross, because of its focus on growth investing. In his view 80% of companies considered in the past would still qualify under new rules. Most of the deals come exclusively to Calculus via corporate advisers or as the management of underlying companies come back for a second or third time.

The existing D share portfolio has three investments currently, but after the merger with the two other share classes in 2017, a further 13 companies should be added. The manager expects a portfolio of 20 once fully invested.  

The VCT focusses on healthcare, applied technology, IT, telecoms, transportation and environmental services. Healthcare is a wide sector, and could encompass the provision of a service to a patient or pharma services, diagnostics or health services for example. Calculus prefers business-to-business companies, although consumer businesses may also be considered. 

An example of a company within the current portfolio is Mexican-themed fast food chain Benito’s Hat. The investment from Calculus will enable the roll out of the chain across London. Another example is Genedrive, which hopes to bring molecular diagnostic testing for tuberculosis to the point of patient care.

The investment team is strong and has grown quickly over the last few years. Each new deal is reviewed by the investment committee three times, covering all aspects such as price and terms. The committee comprises founders Susan McDonald and John Glencross as well as deputy CEO Robert Davis. The role of these three is to scrutinise and review deals rather than seek out new deals themselves, to avoid biases. The fourth member of the committee will be the sponsoring director. Unanimity is required for a deal to proceed. On average, the investment team reviews around 500+ deals a year and completes around 12-15 investments across VCT and EIS portfolios. 

When reviewing a potential deal, they analyse the company’s own forecasts, pull them apart and compare them to their own forecasts. Exit price is considered first, from which they work out the entry price. How a company will perform, under a cautious scenario, is always important. 

Calculus is happy to incentivise management by offering them an increased return above a certain level of performance. 

As well as sitting on the investment committee, Robert Davis takes responsibility for the portfolio post the initial investment; growing value, reducing risk and ultimately exiting the company.

If we have any concern over the team its that it has grown very quickly over the last few years.

Exit strategy

There is no predetermined exit route for a company with a mix of trade sales and flotations the obvious avenue. Encouragingly, Calculus has exited three portfolio companies in Autumn 2016 from its EIS portfolio with two of those sold privately. Calculus has an excellent record of exiting EIS investments, with 27 thus far, as the VCT will co-invest alongside their EIS, these statistics are relevant.


The usual risks with unquoted companies exist with this offer. Until the merger takes place, the portfolio will be concentrated. 

Please remember capital is at risk. VCTs are high risk investments and are not suitable for everyone. Investors should not invest money they are not prepared to lose. 


There is a 5% initial charge, before any Wealth Club saving or early bird bonus. There is an annual fee of 1.75% and the annual charges are capped at 3.4%. There is a performance fee of 20% of the excess returned above 105 pence per share. VAT will be charged where applicable. 


Calculus has delivered excellent returns for EIS investors with many exits, however returns on the VCT haven’t been as good. As the VCT and EIS start to co-invest, the performance of the VCT will hopefully improve. There is a strong team in place who have a clear idea of the types of companies they seek. 

Read more about Calculus VCT

This review is not intended to be advice or a personal recommendation to buy the investment mentioned, nor is it a research recommendation. Wealth Club aim to highlight investments we believe have merit, but investors should form their own view on any proposed investment.