Review: Octopus Titan VCT
Who hasn’t heard of Zoopla Property Group, the £2.2 billion company behind the property website? Octopus Titan VCT, then a minnow in the venture capital world, invested in 2009, two years after Zoopla’s launch.
Ten years on, Octopus Titan VCT has become the largest VCT. It has shown a talent for spotting rising stars and achieving high-profile exits, including sales to the likes of Amazon, Google and Microsoft, although past performance is not a guide to the future.
How does Octopus do it?
It is both a science and an art. Octopus Ventures, the VCT’s investment manager, engages with around 5,000 businesses a year, seeing 60-70% of what it believes to be the top tier of deals. Due to its size, market position and reputation amongst entrepreneurs, the management team believes it is well positioned to pick the best companies.
A stringent selection process follows. In the 12 months to October 2018 for instance, 20 new companies received £61 million (a further £61.7 million was invested into 25 follow-on deals).
Octopus looks for “unusually talented” entrepreneurs, with whom to build a long-term and mutually profitable relationship.
An example? In 2003 the investment team that would become Octopus Ventures helped three entrepreneurs – William Reeve, Graham Bosher and Alex Chesterman – grow their merged online DVD company, which later became LoveFilm (acquired by Amazon for £200 million in 2011). That marked the start of a relationship that has seen Octopus back the same three entrepreneurs through five subsequent ventures. Mr Reeve was on the early board of Secret Escapes. Mr Bosher was behind Graze.com and Tails.com. Mr Chesterman went on to start Zoopla (later Zoopla Property Group) and now Cazoo, to bring the used car market into the digital era. Secret Escapes and Graze.com are still part of the Octopus Titan VCT portfolio; Cazoo is one of its newest investments.
A track record of success to date
Octopus Titan VCT has realised a number of high-profile exits over the years, which have helped the VCT pay 71p per share in cumulative dividends since launch (31 Aug 2018). Past performance is not a guide to the future and dividends are not guaranteed.
One of the most recent exits is Tails.com, a subscription service offering personalised dog food by post. The VCT first invested at launch in 2013. In 2018 Nestlé Purina PetCare acquired a majority stake and Octopus Titan VCT realised its investment at a significant multiple.
The portfolio today includes over 70 fast-growing businesses, many maturing and with the potential to achieve significant exits – but there are no guarantees, capital is at risk.
Risks – important
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.
VCTs are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks.
Tax rules can change and benefits depend on circumstances.
VCTs can now only invest new money in growth capital deals. Management buyouts / replacement capital deals and investments in mature companies are no longer permitted. This results in considerably higher risks.
What to consider next
Please visit the offer page to download the provider documents, read more (including risks and charges) and apply online.
Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.
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