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 and may well become the first £1 billion VCT. It has shown a talent for spotting rising stars and achieving some high-profile exits, including sales to the likes of Amazon, Google and Microsoft, although past performance is not a guide to the future: early-stage investing is inherently high risk.

How does Octopus do it?

It could be considered both a science and an art. Octopus Ventures, the VCT’s investment manager, engages with thousands of businesses each year. 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 April 2019, for instance, 15 new companies received £43 million (a further £76 million was invested into 42 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.

Octopus Titan VCT – Tails.com

Some high-profile exits

Octopus Titan VCT has realised a number of high-profile exits over the years, which have helped the VCT pay 74p per share in cumulative dividends since launch (figures as at Apr 2019). Past performance is not a guide to the future and dividends are not guaranteed. Some of the portfolio companies have failed, as is to be expected.

One of the most recent succesful 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 75 fast-growing businesses, many maturing and with the potential to achieve significant exits – but there are no guarantees, capital is at risk.

Performance

Source: Octopus Investments. Past performance is not a guide to the future. Dividends are not guaranteed. Chart shows Net Asset Value and cumulative dividends paid to 31 October each year (excluding 2019, which is to April), pence per share.

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, plus examples of investments that did and didn’t work out) 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.

Octopus Titan VCT – apply online

3.5% initial saving and 0.25% annual rebate for three years when you apply through Wealth Club – a better deal than going direct

Read more and apply online