Review: Triple Point 2011 VCT

For the past 14 years Triple Point has been successfully managing VCTs in a range of sectors. Indeed it is one of the most experienced managers of limited life VCTs. 

The current offer, the Triple Point Venture Fund, a new generalist share class in the existing Triple Point VCT 2011, capitalises on the team’s experience, focusing on growth opportunities. 

A new and distinctive strategy

The Venture Fund will invest in early-stage businesses the manager believes have strong, long-term growth potential. 

This is not dissimilar to what other VCTs are aiming to achieve. What is different is the way Triple Point plans to go about it. 

The management team has researched why early-stage businesses fail. The main reasons included the wrong business model, the product not being a hit and the lack of a market need. 

The fund tries to address all three by investing in companies that have received validation from the market, i.e. they already have customers. This means the companies, albeit young, should be at least cash generative, if not profitable.

Triple Point VCT 2011 – QudiniHow could this work in practice?

Triple Point has forged partnerships with innovation specialists, entrepreneurs, growth consultants, and venture capitalists to form the ‘Venture Network’. 

The partners in the network have established relationships with a number of large corporates, from John Lewis, to BMW and Deloitte. They work with those corporates to identify and articulate their specific challenges. The objective is to find – and ultimately invest in – start-ups that can provide a relevant solution. 

Triple Point calls this a ‘challenge-led’ approach. In other words, the investment selection process starts from a large corporate with a specific need, rather than from a start-up with an unproven idea. 

An example of challenge/solution is offered by John Lewis and app developer Qudini. The challenge was managing John Lewis’s in-store customer journeys, e.g. queues and waiting times. The solution deemed best was a digital queuing system developed by Qudini. John Lewis staff takes names and phone numbers of customers who need assistance on the Qudini app. The app sends automatic SMS updates on waiting times and alerts customers when it’s their turn, alongside other features. 

After a successful eight-week trial, John Lewis decided to start using Qudini across its stores and signed a significant contract. Before the John Lewis contract, Qudini had a valuation of £4.5 million. A subsequent funding round valued it at £14.5 million.

Please note: this example illustrates the types of future investments the Venture Fund aims to make. The success of this company has no bearing on the potential performance of the fund as the Venture Fund did not invest in Qudini. 

To further strengthen the investment selection process, in addition to the Venture Network, Triple Point has also appointed an Advisory Committee of successful entrepreneurs to give guidance to the in-house Venture team. 

The potential reward for investors

Triple Point aims to invest in companies that will be able to deliver significant growth.

However, the transition from start-up to success doesn’t happen overnight, if at all. To mitigate that, the fund aims to diversify across 20+ investments, subject to a successful fundraise. 

Triple Point plans to pay regular dividends from 2020. It is targeting a dividend of 3p per share in the summer of 2020 and 2021 enabled by the current distributable reserves of the VCT. After that, Triple Point aims to increase the target dividend to 5p per share.

Please remember, dividends and their timing are not guaranteed. 

Performance

As the Triple Point VCT 2011 is an existing VCT, it has a dividend history and performance track record. However, they both relate to previous share classes, which had a different structure and investment mandate, so we do not consider them relevant to the current offer.

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 using the link below to download the provider documents and read more, including risks and charges. 

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