The UK’s growing herd of VCT and EIS-backed unicorns

By the end of December 2021, the UK start-up community had bred over 120 tech unicorns – private tech companies valued above $1 billion – more than France and Germany combined. 

The trend appears to be accelerating. The number of unicorns has more than doubled since 2017, with 29 new UK tech companies achieving unicorn status in 2021, compared to seven in 2020. 

Interestingly, ten of the UK’s unicorns have been backed by VCTs and EIS funds. You can read more below. 

Please remember, past performance is not a guide to the future. VCTs and EIS invest in young companies that can and do fail. 

Zoopla was the first company backed by a VCT and EIS to achieve unicorn status. It is now a household name. 

Founded by Alex Chesterman and Simon Kain, the idea behind Zoopla was inspired by the successful US property search and information website Zillow.

The business first launched in 2008, when the UK property market was reeling from the impact of the global financial crisis, and the economic outlook was very poor. Nonetheless, Octopus invested in the business in 2009 having backed Alex and Simon in their previous venture, LoveFilm. 

By 2010, Zoopla had overtaken a number of long-established rivals to become one of the UK’s top three property websites, attracting over 5 million visitors a month. In 2014, Zoopla Property Group floated on the London Stock Exchange with a market capitalisation of $1.56 billion. Octopus fully exited its investment in February 2017, realising an average return of 6x for investors.

Past performance is not a guide to the future. 

Dubbed the “Intel of AI”, Graphcore created a new generation of microchips, designed specifically for machine learning and artificial intelligence. Graphcore’s Intelligence Processor Unit accelerates machine learning model training by up to 100x compared with current systems. 

The business was founded in 2016 by experienced entrepreneurs Simon Knowles and Nigel Toon, who sold their previous semiconductor business, Icera, to NVIDIA for $367 million. In late 2016, Graphcore raised its first round of funding from a host of high-profile venture capital firms, including Amadeus Capital Partners, who backed it within its Early-Stage EIS fund.

The company achieved unicorn status after being valued at $1.7 billion following the completion of a $200 million funding round led by existing investor Atomico and including BMW and Microsoft Ventures. In 2019, it announced a close partnership with Microsoft which will see its IPU become available to users of Microsoft’s Azure platform. Graphcore also partnered with Dell to offer its server to datacentres.

In 2021, the business raised a further $222 million at a $2.8 billion valuation, bringing total funds raised to $710 million. 

Past performance is not a guide to the future. 

Cazoo, the brainchild of Alex Chesterman (co-founder of Zoopla), aims to make the experience of buying a used car quick and hassle-free. Similar to other online goods, customers can place an order and have the car on their driveway 72 hours later. 

After receiving a call in November 2018 from Alex about Cazoo, it took the Octopus Ventures team ten days to close the investment, having backed him during his previous two ventures (Zoopla and LoveFilm). 

Cazoo launched in December 2019. In its first three months of trading it generated revenue of £20 million. By October 2020, it reported revenues of £100 million. The business attracted £80 million of investment pre-launch (£5 million of which was through Octopus Titan VCT) and an additional £285 million post-launch. It became the UK’s fastest ever “unicorn” in June 2020 – just 18 months after the company was founded.

In March 2021, it was announced that Cazoo intended to list in New York via a $7 billion merger with Ajax I, a special-purpose acquisition company. The deal completed in August 2021. In 2022, Cazoo has seen its share price fall following a deterioration in investor sentiment, with the shares now significantly below their listing price. 

Past performance is not a guide to the future. See above for Octopus Titan VCT performance track record.

Gousto’s co-founders Timo Boldt and James Carter presented their young business on BBC’s Dragon’s Den in 2013 – but failed to secure the dragons’ backing. Nine years later and Gousto is now the UK market leader in subscription-based recipe box delivery. 

The company employs machine learning to optimise production efficiency and anticipate individual customer preferences – allowing it to outpace its rivals and reduce food waste. It also focuses on reducing plastics and other non-renewable materials in its packaging.

The Covid-19 pandemic acted as an accelerant for the business; revenues in the year to December 2020 rose to £189 million, up from £82.5 million in 2019. The growth continued into 2021, with 25 million meals sold in the first three months of the year, equivalent to three meals a second, and revenue hitting £315.3 million. 

As at January 2022, the business was valued £1.4 billion (up from £780 million in late 2020) with investment from Barclays, HSBC and Softbank.

Past performance is not a guide to the future. 

Co-founded by Stephen Mendel and Guy Farley in 2012, ManyPets (previously Bought by Many) began life as an insurance broker. It negotiated better terms and more appropriate cover for its clients by grouping those with similar needs together. 

In 2017, after listening to the needs of its customers, ManyPets launched its own disruptive brand of pet insurance, which won a number of awards, including Best Pet Insurance Provider of the Year at the 2020 Insurance Choice Awards. Today, the business insures over half a million pets globally, including in the US, where it launched in 2021.

ManyPets experienced significant growth – it more than doubled gross written premiums annually to £220 million in 2020. In June 2021, Swedish investor EQT led a $350 million funding round which valued the business at $2 billion. 

Octopus Ventures first invested into the business in October 2016, and to date has invested nearly £10.0 million. The holding was valued at £127.0 million as at 31 June 2021. 

Past performance is not a guide to the future. See above for Octopus Titan VCT performance track record.

Depop is the social marketplace where people buy, sell and discover unique fashion online. It acts as a virtual, people-owned fashion show, where sellers and buyers can trade directly. 

Founded by Simon Beckerman in 2011, Depop began life as a social network where readers of PIG (People in Groove) magazine could buy items from the young creatives featured in the magazine. Today, Depop has grown to over 24 million users globally and is the 10th most visited shopping site in the US for “Generation Z” consumers.

In 2020, the value of goods sold on Depop’s marketplace grew to $650 million, generating revenues of $70 million, double that of the prior year. 

Octopus Ventures first invested in the business in January 2018 via Octopus Titan VCT, and participated in a further funding round in 2019, investing £8.8 million in total.

The growth of Depop eventually drew the gaze of Etsy, the Nasdaq-listed online marketplace. Etsy acquired Depop in June 2021 for $1.625 billion, generating an 11.1x return for the Octopus Titan VCT. 

Past performance is not a guide to the future. See above for Octopus Titan VCT performance track record.

Founded in 2010, Matillion is one of the world’s leading cloud data integration platforms. Its software allows customers to extract data from a wide number of sources, load it into cloud data warehouses, and transform it into useful, analytically ready data.

Matillion featured in the Deloitte Fast 50 (2020), with 922% revenue growth over the previous four years. Customers reportedly include Cisco, Siemens, Novartis, Amazon and Accenture.

In 2021, cloud-based data storage and analytics giant Snowflake named Matillion data integration partner of the year and invested in the business in 2022. Matillion also entered into a solution partnership with global software pioneer, Software AG.

The British Smaller Companies VCTs first backed the business in November 2016, investing £3.5 million. It has since completed several investment rounds with high-profile US technology investors including Battery Ventures, Sapphire Ventures and Scale Venture Partners. Matillion achieved unicorn status in September 2021, after completing its Series E funding round, raising $150 million at a $1.5 billion valuation. In 2022, Matillion received investment from Snowflake, although terms of the deal have not been disclosed. 

Past performance is not a guide to the future. 

Wejo is a connected vehicle data start-up. Every day, it collects and analyses data from 66 million journeys across a network of 10.7 million live vehicles, which it then sells under licence to insurance companies, local authorities and breakdown services. It also believes it can help reduce congestion and pollution, forecast traffic and identify incident hotspots. Clients include General Motors, Hyundai, and Daimler AG.

Seneca Partners first invested £1.3 million in 2016 via its EIS fund and followed on with a further £2.5 million across two further funding rounds in 2017 and 2018. 

Wejo has also received significant funding from backers including Hella, DIP Capital, and the British Government. In 2019, General Motors invested €91 million for a 35% stake, valuing the company at €244 million. 

In May 2021, Wejo announced plans to list publicly in the US via a reverse merger with Virtuoso Acquisition Corporation, a Special Purpose Acquisition Company (SPAC). The transaction implied an enterprise value of $1.1 billion and completed in November 2021. Like Cazoo, Wejo has struggled as a public company, with the shares falling significantly since listing.

Past performance is not a guide to the future. 

Founded over 25 years ago, Interactive Investor (ii) is today the UK’s second-largest online investment platform. It employees more than 600 staff, serving 400,000 customers with £59 billion of assets.

MMC Ventures initially invested in the business in 2010, and ii received further funding from the Unicorn AIM VCT in 2013. Since then it has built its position through a series of acquisitions, adding £14 billion of assets with the acquisition of TD, £9 billion from Alliance Trust Savings, £4 billion from The Share Centre and £5 billion from EQi.

2020 proved a major catalyst for the business: with revenues rising by 63% and its active customer numbers rise by 154%. The trend continued into the first half of 2021, with revenues up 12%. 

In December 2021 asset management giant abrdn announced plans to acquire the company for £1.49 billion. The deal completed in May 2022.

Past performance is not a guide to the future. See above for MMC Ventures performance track record.

The introduction of IT systems into the banking and financial services sector played a pivotal role in the 1980s financial Big Bang. Whilst still at the core of many established companies, these systems are now starting to creak, creating substantial risks and limiting fast-paced innovation. 

Thought Machine, founded by Paul Taylor in 2014, seeks to solve these problems by applying Google style cloud computing technology to the financial sector. Paul, who previously worked as a technical lead at Google, previously founded two successful software business which were acquired by Nuance and Google.

Thought Machine’s first commercial partnership with Lloyds Banking Group in 2018 included a $25 million investment. Since then it has attracted partnerships or investments from banks around the world, including Standard Chartered, SEB, JP Morgan, ING and Morgan Stanley.

In May 2022, Thought Machine announced it had raised $160 million series D funding, led by Singaporean investor Temasek. The round valued the business at $2.7 billion, a 100% increase on the companies last funding round.

Past performance is not a guide to the future.