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

In June 2021, the UK crossed a new milestone. 

It is now home to 100 tech unicorns – private tech companies valued above $1 billion – only the third country to achieve this, after the US and China. 

The trend appears to be accelerating. The number of unicorns has more than doubled since 2017. So far in 2021, 13 new UK tech companies have achieved unicorn status, compared to seven in the whole of 2020. 

Interestingly, out of the UK’s 100 unicorns, seven 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. 

Co-founded by Stephen Mendel and Guy Farley in 2012, Bought by Many began life as an insurance broker. At the start, it grouped people with similar insurance needs and negotiated better terms with insurance companies for them: better prices and a more appropriate or tailored cover.  

In 2017, after listening to the needs of its customers, Bought By Many launched its own disruptive brand of pet insurance, which proceeded to win 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.

Octopus Ventures first invested into the business in October 2016, and to date has invested £10.0 million. The holding is currently valued at £84.6 million as at 31 December 2020. 

Bought By Many 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. 

Past performance is not a guide to the future. 

Cazoo is the brainchild of Alex Chesterman, the co-founder of Zoopla. 

The idea is to make the experience of buying a used car quick and hassle-free, much the same as buying any other goods online. Customers can place an order one day and have their car on their driveway 72 hours later. 

After receiving a call in November 2018 from Alex about his latest venture, Cazoo, it took the Octopus Ventures team just 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). Post-launch, Cazoo raised an additional £285 million and 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 intends to list in New York via a $7 billion merger with Ajax I, a special-purpose acquisition company – note, this transaction has not yet completed. 

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. Users can open their own Depop shop and sell items via their phone by taking a photo or video. Think of it 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 magazine could buy items from the young creatives featured in the magazine. Today, Depop has grown to over 24 million users globally. More than 90% of its users are below the age of 26, and Depop is now 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. As at 31 December 2020, Octopus Titan’s stake in Depop was valued at £57.9 million. 

The growth of Depop eventually drew the gaze of Etsy, the $23 billion Nasdaq-listed online marketplace. Etsy acquired Depop in June 2021 for $1.625 billion.

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. One of the very first subscription-based meal-kit providers, Gousto is now the UK market leader in recipe box delivery. 

A food industry disruptor, Gousto employs machine learning to optimise production efficiency and anticipate individual customer preferences – allowing it to outpace its rivals. The company prides itself on zero food waste and reduces the use of plastics and other non-renewable materials in its packaging.

The disruption caused by COVID-19 has 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 business is now profitable with EDITDA of £18.2 million. The growth has continued into 2021, with 25 million meals sold in the first three months of the year, equivalent to three meals a second. 

In late 2020, Gousto achieved a valuation in excess of $1 billion, by raising a further £25 million from new and existing investors, including fitness guru Joe Wicks. 

Past performance is not a guide to the future. 

Dubbed the “Intel of AI”, Bristol-based unicorn Graphcore has 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 a factor of 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, which backed the business within its Early-Stage EIS fund.

In 2018, the business began shipping its first product to early access customers and achieved unicorn status after being valued at $1.7 billion following the completion of a $200 million funding round led by existing investor Atomico alongside a host of existing and new investors, including BMW and Microsoft Ventures.

In 2019, Graphcore announced a close partnership with Microsoft which will see its IPU become available to users of Microsoft’s Azure platform. Graphcore has also partnered with Dell to offer its server to datacentres.  

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

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. This data is then sold under licence to businesses such as insurance companies, local authorities and breakdown services. Clients include General Motors, Hyundai, and Daimler AG.

In addition, the company believes it can help reduce congestion and pollution as well as forecasting traffic and incident hotspots. 

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 Virtuosso Acquisition Corporation, a Special Purpose Acquisition Company (SPAC). The transaction implies an enterprise value of $1.1 billion and the transaction is expected to complete in late 2021. Past performance is not a guide to the future.

Past performance is not a guide to the future. 

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 website Zillow, a property search and information platform.

When the business first launched in 2008, it faced a series of challenges. The UK property market was reeling from the impact of the global financial crisis, and the economic outlook was very poor. 

Nonetheless, having backed Alex and Simon within their previous venture LoveFilm, Octopus invested in the business in 2009 with funds from the Octopus Titan VCT and Octopus Eureka EIS service. 

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. In May 2018, US private equity firm Silver Lake acquired Zoopla for $3 billion and parent group ZPG delisted from the London Stock Exchange.

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