Fuel Ventures VCT

Launch offer: 0% initial charge and 0% performance fee

To mark the first fundraise, Fuel Ventures is offering Wealth Club investors the opportunity to invest paying 0% initial charge. In addition, no performance fee (normally 20%) will apply for the life of the investment. 

The Fuel Ventures VCT is a new VCT managed by the same team that runs the popular Fuel Ventures EIS and SEIS funds.

Started in 2013 by successful entrepreneur Mark Pearson, founder of MyVoucherCodes, Fuel Ventures has raised £180 million and invested into 156 EIS and SEIS-qualifying companies. It focuses on early-stage marketplaces, platforms and SaaS businesses, including some of the UK’s most exciting start-ups. To date it has achieved two exits, with an average return of 6.2x cost. 

The VCT will back promising companies from Fuel’s earlier-stage funds, as well as investing alongside those funds in new investments. 

The VCT hopes to pay annual dividends of 4p per share, but dividend payments are unlikely to start before 2027 at the earliest. Dividends are variable and not guaranteed.

  • Seeking to raise up to £10 million with a £40 million overallotment facility 
  • Targets annual dividends of 4p per share from 2027 – variable and not guaranteed 
  • Available for the 2024/25 tax year 
  • Minimum investment £5,000 
  • Offer closes 31 July 2024 (5pm)

Important: The information on this website is for experienced investors. It is not a personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value: you could lose all the money you invest.

The manager

Fuel Ventures was started in 2013 by successful entrepreneur Mark Pearson. He had previously founded online voucher code company, MyVoucherCodes, sold as part of parent company Markco Media for a reported £55 million. Whilst running MyVoucherCodes, Mark made personal investments in nine early-stage technology and software businesses. Fuel Ventures was born as a result of his experience with these businesses. 

Since its inception, Fuel has raised £180 million and invested in 156 EIS and SEIS-qualifying companies – typically early-stage marketplaces, platforms and SaaS businesses – across its three funds: the SEIS fund, Follow-on EIS Fund, and the Scale-Up EIS Fund. 

Fuel Ventures has 23 full-time staff. The team includes Founder and Managing Director Mark Pearson, Partners Stan Williams, Shiv Patel, and Oliver Hammond and Investment Associate Katie Mathias. 

Fuel Ventures is the Investment Adviser to the Fund. Sturgeon Ventures is the Investment Manager. 

Investment strategy

The VCT expects to follow the same core investment strategy as the Fuel Ventures EIS and SEIS funds. 

It will typically invest in early-stage, revenue-generating, digital businesses, usually marketplaces, platforms, and SaaS companies. 

Fuel considers them attractive for two reasons. 

Firstly, they should be easily scalable, with low costs per unit sold, and – once a product starts generating revenue – growth is typically limited only by market demand.

Secondly, Mark Pearson and the Fuel team have significant experience in these sectors and can therefore add value and support growth with a hands-on approach from an early stage. This could also help Fuel attract high-quality opportunities. 

The VCT expects to invest in businesses Fuel has previously backed, which it already knows well – this could somewhat mitigate risks. Note, however, this is still a high-risk investment. 

The investment manager can also use its discretion to invest in new companies it believes are attractive, either alongside the other Fuel funds or independently.

Current portfolio overview

This is a new VCT and so does not yet have a portfolio.

Below are examples of previous companies the manager has backed in its EIS funds. These are provided to give a flavour of the kinds of companies the VCT may back and may not feature in the VCT itself. 

Example of portfolio companies from previous EIS funds

Volt – Fuel Ventures Scale-up EISVolt Technologies

Volt Technologies (trading as Volt.io) is building infrastructure to facilitate online real-time payments using open banking: instead of going via a payments network such as Visa or Mastercard, payments are made directly between two bank accounts. Merchants receive instant payments, have lower transaction fees and increased payment security. 

Volt.io believes account-to-account payments will soon become the new normal, whilst card-based payments will see a gradual decline. 

The business was founded by three payment industry veterans (pictured): Tom Greenwood (ex-CEO IFX Payments), Steffen Vollert (led global expansion at payments platform Adyen), and Jordan Lawrence (ex-CEO PCN Capital, a payments recruitment specialist). 

Fuel Ventures initially backed the business in January 2020, investing £1 million at a £3.3 million pre-money valuation. In June 2021, the business raised $23.5 million from EQT, Augmentum, and Fuel Ventures. In June 2023, the business raised a further $60 million at a $350 million valuation. The round was led by Silicon Valley’s IVP, one of the world’s leading venture investors and a backer of fintechs Robinhood, Wise, and Klarna among others. Fuel’s initial £1 million investment is currently valued at £32.8 million. Past performance is not a guide to the future. 

Peckwater-Fuel-Ventures-EIS.jpgPeckwater Brands

Demand for food delivery, which surged during the pandemic, remains strong: a recent report by KPMG found that 38% of 18-24 year olds ordered a takeaway at least two or three times a week in 2022.

Peckwater Brands was set to capitalise on this. It specialises in virtual brands. Peckwater Brands provides restaurants and kitchen operators with everything they need to take and fulfil online orders: branding, platform listings, suppliers, recipes, packaging, staff training, and technology and using its data it helps them select the best cuisine for a particular market. 

Following the acquisition of Eatclever, a virtual delivery brand in Germany, Austria and Switzerland, Peckwater has grown to 600 sites, with operations in 12 countries including the US, United Arab Emirates, and France. 

The Fuel Scale-Up fund first invested £2 million in September 2021 alongside Pembroke VCT in a round that valued the business at £7.37 million. In April 2022, the Follow-on fund invested £3.0 million as part of a £15 million investment round led by SoftBank Investments, which valued the business at £65 million (post money). Past performance is not a guide to the future.

Exit track record

As this is a new VCT there is no track record. However, the VCT plans to invest in the same type of companies as the Fuel Ventures EIS fund and SEIS funds, which have had two exits to date (ContentCal and Capdesk – generating total proceeds of over £29 million with an average return of 6.2x cost ). Past performance is not a guide to the future. 

As is to be expected, there have also been failures. 

Performance and dividends

The VCT is targeting an annual dividend of 4p per share from 2027. As this is a new VCT, there is no performance track record. However, it will be managed by the same team responsible for the Fuel EIS and SEIS funds.

To date Fuel EIS and SEIS funds have raised £180 million and invested in 156 EIS and SEIS-qualifying companies. It has enjoyed some early successes, with exits from ContentCal and Capdesk delivering proceeds of over £29 million with an average return of 6.2x cost. The remaining portfolio is valued at £327.2 million (August 2023), reflecting significant progress among some of the funds’ early investments. 12 businesses have failed (August 2023).

Fuel Venture Scale Up Fund – performance per £100 invested in each tax year

Source: Fuel Ventures, as at 11 August 2023. Past performance is not a guide to future performance. The chart shows realised returns (where share proceeds have been returned to investors as cash) and unrealised returns (where cash has not yet been returned and the value of the investments is based on the manager’s own valuation methodology). There is no ready market for unlisted shares. The figures shown are net of all fees and do not include any income tax relief or loss relief.

Fuel Ventures Follow-On Fund – performance per £100 invested in each tax year

Source: Fuel Ventures, as at 11 August 2023. Past performance is not a guide to future performance. The chart shows realised returns (where share proceeds have been returned to investors as cash) and unrealised returns (where cash has not yet been returned and the value of the investments is based on the manager’s own valuation methodology). The figures shown are net of all fees and do not include any income tax relief or loss relief.

Dividend Reinvestment Scheme

The VCT does not expect to pay a dividend until at least 2027 – not guaranteed. 

Share buybacks

The VCT plans to operate a policy of purchasing their own shares as they become available in the market at a discount of approximately 5% to the latest published NAV. However, there is no guarantee that the company will buy back shares. The discount to NAV could also be greater or less than 5%. 

As with all new VCTs, the board expects only limited demand for share buybacks within the five-year minimum holding period. As a result, the buyback scheme is expected to become operational no sooner than 2027.

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. 

To retain the tax benefits, VCTs should be held for at least five years. If you sell VCT shares and reinvest in new shares of the same VCT (including any mergers) within six months, tax relief can be restricted. Tax rules can change and benefits depend on circumstances.

As this is a new VCT it will take time to build a portfolio of investments, during this time the trust is likely to be more concentrated and no dividend payments are expected until at least 2027. If the raise is smaller than expected, costs may have a larger impact than intended. Equally, the portfolio may initially be less diverse than anticipated.

The offer is conditional upon the minimum subscription (£3 million) being reached – not guaranteed. 

Charges and savings 

A summary of the main charges and savings is shown below. The net initial charge shown includes the Wealth Club saving and any early bird discount. The investment may have additional charges and expenses: please see the provider documents including the Key Information Document for more details, offer price and share allotment calculation methodology.

Please note, capacity – for the offer or any early bird savings – can be reached early, and we may not be notified of this by the VCT in real time.

Full initial charge 5.5%
Early bird discount 3%
Wealth Club initial saving 2.5%
Existing investor discount
Net initial charge through Wealth Club (new investors) 0%
Net initial charge through Wealth Club (existing investors) 0%
Annual management charge 2%
Annual administration charge
Performance fee 0% (normally 20%)
Annual rebate from Wealth Club

More detail on the charges

Annual rebate when you invest through Wealth Club

There is no annual rebate for this offer.

Deadlines

  • Offer closes 31 July 2024 (5pm) 

Our view

While the Fuel Ventures VCT is new, its manager has built a track record of backing successful, fast-growing digital companies in a short space of time. The team’s focus on capital-light businesses in the marketplace, platform, and SaaS sectors means companies can scale quickly and potentially deliver impressive returns – not guaranteed.

The manager’s previous investments are showing promise, with the EIS funds starting to report exits and other portfolio companies, like Volt and Peckwater Brands (both detailed above), attracting funding from globally significant VC firms. The potential to follow-on into existing Fuel Ventures portfolio companies provides a valuable source of deal flow and could be a valuable filter. Fuel Ventures is likely to have known and worked with each business before committing investor capital.  

Investors should note that the VCT does not expect to start paying dividends for some years. The portfolio is also likely to be concentrated in the early years, potentially making it a riskier investment. Nonetheless, this may be worth considering as part of an existing VCT portfolio.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination. 

The details

Type
Generalist
Target dividend
4p per share from 2027
Initial charge
5.5%
Initial saving via Wealth Club
5.5%
Net initial charge
0%
Annual rebate
Funds raised / sought
£8.9 million / £10.0 million
Deadline
31 Jul 2024 (5pm) for final close
Last updated: 19 December 2023

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