Molten Ventures VCT

Molten Ventures VCT invests in early-stage digital technology businesses, usually alongside Molten Ventures plc.

The VCT favours businesses in the consumer technology, enterprise technology, deep tech & hardware, and digital health & wellness sectors. 

The VCT’s largest holding, Thought Machine, is one of Britain’s most valuable fintechs, most recently achieving a $2.7 billion valuation in 2022 – past performance is not a guide to the future. 

The VCT has a portfolio of 37 active companies and net assets of £131 million, with 68% in investments and 32% in cash and cash equivalents (August 2024).

Over the five years to 30 June 2024, the VCT has delivered a NAV total return (including dividends) of 8.2% – past performance is not a guide to the future.

• Seeking to raise up to £6.7 million  
• Target dividend of 5% of NAV – variable and not guaranteed
• Invest in the 2024/25 tax year and 2025/26
• Minimum investment £6,000 – you can apply online
• Next deadline: 31 October 2024 for 1.25% early bird discount

The manager

The VCT launched in 1998 and has been managed by Molten Ventures (formerly Draper Esprit plc) since 2017.

Founded in 2006, Molten Ventures is a listed company with a market capitalisation of around £600 million (October 2024) and one of the most established venture capital firms in Europe. It has a reputation for backing some of Europe’s most innovative growth companies, including technology unicorns Wise and Revolut. It has also backed 80 seed and early-stage venture funds, giving it exposure to over 2,300 companies from which it can source new investments. 

The VCT is managed by the same team that oversees the plc’s balance sheet investments. It’s well resourced, consisting of six executives and four venture partners who can draw on a wider team of over 30 investment professionals and venture partners. 

Molten Ventures also manages an EIS fund and it is expected that the EIS fund, VCT and plc will co-invest in most qualifying deals.

Investment strategy

The size and reputation of Molten Ventures plays a key role in the investment strategy, potentially allowing the VCT to punch above its weight and attract deals normally out of reach for a small VCT. The VCT focuses on four sectors in which Molten Ventures has considerable experience and a strong track record.

1. Consumer technology

This includes companies the manager believes have exceptional growth opportunities in international markets underpinned by new consumer-facing products, innovative business models and proven execution capabilities. Commission-free share dealing service Freetrade and IPO platform PrimaryBid are two examples. Both were backed by Molten Ventures plc, and are held within the VCT.

2. Enterprise technology

This includes companies developing software infrastructure, applications and services that could improve productivity and reduce costs for enterprises. Form3, a payments-as-a-service platform, and Thought Machine Group, a core banking platform are examples. Both were backed by Molten Ventures plc and are held within the VCT.

3. Hardware and deeptech

This includes companies developing differentiated technologies that underpin advances in computing, consumer electronics and other industries. Paragraf, which makes electronic devices out of graphene, and Riverlane, which is developing an operating system for use in quantum computers, are examples. Both were backed by Molten Ventures and are held within the VCT.

4. Digital health and wellness

This includes companies using digital and other technologies to create new products and services for the health and wellness markets. An example is Endomag (see below), which has developed technologies to improve breast cancer care; it has been backed by Molten Ventures and is held within the VCT portfolio. 

In addition to supporting deal flow and co-investments, the association with Molten Ventures plc provides potential exit routes and follow-on funding, particularly if a company becomes too large to continue to qualify for VCT investment.

Current portfolio overview

The Molten Ventures VCT has net assets of £131 million, with the top 10 holdings accounting for 41.7% of net assets (August 2024), as a result, the portfolio is concentrated.

Currently, 57% of net assets are invested in early-stage technology deals, the remainder is split between legacy investments (11%) and cash (32%). Legacy investments are those made prior to the manager’s acquisition by Molten Ventures plc, with the vast majority invested in two companies (Pulsar Group plc and Fords Packaging).

In its last full financial year, covering the 12 months to March 2024, the VCT invested £16.4 million across five new and four follow-on opportunities.

Asset allocation (%)

Sector breakdown (%) – Molten Ventures technology portfolio

Examples of portfolio companies

Thought Machine – largest investment

Thought Machine is one of the UK’s leading fintech companies. It was founded in 2014 by former Google engineer Paul Taylor, along with a senior team of ex-Google employees, to try to “fix the foundations of banking”. 

They saw banks tend to run on outdated technology, which is expensive to maintain and doesn’t allow for fast innovation. To address this, Thought Machine has built a core banking engine, Vault, which uses cloud-native technologies – the same technologies that underpin Google, Netflix, and Spotify. 

Thought Machine’s technology is cheaper to run and scale up than legacy systems, could give better insight into customer data and makes it easier to launch new products quickly. Customers include established institutions like Standard Chartered, Lloyds Banking Group, and Sweden’s SEB, as well as challenger banks like the UK banking startup Atom. 

The VCT invested £2.4 million in 2020 alongside Molten Ventures plc, which invested £16 million and led the $83 million Series B funding round to fund a major expansion drive in the US and Asia. The most recent funding round (2022) values the company at $2.7 billion. The VCT’s holding is valued at 4x cost and accounts for 7.4% of NAV (March 2024). Past performance is not a guide to the future.

Anima Group – recent investment 

Anima Group, founded in 2021 is an integrated care platform that combines online consultations with productivity tools. It brings everything a care team needs in one place, helping streamline workflows and improve patient outcomes. 

Anima launched with first paying clinics in September 2022, and is now deployed in over 150 NHS clinics providing care to over 1.3 million. 

Anima automatically generates patient communications, clinical notes, admin requests, and paperwork. Its productivity tools can halve the time practices spend on coding, processing and filing documents. Meanwhile, its online consultation platform can save practitioners time and help them deliver better patient outcomes. The platform gathers a comprehensive history of each patient using questionnaires linked to clinical guidelines. The online dashboard helps handle and prioritise patient requests by risk score and assign them to the right team members. 

The VCT invested £2.65 million as part of an oversubscribed $12 million Series A funding round with participation from existing investors Y Combinator, Hummingbird Ventures and Amino Collective. The company aims to use the capital to accelerate deployment to tens of millions of patients and healthcare professionals worldwide.

Exit track record

Since its last financial year end (March 2024), the VCT has exited its position in Endomag, previously the VCT’s second largest holding (see below). Over the life of the VCT it has realised exits worth £39 million.

Endomagnetics Ltd (Endomag) – recent exit

Endomag was founded in 2007 building on research from University College London and the University of Houston. 

The company manufactures medical devices for the treatment of breast cancer, focused on cancer localisation and lymph node identification. Its products are now routinely used by over 1,350 hospitals in more than 45 countries – helping over 500,000 women access more precise and less invasive breast cancer treatment. 

In July 2024, the VCT sold its holding in Endomag to NASDAQ-listed Hologic Inc. The first VCT investment was made in 2018, with a follow-on investment in 2020. The sale returned £8.3 million with a further £0.8 million subject to meeting targets, equivalent to a return of 3.9x investment cost. Past performance is not a guide to future returns.

Cervest – example of failure

Cervest was founded in 2016 to develop a climate intelligence platform. Its EarthScan product allowed companies, governments and charities to assess climate-related risks for individual assets, to help them make climate change resilient investment decisions.

The company won backing from Molten as well as a number of other large investors, and landed work for consulting group Accenture and DIY chain Wickes among others. It was also named among the top 10 UK companies at the forefront of AI by the Department for Science, Innovation and Technology. However, in early 2023 an attempt to raise further funding failed and the company was forced into administration.

The VCT invested £1.3 million in 2021, since written down to nil.

Performance and dividends

Over the five years to 30 June 2024, the VCT has generated a NAV total return (including dividends reinvested) of 8.2%. The VCT has paid out 14.1p in dividends, equivalent to 24.9% of the starting net asset value. Dividends are variable and not guaranteed. 

Note, we show VCT returns over a five-year period as a minimum, where possible. Where a VCT has followed the same investment strategy for longer, we also show returns over 10 years.

NAV and cumulative dividends per share over five years (p)

Dividends paid per calendar year

Dividend Reinvestment Scheme

The VCT operates a dividend investment scheme that allows shareholders to reinvest future cash dividend payments in new shares if desired. As these are new shares they should be eligible for tax relief (you will need to claim this on your tax return or directly with HMRC) and the shares will count towards the VCT annual subscription limit. 

Share buyback policy

The boards intend to buy back shares at up to a 5% discount to the prevailing net asset value. This is not guaranteed – please see the offer documents for details. 

Discount history

VCT shares are traded on the London Stock Exchange. Similar to investment trusts, the share price can fluctuate and can be different from the VCT’s net asset value (NAV), i.e. the value of the VCT’s underlying investments. The difference between the share price of a VCT, and its net asset value per share, is called a discount.

Based on data from Morningstar, the discount to NAV as at 30 June 2024 was -6.8%. Over the previous five years, the average discount to NAV was -6.7%.

The discount history is based on the closing share price of the VCT at the end of each month, divided by the latest net asset value at the time. Past performance is not a guide to the future. Investors looking to sell their VCT shares may get a better price using the VCTs’ share buyback facilities, although this is not guaranteed.

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.

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.

Annual rebate when you invest through Wealth Club

There is no annual rebate for this offer. 

Deadlines 

• Deadline for 1.25% early bird discount – 31 October 2024
• Deadline for 1.00% early bird discount – 30 November 2024
• Deadline for 0.75% early bird discount – 31 December 2024
• Deadline for 0.50% early bird discount – 31 January 2025
• Deadline for 0.25% early bird discount – 28 February 2025
• Deadline for 2024/25 allotment – 3 April 2025 (5pm)
• Deadline for 2025/26 allotment – 28 June 2025

Our view

Molten Ventures has in the past backed some of the most successful UK tech startups, including Wise and Revolut, and is making its mark on the VCT. 

Over half of the trust’s net assets are now in early-stage technology investments, including some of the UK's fastest-growing companies, such as Thought Machine, a leading European fintech recently valued at $2.7 billion. The early-stage technology investments are also beginning to bear fruit as demonstrated by the recent sale of Endomagnetics for £8.3 million. The legacy portfolio has continued to drop and now stands at just over 11%. Past performance is not a guide to the future. 

As the VCT continues to build out its portfolio it should benefit from Molten Ventures’ reputation within the industry, helping it access companies normally out of reach for a smaller VCT. Furthermore, the similarities between the VCT and EIS fund should facilitate co-investment opportunities, with later-stage support offered by the Molten Ventures plc balance sheet.

The offer may appeal to long-term investors who are keen to gain exposure to companies backed by one of Europe’s leading venture capital managers within a tax efficient structure – tax rules can change and benefits depend on circumstances.

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.