Triple Point VCT 2011

Triple Point 2011 VCT launched its Venture Share class, known as the Triple Point Venture Fund, in 2018. To date, the share class has raised £23.1 million.

The VCT makes use of Triple Point’s Venture Network, built over 16 years, to work with and identify promising small innovative companies that are solving problems faced by large corporates. The VCT seeks to invest once some form of market validation has been achieved, typically after the company has secured a contract with an established corporate customer. 

As at the latest financial year end, the Venture Fund has net assets of £14.3 million with £5.3 million held in cash and a portfolio of 19 qualifying companies (February 2021). The latest offer looks to raise up to £10 million, with an overallotment facility of up to £15 million.

Important: The information on this website is for experienced investors. It is not advice nor a research or 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, so you could get back less than you invest.

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Highlights

  • New “Venture” Share Class will invest in growth capital opportunities in a range of sectors
  • Focus on B2B businesses that have secured their first contract with a large corporate.
  • Target dividend of 5p per share (not guaranteed)
  • Annual rebate of 0.10% for three years
  • Available for this tax year (2021/22) and next tax year (2022/23)
  • Minimum investment £3,000 - you can apply online

The manager

Triple Point Investment Management LLP (“Triple Point”) was founded in 2004 and its team of 170 today manages £2.3 billion of private, institutional, and public capital. To date, it has provided over £490 million of funding to 159 VCT/EIS companies.

Triple Point concentrates on four key areas for investment: venture capital; energy and infrastructure; lending, leasing and private debt; and property.

The VCT is managed by the five-strong venture investment team, led by partner Ian McLennan, which has significant experience in venture capital, start-up incubation, private equity and asset finance. The investment team is supported by an advisory committee, whose members are successful entrepreneurs with investment experience in high-growth businesses.

Established for over 16 years, the Triple Point Venture Network is a network of blue-chip corporates, entrepreneur investors, corporate innovation specialists, and venture capitalists. The Venture Network works with innovative small businesses in solving large identified corporate problems. It will act as the initial screen and provide deal flow to the venture investment team.

Watch a video interview with Ian McLennan of Triple Point:

Investment strategy

The VCT was originally set up as a Limited Life VCT and had an Ordinary share class, which was fully exited in January 2018. It had two further share classes, ‘A’ and ‘B’, which invested in separate portfolios of Scottish hydroelectric power companies, combined heat and power plants, and lending to small and medium-sized companies (SMEs).

The Venture Shares are the newest share class within the VCT. Investors in the current offer will only have access to the Venture Fund portfolio. 

The Venture Fund aims to deliver capital growth by investing in innovative companies, at an early stage, when valuations tend to be lower, but after the company has received some form of market validation. 

The investment strategy starts by identifying problems faced by large corporates. The Triple Point Venture Network will find innovative small businesses it believes to be well placed to solve those problems. The corporate will then typically purchase the product/service and potentially enter a contract to buy the product or use the service, thereby providing the small business with market validation and initial revenue. Triple Point believes this overcomes one of the main reasons young companies statistically fail: not enough demand. That said, investing in early-stage companies remains high risk and you should expect some failures. 

Successful opportunities are evaluated by Triple Point’s Investment Team, often in conjunction with the advisory committee and subject to due diligence. This forms the backbone of the Investment Committee's investment recommendation. The VCT board has the final say. 

The VCT intends to make initial investments of between £50,000 and £2 million and may make follow-on investments. It is targeting a portfolio of around 20 companies and will look to take equity stakes of 5–20%.

Covid-19 impact

Following a review of the portfolio in March 2020, the Board revalued the NAV to 93.12p, down from 99.01p (30 November 2019). In August 2020, the NAV was revised to 89.54p, after paying a 3p dividend. More recently, the VCT announced a significant NAV uplift to 108.43 (4 August 2021) after paying an interim dividend of 3p on 31 July 2021

Going forward, Triple Point remains confident about the potential investment opportunities ahead. The investment team intends to remain prudent but anticipates an increase in higher quality deals that could benefit in the coming years as the economy recovers. The VCT has a significant proportion of its assets (c.37%) held in cash so is well capitalised to take advantage of new investment opportunities.

Exit track record

There have been no cash exits from the Venture Shares portfolio to date. However, one company, Adepto, was sold in December 2019. The VCT received shares in Degreed Inc (the acquirer), as consideration for the sale. 

The manager expects exits to take place between 5 to 7 years from investment, although this may be longer if there is the potential to enhance investor returns. Exit options and timeframes are not guaranteed.

Current portfolio overview

The Venture Fund has now invested £8.3 million into 20 investee companies (February 2021). The Venture Fund has total net assets of £14.3 million, £5.3 million is held in cash or cash equivalents (February 2021). 

In the year to February 2021, the VCT invested £4.37 million into eight investee companies.

Sector breakdown

Source: Triple Point, as at 28 February 2021

Examples of portfolio companies

Quit Genius – Octopus Ventures EISDigital Therapeutics Inc (Quit Genius)

As doctors, the three founders of Quit Genius had first-hand experience on the poor success rate of ‘traditional’ addiction treatment models. According to the company, 92% of people with an addiction do not have access to evidence-based addiction treatment. 

Conversely, the Quit Genius digital program has been validated by 8 peer-reviewed studies and focuses on cognitive behavioural therapy (CBT) – a form of therapy that helps individuals identify negative thought patterns and change them. 

Through the company’s treatment programs, individuals receive structured support for alcohol, tobacco and opioid addiction. The platform provides access to online medical consultations, dedicated counsellors, and personalised CBT-based programs specific to each member’s unique combination of triggers. In a controlled trial, Quit Genius participants demonstrated a 52% biochemically verified quit-rate after 28 days, 20% higher than other addiction treatment methods. The success of the Quit Genius program is not going unnoticed. The business grew revenues 10-fold over the previous 12 months (as at July 2021) and is now partnered with 55 employers and health plans covering 2.1 million individuals.

Triple Point initially invested approximately £700,000 into the business in February 2020  as part of a $11 million Series A funding round. In July 2021, Swedish asset manager Kinnevik and British VC firm Atomico co-led a $64 million Series B round alongside Triple Point and other existing investors such as Octopus Ventures and Startup Health.

Credit Kudos – Triple Point Venture FundCredit Kudos

One of the VCT’s latest investments, Credit Kudos is a Credit Reference Agency (CRA) that uses financial data obtained via Open Banking APIs. 

The idea for the company came about after software engineer, Freddy Kelly (co-founder), returned to the UK after working in Silicon Valley. He discovered his time away had severely impacted his credit history, leaving him with limited options. 

Rather than rely on personal assumptions, Credit Kudos allows lenders to analyse verified, up-to-date transaction data. With direct connections to the UK’s largest banks, users can safely and securely share their financial information with lenders, removing the need to upload bank statements and payslips. This not only provides a fairer credit rating for the user but also allows lenders to make quicker decisions and access a previously overlooked client base.

The Venture Fund invested £500,000 as part of £5 million Series A round in March 2020. 

Performance and dividends

The Venture Fund paid its first dividend of 3p per share on 31 July 2020 and a further interim dividend of 3p on 31 July 2021. Following this latest dividend, the VCT now aims to pay a regular dividend of up to 5p per share, per annum, thereafter. Dividends are variable and not guaranteed.

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

Source: Morningstar. Share class launched in 2019. Past performance is no guide to the future. Dividends are variable and not guaranteed. The bar chart shows net asset value and cumulative dividends per share for the period 31/12/2019-30/06/2021.

Dividends paid per calendar year to 30 June 2021

Source: Morningstar. Past performance is not a guide to the future. Dividends are not guaranteed. The graph shows the dividends paid per calendar year to 30 June 2021.

Average dividend yield (% of NAV) history

Calendar year Dividend as % of NAV
2020 3.22%
YTD 0%

Source: Morningstar. Average dividend yields are based on the dividends paid over the period divided by the monthly average NAV of the VCT over the same period. Past performance is no guide to the future.

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.

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.

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.

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 1%
Wealth Club initial saving 3%
Existing shareholder discount 1%
Net initial charge through Wealth Club (new investors) 1.5%
Net initial charge through Wealth Club (existing shareholders) 0.5%
Annual management charge 2%
Annual administration charge 0.25%
Performance fee 20%
Annual rebate from Wealth Club (for three years) 0.10%

More detail on the charges

Deadlines

  • Deadline for first allotment: 22 October 2021
  • Deadline for early bird discount of 1%: 31 December 2021 or on the first £5 million raised, whichever is reached first
  • Deadline for loyalty bonus of 1% for existing TP11 shareholders: 31 December 2021
  • Deadline for allotment of shares in 2021/22: 5 April 2022 (noon)
  • Deadline for allotment of shares in 2022/23: 29 July 2022 (noon)

Share buy-back policy

The Company may operate a buy-back policy at a 5% discount to net asset value. 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.

Investors should note the VCT has less than a five year track record. Trading of the VCTs shares will be immaterial and any consideration of the share price movements in relation to the net asset value per share will be inconclusive. The discount history chart will be published once the VCT has a five year track record.

Investors looking to sell their VCT shares may get a better price using the VCT’s share buyback facility, although this is not guaranteed.

Dividend reinvestment scheme

The VCT does not currently have a dividend reinvestment scheme in place.

Subject to shareholder approval, the VCT intends to implement a dividend reinvestment 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. 

Annual rebate when you invest through Wealth Club

The VCT includes an annual rebate for Wealth Club investors, payable for the first three years. 

This is a rebate of our renewal commission and should be equivalent to 0.10% of the Net Asset Value of the Offer Shares issued to you when you invest. Terms and conditions apply.

Our view

Triple Point has a longstanding reputation as a VCT manager. This is still a relatively new offering – it is only the third fundraise under the Venture share class. 

The VCT has a portfolio of 19 qualifying companies, so it is fairly concentrated, although growing quickly. The manager’s long-term aim is to build a portfolio diversified across 20+ investments in different sectors. The VCT currently has a large allocation to cash (37% of net assets as at February 2021). 

The manager has a differentiated investment strategy focusing on early-stage innovative B2B companies solving problems faced by established corporates. The manager believes its preference for investee companies that have already received some form of market validation, by securing a contract with a large corporate, could mitigate some of the risks of small-company investing and provide attractive long term returns to shareholders – you should form your own view. 

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. 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
5p per share
Initial charge
5.5%
Initial saving via Wealth Club
4% (5% existing investors)
Net initial charge
1.5% (0.5% existing investors)
Annual rebate
0.10%
Funds raised / sought
£1.2 million / £10.0 million
Deadline
22 Oct 2021
Last updated: 15 September 2021

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