Demand for VCTs resilient despite economic uncertainty, says Octopus

6 December 2020

Octopus Investments says demand for VCTs remains resilient despite broader economic uncertainty, citing £61 million raised into its own venture capital trusts (VCTs) during the month of November, equivalent to more than £2 million each day.

Paul Latham, managing director of Octopus Investments said VCTs act as a critical source of patient capital, “which is needed now more than ever as smaller companies navigate the shifting environment that the pandemic has brought.

“Strong inflows into VCTs will be welcome news for the UK’s early stage technology companies, many of which are in a great position to scale but still need funding to realise their full potential.

“This opportunity to back some of the most promising British technology businesses has clearly resonated with investors seeking growth, while also looking for established managers with a proven track record.”

Fundraising for the Octopus AIM VCTs has been closed after raising £17 million in November and reaching the overallotment target of £31 million.

Octopus also experienced strong inflows into its flagship VCT, Octopus Titan, which raised £38 million in November, close to half way to its initial £80 million fundraising target, after 5 weeks.

Latham added that another factor explaining why inflows have held up is that VCTs are now “more ingrained in the financial planning process”.

“In years gone by, we often saw a big rush towards the end of the tax-year, but increasingly investors and financial advisers have become more familiar with VCT investing and are also doing their tax planning much earlier. However, this increases the risk of the most popular VCTs reaching capacity sooner than you might expect, as we have seen already with our AIM VCTs.”

Octopus has boosted inflows with ‘early bird’ discounts on fees available until 15 December.

Professional Paraplanner