Octopus Investments has launched a £25 million fundraise for its (£141m) Apollo VCT, which invests predominantly in commercialised B2B technology businesses with a growing customer base, repeating revenues and the potential for significant expansion.
The latest fundraise, the company says, provides an opportunity for Apollo to capitalise on the increased technology adoption among businesses post Covid-19.
Apollo VCT is managed by Richard Court, head of Development Capital at Octopus Investments. Court points to a “significant acceleration in the adoption of tech by businesses as they have adapted to new ways of working” on top of an already “extremely positive long-term investment outlook for technology.
“I firmly believe this is a permanent shift and we’ve seen a strong pipeline of businesses well positioned to take advantage of this,” Court says.
“For Apollo, we typically look for proven companies at a later stage in their development, but where there are significant opportunities for expansion which can be unlocked by growth financing. Our investment should allow them to reach greater scale and, in time, profitability. This is often by investing in R&D to improve existing products, enlarging the sales team, or expanding internationally.”
As examples in successful investments, Octopus flagged Apollo’s investment in Natterbox, which offers cloud telephony services to corporate customers. The funding allowed Natterbox to invest in its sales and marketing function and to expand successfully into the US market, resulting in revenues almost trebling in Apollo’s period of investment so far.
Likewise Apollo’s funding allowed City Pantry to more than double the number of customers it served and significantly increase revenues. City Pantry was recently acquired by FTSE 100 food delivery giant, Just Eat Plc, at which point the VCT exited the business. The exit achieved an annualised return in excess of 40%2, which was a record for the fund.
Paul Latham, managing director at Octopus Investments says the apollo VCT provides investors with the opportunity invest in slightly later stage companies that are already generating significant revenues.
He adds: “Many people are also keen to play their part in supporting the UK’s economic recovery, and VCTs can be a great way to do that. Smaller companies tend to be more adaptable, which means they can take advantage of new opportunities as they arise, creating new jobs in the process. VCTs act as a vital source of growth capital to make this possible.”
