Octopus launches £40m fundraise for its Apollo VCT to capitalise on wave of digitalisation.
Octopus Investments’ Apollo VCT is a specialist investment, focusing on fast-growing B2B software businesses. The companies, while early-stage and therefore high risk, tend to be more established with existing recurring revenues and the potential for significant expansion. This, Octopus says, can be achieved through increased investment in sales and marketing, further R&D or through geographic expansion.
The VCT is managed by an investment team of 12 within Octopus Ventures, led by fund manager Richard Court, partner, who has 15-years of expertise in UK smaller company investing.
Apollo VCT also benefits from Octopus Ventures’ dedicated talent team, which helps its portfolio companies hire and retain the best talent to help them realise their growth potential.
Octopus also provides access to a network of experienced Venture Partners, who have built, scaled and exited companies many times.
Court says: “This time last year last year we were talking about remote working and the technology we need to adapt to new working patterns. Fast forward 12 months and we’re now seeing very significant changes permeate almost every sector imaginable as businesses invest heavily in new technology solutions to increase efficiency and future-proof their operations. It’s safe to say that software adoption is still massively on the rise.
“We’re very excited by the opportunity for international expansion among software companies as the barriers to trade are much lower compared to other sectors. Almost any customer in the world can now trial your product at the click of a button and there are still huge untapped markets. This means businesses can reach significant scale, even within relatively ‘niche’ sectors.”
Court adds that the pipeline for new investments “has never been stronger”, hence the £40m fundraise – “we want to capitalise on this momentum”.
Jessica Franks, head of Retail Investment Products at Octopus Investments, adds: “The later stage focus of Apollo is attractive for investors who prefer to invest in slightly more established businesses, but I think many also recognise the mass adoption of software that’s underway and want to get access to that growth opportunity.
“Restrictions on pension contributions have been driving demand for VCTs for some years now, as has the limited investments capable of providing an income stream. The recent announcement that tax on dividends will increase should make VCTs even more attractive since the dividends they pay are income tax free.
“We might also see business owners pay themselves an extra-large dividend this year ahead of the increase in April, and some will likely increase their investments including in VCTs as a result.”