Octopus VCTs now available to everyday investors via Crowdcube platform
Do you want to invest in a venture capital fund? Investors can now access Octopus VCTs through Crowdcube with a minimum investment of £500
- Octopus VCTs will be available on Crowdcube, This Is Money can reveal
- Crowdfunding platform has helped Monzo and Brewdog, among others, to raise money
- The minimum investment has been reduced to £500
Venture capital trusts have long been viewed as a vehicle for wealthy, experienced investors seeking early-stage access to private companies.
VCTs raise money from investors to invest in start-up companies, usually privately held, or companies listed on the junior Aim market.
In return for taking on this higher level of risk, they offer a tasty 30 percent tax break and tax-free dividends, along with an annual investment cap of £200,000.
Crowdfunding platform Crowdcube, which was behind the crowdfunding efforts of Monzo and Brewdog, is now partnering with Octopus Investments to bring VCTs to the masses, This Is Money can reveal.
VCTs give investors exposure to early-stage companies and offer juicy tax breaks, but they’re often reserved for the wealthy
There have been a number of successful exits for VCTs in the UK in recent years that have paid out big to several trusts, most notably Cazoo, which listed in New York in 2021, and Depop, which was sold to Etsy for $1.6 billion.
The typical minimum investment in a VCT was between £3,000 and £5,000, and as companies stay private longer, the vast majority of private investors cannot access private startups.
> VCTs offer a 30% tax break and tax-free dividends, but are they right for you?
Through the Crowdcube partnership, Octopus VCTs will be available for investment through the Crowdcube platform, including their flagship funds Titan VCT and Apollo VCT.
Apollo VCT will become available first, with an initial fee of 2 percent and an ongoing annual fee of 0.4 percent, though it is currently closed to investment.
Octopus said it won’t be available immediately and will be available on the platform once the VCTs are open.
Octopus has an impressive track record of providing everyday investors with access to some household names, including Zoopla, Graze, and Depop.
Crucially, the minimum investment has been reduced to £500, opening it up to a wider range of investors.
Ruth Handcock, board director at Octopus Investments, said: “Investing in companies during the initial public offering (IPO) has been the tried and true route for many private investors to increase their wealth in recent years, but increasingly so as companies remain private for longer dries. this investment source.
Retail investors have been largely excluded from the access to private companies that many institutional investors have enjoyed. This needs to change and it is up to the investment industry to break down those barriers.
“Crowdcube has long advocated better access for private investors to private companies, a philosophy we too have wholeheartedly supported since Octopus began investing in high-growth, early-stage companies around the turn of the millennium.
“Our partnership offers investors who may be new to the VCT asset class, but have the right risk appetite, a great opportunity to invest in a diversified array of future technology stars.”
VCTs may have become more popular in recent years, but investors should be aware that they carry greater risk than other types of investments.
By pooling investments with others, VCTs allow investors to spread their risk across a number of small companies.
But VCTs are still a niche and very risky investment because the companies they invest in are early stage and the vast majority will fail.