Crowdcube, a top UK and European securities crowdfunding platform, has announced a partnership with Octopus to provide access for investors to Venture Capital Trusts (VCTs).
In a company statement, Crowdcube said that the collaboration with Octopus will allow for lower minimum hurdles to invest in these vehicles. For individuals investing in a VCT, they will need to commit just £500. Octopus is the largest player in the VCT market, with over £12 billion of managed assets.
VCTs are listed investment companies that facilitate investing in early-stage firms. The funds back private firms while benefiting from significant tax benefits. As an investor in a VCT, you benefit from a 30% upfront tax deduction as well as the potential for tax-free dividends and tax-free capital gains. The policy was enacted in the mid 90’s in a move to help finance and support innovative private firms. Similar to the popular EIS/SEIS programs, VCTs can provide immediate diversification as they take a portfolio approach – frequently theme based.
Crowdcube notes that the majority of returns from VCTs are normally paid through tax-free dividends. Of course not all VCTs generate the same performance.
According to Crowdcube, the agreement with Octopus will see VCTs listed on Crowdcube – including Octopus’s Titan VCT and Apollo VCT, which will be the first listed offering.
Crowdcube co-CEO Matt Cooper said that his company has transformed the landscape for retail investors to invest in promising private firms.
“We took something that was the preserve of the few and made it accessible to the many.”
Cooper sees the offering as a natural continuation of their mission.
“We’re excited that two leading UK financial technology companies can come together to engage with a new generation of UK retail investors for the very first time.”
Ruth Handcock, Board Director, Octopus Investments, commented on the partnership and explained that it used to be that investing in an initial public offering was one of the best paths for investors to increase their wealth. But over the years, more firms are staying private longer.
“Retail investors have been largely locked out of the private company access that many institutional investors have enjoyed. This needs to change and it’s up to the investment industry to break down those barriers,” said Handcock. “Crowdcube has long championed greater access for retail investors to private companies, a philosophy that we too have wholeheartedly supported since Octopus began investing in high-growth, early-stage companies at the turn of the millennium. Our partnership provides an exciting opportunity for investors who might be new to the VCT asset class, but have the appropriate risk appetite, to invest in a diversified range of future technology stars.”
Octopus Titan VCT, the UK’s largest VCT, invests in “tech-enabled” firms with high growth potential and currently holds a portfolio of over 115 early-stage companies.
Octopus Apollo VCT is the UK’s second-largest VCT, focusing on business-to-business software companies with high growth potential. This VTC currently holds 40 different firms.
For Crowdcube to expand its investment options into VCTs makes a lot of sense. The investment platform already has a solid investor base, and providing more options is a way to drive more value. You can anticipate future announcements with other financial services and investment opportunities in the coming months.
Crowdcube is currently accepting registrations for indications of interest in the VCTs now.
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