Octopus Apollo VCT, a notable VCT with a focus on small and medium-sized B2B software businesses, has announced a fundraising event.
The VCT, boasting total net assets of £386m and a diverse portfolio of approximately 45 companies, has opened an offer for up to £50m (£35m with an additional £15m overallotment).
Specialising in investments in more mature B2B software companies, Octopus Apollo VCT targets firms that are beyond the traditional startup phase. These businesses typically record annual revenues ranging from £2m to £8m. Over the last five years, leading up to September 2023, the VCT has reported a commendable NAV total return of 50.6%. Additionally, Octopus Apollo VCT aims to maintain a dividend target of 5% of NAV, underscoring its commitment to delivering value to its investors.
The recent fundraising is earmarked for further investments in the B2B software sector, a space where Octopus Apollo VCT has historically seen significant success. The company’s strategy focuses on more mature businesses, which are less reliant on continuous funding rounds, giving them a stronger position to navigate the uncertainties of the venture capital environment.
Nicholas Hyett, Investment Manager at Wealth Club, highlighted the strengths of Octopus Apollo VCT’s investment approach. “Apollo’s focus on more mature businesses in the B2B software space has paid dividends in the last 18 months.
“As more mature businesses, Apollo’s portfolio companies are less likely to be dependent on repeat funding rounds for survival – allowing them to weather the storm that’s rocked venture capital with relative ease. The focus on B2B software also helps, software businesses are inherently higher margin and cash generative – a software package can be built once but sold again and again with minimal additional cost,” Hyett said.
“In the 2021 VC boom Apollo’s companies were viewed as boring, unable to deliver the sort of stellar growth that sets Silicon Valley hearts racing. But in the new higher interest rate world, the potential mix of high margins, cash generation and low capital intensity are positively sexy,” he added.
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