Titan VCT
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The latest update on Octopus Titan VCT: July

10:04am 27 Jul 2020 - Written by Jo Oliver, Titan Fund Manager
The annual report is available

The annual report is available

The annual report & accounts for the 14 month period to 31 December 2019 was released on 16 April, and can be viewed in full here.

The report includes more detailed information for the period to 31 December 2019, as well as Octopus’ and the Board’s view on the outlook for the VCT.

We continue to work closely with our portfolio

We continue to work closely with our portfolio

Octopus Titan VCT’s 80 portfolio companies are spread across a range of different sectors. We have been speaking to all of them as often as needed to help them continue to navigate the impact of Coronavirus on their businesses and understand the options available to them, including government support, business and financial scenario planning and funding options. 

Given the fundamental change brought on by Coronavirus, our immediate priority has been to carry out a full re-budgeting and re-forecasting process with the entire portfolio. Swift and considered actions from the management teams have allowed these companies to weather a prolonged period of disruption. Measures to extend their cash runways, combined with additional funding where appropriate, have meant that we are now in a position where our portfolio is as well capitalised as it has ever been. 

Entrepreneurs thrive on challenge so it was no surprise that our portfolio companies responded boldly to the crisis. With people spending more time at home, Patch Plants saw demand for their plants increase by 500%. As physical stores were forced to close, Trouva’s platform proved to be a lifeline for many independent boutiques, enabling 70% of them to continue trading online and Depop, the online fashion marketplace, also benefited from 40% of their community spending more time online by using clever, low cost marketing tactics at a time when many were clearing out their closets, and has experienced all-time high revenues as a result. When a crisis hits, we are all required to think differently. Immediate challenges need to be faced, but disruption also presents a longer-term opportunity to re-think industries that have so far been resistant to change. We are now positioning for this new normal, understanding how the portfolio will be impacted in the short, medium, and long term. A startup’s very existence is built on being able to grab opportunities with an agility rarely seen in bigger, long-established companies. This means that a lot of the companies in our portfolio are in fact well placed to be net beneficiaries of the crisis in the long term.  

The impact on deployment

The impact on deployment

As an evergreen VCT with significant cash reserves of £295 million as at 16 April 2020, we have been well placed to support the companies in our portfolio with additional funding and this was our priority when the crisis struck. We have also made some exciting new investments during lockdown, welcoming Quantum Motion Technology, Skew and Stackin’ to our portfolio, albeit with management teams we had met ahead of the pandemic. 

Now that we have come through the immediate intensive crisis work, we are starting to refocus on new investments. As always, we are considering each company and opportunity on a case-by-case basis, taking into account a number of factors including the potential medium to long-term impact of Coronavirus on the sector the business operates in. Ensuring we continue to maintain a robust investment discipline will be key to the ongoing success of Titan VCT.   

How we’re able to help apart from funding

How we’re able to help apart from funding

As investors will be aware, we have prioritised talented entrepreneurial teams when seeking businesses in which to invest Titan VCT for many years. As a result, we have been very impressed by the management teams’ response to this unique situation so far.

But even the best entrepreneurs need support. In some cases, this has meant taking advantage of our existing resources such as our panel of CEO coaches, the founder mental health programme, or our in-house talent experts. Our Operating Partners (experts in their field, who can help businesses with particular challenges) have also held sessions with CEOs on “how to lead in a crisis”. 

Our talent team has been helping our portfolio navigate all the major financial aid initiatives brought in by governments in the UK, US and other countries, and understand whether taking advantage of such assistance is the right path for their business. They have reviewed the options available, held webinars with key advisers and, where businesses might have to take the very tough decision to consider redundancies, they’ve set up a system to help our entrepreneurs share information on the best talent, helping to retain the best people within the Octopus family of portfolio companies.

As the dust begins to settle, our conversations are now aiming to understanding how the portfolio companies are adjusting to the new situation, remote ways of working and the fundamental changes that might need to happen to sustain each one in the long run.

Realising our investments

Realising our investments

Realistically, we just don’t know yet how the pandemic will affect the potential for exits from the portfolio in the immediate to medium-term. Regardless, we continue to work closely with our portfolio companies to position them for exits when appropriate and were delighted to announce the acquisition of UltraSoc by Siemens in June. Titan first invested in UltraSoc when its products were still in concept phase and have partnered with them over the years as they have turned their exciting vision into reality, signing up some of the world’s largest technology companies as customers along the way.

In the meantime, we are very pleased that many portfolio companies continue to attract further investment from new investors and we’re delighted, for example, that Bought By Many, the British pet insurer which is among the industry’s fastest-growing companies, recently announced it has raised nearly £80m led by a prominent global venture capital. 

Conclusion

Conclusion

In summary, the Coronavirus pandemic continues to impact the Titan portfolio companies, positively and negatively. We are working closely with all companies and funding those that require it where appropriate so that they can weather a prolonged period of disruption, confident that many will emerge stronger when the effects of the pandemic abate.

Reminder of the key risks

Reminder of the key risks

The value of investments discussed, and any income from them, can fall as well as rise. Investors may not get back the full amount they invest.

Tax treatment depends on an investor’s personal circumstances and may change in the future.

Tax reliefs depend on the VCT maintaining it’s VCT-qualifying status.

VCT shares could fall or rise in value more than other shares listed on the main market of the London Stock Exchange. They may also be harder to sell.

This advertisement is not a prospectus. Investors should only subscribe for shares based on information in the prospectus and Key Information Document (KID), which can be obtained from octopusinvestments.com.