Triple Point has launched the Venture Fund, a new share class in the successful Triple Point VCT 2011 plc. The fund is designed to generate significant returns for investors through a challenge-led investment strategy.
Traditional venture investing focuses on researching a broad cohort of companies and seeking to identify those businesses that are likely to be successful. However, this analysis cannot always predict whether there is a genuine market demand for a product or service. Research has shown that over 40 per cent of start-ups fail because there is no market need, the product doesn’t resonate with the market, or the company employs the wrong business model.
The Venture Fund’s challenge-led investment approach addresses these issues head on and draws on the reach and expertise of the Triple Point Venture Network. It encompasses a range of corporate innovators, growth consultants and entrepreneurs and has a base of some 5,000 innovative companies, which have the potential to help in excess of the 100 large corporations already working with the Network.
The Venture Fund looks to maximise financial returns by investing in innovative businesses already working with the Network, that have, or soon will, contract with large corporates to help them solve some of the key business issues they face.
By focusing on growth businesses that have effectively established market fit for their products and services with large corporates, the Fund addresses one of the most significant risks of early stage venture capital.
Each investee company must have a UK focus and significant addressable target market, with an innovative product or intellectual property. The Fund targets businesses with a strong management team, aligned appetite for growth, and a clear pathway to long-term profitability. The Venture Fund will typically expect to take 5-20 per cent equity stakes in these businesses.
The Venture Fund is targeting a substantial deployment of investment funds over a 12 to 24 month timeframe. It is seeking to raise an initial GBP15 million with potential for a further GBP15 million over-allotment facility and will offer investors a portfolio of 20+ innovative companies with significant growth potential and the possibility of generating 5x to 10x money multiples.
Investors will also enjoy 30 per cent upfront income tax relief on their investments and tax-free growth. It builds on Triple Point’s strong 15-year track record of early stage investing with a very successful, distinctive approach. The offer is available until 30 August 2019, for a minimum investment of GBP3,000.
Triple Point seeks to align its interests with investors and maximise returns by limiting costs. The Venture Fund’s annual running costs are capped at 3.5 per cent of net asset value (NAV). The Fund targets a 3 pence per share dividend in the first two years, and up to 5 pence per share per annum in the years thereafter, subject to successful realisations.
The Venture Investment team is led by Ian McLennan a partner of Triple Point and supported by a team experienced in venture capital investing. Triple Point, with over GBP900 million in assets under management has a strong track record in tax efficient VCT and EIS investing, and a 14 year history of delivering target returns for its clients.
This will be Triple Point’s 19th VCT fund raise and the firm has supported 44 EIS and 18 VCT Share Classes in that time, with GBP250 million of successful VCT and EIS exits.
In 2017 VCTs raised GBP728 million in aggregate, the second highest amount since the VCT market’s inception and 30 per cent up on the previous year. This probably reflects increasing restrictions on pension investments, and strong and early demand for VCTs is expected again this year.
Belinda Thomas, Head of Sales and Investor Relations at Triple Point, says: “We are delighted to launch the Venture Fund, which follows a unique strategy in the market that is designed to address some of the key pitfalls of early-stage investing, in order to achieve attractive returns for investors.”
“The Venture Fund builds on our strong track record of early stage investing with a distinctive approach which matches the propositions and solutions offered by innovative, growth business with the challenges faced by large corporations. The Venture Network already has a track record of success in this area, having helped a range of blue-chip businesses source innovative companies to help them address key issues. By investing in growth businesses once they have secured such contracts, the Venture Fund seeks to mitigate the risk of venture investing and helps to underpin investors’ returns.”
