Why the Triple Point Venture VCT?

As you would expect from a company called Triple Point, our Venture Capital Trust (VCT) is based on three core beliefs which give us a foundation for achieving the best available returns for our investors. 

One: Investing early increases your return potential 

The point at which you invest in early-stage companies has a significant impact on the potential returns. Although investing later in more mature companies reduces some of the risks associated with venture capital, it also usually means paying a higher price for the shares. This can reduce the potential return investors can expect to receive over the life of their VCT investment. 

Here’s an example of what we mean. Say you invested in a company at an early stage when it had a valuation of £5 million, and the company was later sold for £50 million. Your shares in that company would have generated a 10x return. However, say you invested in that company at a later stage (when it had already started to generate revenue and expand its customer base), and was therefore valued at £10 million. If you had invested in the same company at this point, then when it was sold for £50 million, your shares would only deliver a 5x return on your investment. 

At Triple Point, we believe early-stage investing significantly increases the available investment return. So, we don’t look for maturity, we look to unleash growth potential. We back companies at an earlier stage of their growth journey, usually at pre-seed or seed stages, because this is where meaningful returns begin.  

Two: Business-to-business (B2B) companies are more frequently sold at a profit 

Why does the Triple Point Venture VCT focus on investing in B2B companies? Because, quite simply, it’s where the best returns are to be found. B2B is an essential part of the economy, and business-to-business relationships usually involve larger volumes and longer-term relationships compared to B2C (Business-to-Consumer) connections.  

In 2021, we asked data provider Beauhurst to look at the types of companies that received venture capital, and to find out whether more B2B or B2C companies achieved a successful ‘exit’ – either being sold to an acquiring firm or listed on the London Stock Exchange. The findings were unarguable. It found that over the ten-year period, the number of B2B exits was consistently more than double that of B2B companies. In fact, in 2021 alone, 579 B2B companies successfully exited versus 294 B2C companies. 

We manage the Triple Point Venture VCT to deliver exciting returns for our shareholders. We believe the best way to do this is through investing in exceptional B2B businesses that acquirers are keen to buy from us, at a profit. 

Three: Diversification is the key to a well-rounded portfolio 

You might think diversification is just another way of saying “don’t put all your eggs in one basket.” However, the Triple Point Venture VCT offers diversification in three ways: portfolio diversification, sector diversification and diversification by age of portfolio companies.  

• Portfolio diversification: Because many start-ups fail, we spread the risk by investing in 47 companies, meaning the knock-on impact on investor returns from any single company failure is limited. 
• Sector diversification: We diversify across several business sectors (20 so far). We don’t constrain ourselves to any particular sector or industry, because B2B companies have the ability to transform or improve business models in all sorts of sectors. 
• Company maturity diversification: We add new early-stage companies to the portfolio each year, meaning we always hold a good mix of businesses at different stages of their lifecycle.  

The three ingredients for VCT success  

When it comes to investing in outstanding young businesses, you have to know where to look and what you’re looking for. The line between start-up success and failure can be painfully thin, so we look for companies that give themselves every chance of success. Our three core beliefs help us to find businesses led by founders that are not just innovative but are also actively solving the challenges faced by more established businesses. We call this our ‘challenge-led approach’, and it leads us towards some outstanding early-stage companies with significant growth potential. 

The Triple Point Venture VCT is currently open for investment. Apply via our Adviser Portal. 

 

 

Important information 

This article is an advertisement for the purposes of the Prospectus Regulation Rules and is not the prospectus. The Triple Point Venture VCT carries all the risks of investment in smaller companies and places investor’s capital at risk. There is no guarantee that target returns will be achieved, and investors may get back less than they invested. Past performance and forecasts are not a reliable indicator of future performance. Tax treatment depends on the individual circumstances of each client and is subject to change. Tax reliefs depend on the VCT maintaining its qualifying status. Investors should only subscribe for shares on the basis of information contained in the Prospectus which is available via the Documents section of the website. This article has been approved by Triple Point Administration LLP, which is authorised and regulated by the Financial Conduct Authority.