Octopus Ventures (CrunchBase listing) has become one of the most active early stage investors in the UK, backing many early individuals and businesses which went on to greater heights. These include backing Alex Chesterman all the way from Screen Select to LOVEFiLM and then from the early stages of Zoopla through to IPO. Another example is William Reeve, also from Screen Select and the LoveFilm days, all the way through to starting Graze.com. It’s been an early investor in Secret Escapes, SwiftKey and YPlan among others.
But until now little has been known about how it works and where it pulls its money from.
Admittedly, most VCs keep the names of the their institutional investors close to their chest, but at least we know the process. Octopus has been a bit of a mystery.
But now it’s has chosen TechCrunch to put-on the record a few facts and figures, so here goes.
Alex Macpherson heads the Ventures team at Octopus, while George Whitehead runs the Venture Partners, and is also chairman of AngelCo Fund.
Octopus Ventures is specifically backed by evergreen funds of £280m in evergreen VCT, EIS and traditional LP/GP funds (the wider Octopus Investment group has £4.7bn under management). OC’s first fund was raised in 2008 (when its parent firm Octopus Investments started back in 2000).
These Evergreen funds come from by 10,000 retail investors, listed on the London Stock exchange.
Last year it raised a £50m fund from these backers. This year it will raise £60m. Next year they plan for £70m.
Thus, current funds under management for the Ventures team at Octopus is £280m ($400m).
Now to set that in context.
Index Ventures raised a new fund of $550 million this year, while Balderton Capital raised $305M earlier this year. Last year Accel Partners Europe raised a new fund of $475 million last year. At the mid-tier, Mosaic Ventures emerged recently with a $!40m fund. And at the other end of the scale, Seedcamp raised a £30m fund this year.
In other words, Octopus isn’t at the high end, but neither it at the lower end either. But it also regularly co-invests with all the big players such as Index and Accel.
This puts Octopus in an interesting position in that – assuming it doesn’t complete screw up its investment processes or makes disastrous decisions – it can relatively reliably continue to raise these sorts of funds annually, and continue to invest at an early stage.
As mentioned above Octopus likes to back its serial entrepreneurs (as do most investors) and also includes companies like Faction, CertiVox, Conversocial, Kabbee, StreetHub and many more in the portfolio. Indeed, YPlan’s founder Rytis Vitkauskas tells us: ‘Octopus was among the first to see the potential in YPlan.”
This year it brought Debu Purkayastha from Google as Entrepreneur in Residence, as well as Chris Wade from the UKIT.
They can invest from £250k to £5m in a first round of investment and can invest through the life time of the investment. There is a strong bias towards London and UK but they will invest in Europe, and have invested to date in Switzerland, Portugal and “imminently in Sweden”.
Over a 1/3 of the portfolio now is HQ’d in the US and expectation that this will increase as the portfolio matures.
Going forward I think we can expect more of the same, but at least the small matter of how this particular investor is structured is now on the record.