EXCLUSIVE: Albion Capital, the VCT investment manager, is set to go beyond its original £45m fundraise target, having raised £21m within just 14 days.
The VCT points out that its latest fundraise, which launched on January 5, has raised cash three-and-a-half times quicker than its previous reach-out to investors this time last year.
Albion, which currently manages approximately £440m on behalf of its six Albion VCTs, has invested £66m in 36 high-growth businesses over the last couple of years.
Albion currently has investments in 70 businesses across the five VCTs it is raising money for in portfolios with a combined worth of approximately £377m.
|Albion Technology & General VCT||£14m|
|Kings Arms Yard VCT||£12m|
|Albion Development VCT||£7m|
|Albion Enterprise VCT||£6m|
|Crown Place VCT||£6m|
The investment manager puts its latest fundraise success down to its focus on digital healthcare and enterprise software, two sectors which have held up during the pandemic.
Portfolio companies include Healios, a platform for clinicians to offer mental health help remotely to adolescents; Oviva, which again offers remote clinical advice for diabetics; and Egress, which provides encrypted email and secure data exchange.
All three businesses count the NHS among their clients.
Will Fraser-Allen, managing partner of Albion Capital, said: “There’s less supply of generalist VCTs plus there’s also been our own strong performance over the last three to five to ten years.”
For example, Oracle bought Albion portfolio company Grapeshot, an ad-tech business for £30m in 2018 for – representing a 10x return on Albion’s £2.9m investment.
In 2019, Siemens bought Process Systems Enterprise (PSE) for £20m, representing another 10x return on Albion’s £2m equity stake.
And last month Albion completed the sale of broadband network G.Network now valued at £1bn to the USS pension and Cube, representing a 3.8x return on its stake for investors.
Fraser-Allen also pointed to pent-up investor demand, with investors sitting on cash unable to spend it on themselves.
What Albion is looking for
Mostly it invests in Series A funding rounds, injecting between £3m and £7m in scale-ups with an average investment of £5m.
But Albion also has a seed funding cohort spread across all six of its VCT funds, which is dubs Genesis. Fifteen companies are in this Genesis portfolio. Quantexa, for example, a cybersecurity firm which helps detect financial crime, was invested in at seed stage through Genesis.
Typically, Albion invests alongside a regular group including leading UK VCs Dawn and IQ Capital, US growth investors including Evolution Equity and FTV Capital and strategic partners including Citi Ventures, Commerz Ventures, HSBC and ING Ventures.
As for the kinds of start-ups Albion is looking to invest in, apart from the focus on digital health and enterprise-level business software and fintech, Fraser-Allen says he likes to see management teams with ambition.
Although the consensus is that start-ups have found it harder to raise investment since the pandemic, with investors preferring to play it safe by joining in on later funding rounds, Fraser-Allen says that hasn’t been the case for start-ups in hot sectors.
Fraser-Allen applauds the government for the way it’s acted quickly to support businesses through scheme including the Future Fund but bemoans the way VCT managers’ hands are tied as to the size of their investments. It would like to keep on backing British tech companies at later growth stages, “expanding the universe in something Britain can be proud of,” he said.
Further reading on Albion Capital