Octopus's Garden
03-Feb-08
Company Profile: Octopus Ventures
The team: Christopher Allner, Head of Private Equity; Alistair Brew; Director; Andrew Cavaghan, Director; Richard Taylor, Associate Director; Jane Vinson, Portfolio Manager; Paddy Woods Ballard, Investment Manager; Matt Penneycard, Investment Manager; Valentine Tourres, Investment Manager; Purvi Sapre Investment Manager Overview: Established in 2004 by Octopus Investments, Octopus Private Equity has £110m under management. The company is an active investor in the UK lower mid market. Between us we have completed 106 deals and exited 81. Opportunity: The company is looking to back high quality and ambitious management teams who are seeking to make a significant capital gain over a three to five year period. Investment between £2m and £8m of equity to support buyouts, accelerate growth, or make strategic acquisitions is available. The company does not do start-ups.
Current portfolio:
Plum Baby Ltd: £400K investment
In December 2007, Octopus Ventures concluded a £400,000 investment in Plum Baby, the organic baby food business founded by Susie Willis in 2004. This investment formed part of a larger £2 million funding round. Plum Baby started trading in February 2006 and offers consumers a fresh approach to nutrition for infants. The Plum Baby brand provides the ultimate in “feel good” baby food — a premium range of ambient weaning meals whose ingredients are exclusively organic.
In its first year of trading, Plum Baby sold over two million pots from just eight recipes in its weaning range for babies aged over four months. In June 2007 the Company launched a range of meals for older babies between seven and twelve months and in August 2007, it launched a range of three super grain porridges.
Plum Baby is forecasting sales of £5 million for 2007, equivalent to 4&37; of the baby meals market. The Company has listings with Boots, Ocado, Tesco, Sainsbury’s and Waitrose. Market data from A.C. Nielsen shows Plum Baby has already made it into the Top 20 ranking by retail sales value for products in its category.
SkillsMarket: £700K investment
During 2007 Octopus Ventures invested £700,000 in SkillsMarket, one of the UK’s fastest growing recruitment solution providers. This investment formed part of a recent funding round for the Company, with which Octopus Ventures has a longstanding relationship as an original investor. The new capital will be used to finance the initial stages of an aggressive domestic and international expansion of SkillsMarket’s online CV product, known as iProfile™, which is revolutionising the way people interact with the job market.
Already more than two million people, or 15&37; of UK professionals, currently have an iProfile™, and many of the UK’s leading recruiters are iProfile™ Compatible, including Reed, Spring and Alexander Mann. Given the leading market positions both of these businesses have already established at a very early stage, combined with the high calibre of their management teams and strength of their rollout strategies, we believe that both Plum Baby and SkillsMarket have the potential to generate very healthy returns for our investors.
Other Portfolio Highlights:
e-Therapeutics: 132&37; IRR for Octopus Ventures investors During 2007, e-Therapeutics, a systems biology drug discovery company, took several important steps towards bringing its revolutionary drugs to market and Octopus Ventures investors are already seeing the substantial benefits from their investment in the Company.
Since its launch in 2005, e-Therapeutics has already delivered 45 new therapy candidates in 11 clinical areas, including MRSA, asthma, depression, cancer, cholesterol, diabetes and pain. These include three drugs which have already proven their efficiacy in killing the most resistant strains of MRSA and are currently entering Phase II testing trials.
In April 2007, Octopus Ventures led an undisclosed 7- figure investment round in e-Therapeutics which has been used to progress the next phase of the company’s drug discovery and clinical programmes, as well as orientate its platform technology towards the discovery of further new treatments for diseases where there are currently no satisfactory medicines.
In November 2007, e-Therapeutics completed a listing on the AIM market of the London Stock Exchange, placing 1,985,075 Ordinary Shares at 67 pence per share.
This has raised £1.33 million (gross) for the Company, giving it a market capitalisation of £37.33 million, representing an IRR of 132&37; for Octopus Ventures investors.
True Knowledge: £600K investment
In September 2007, Octopus Ventures investors committed more than £600,000 to True Knowledge, an internet technology company whose primary product is a ground breaking online tool set to enable internet searching using natural language questions, potentially revolutionising how the internet is used.
This first funding round, in which Octopus Ventures were the exclusive investors, will help True Knowledge to achieve important strategic milestones as it brings its unique search product to market. The Company’s websitehttp://www. trueknowledge.com is already open for beta testing.
Site Confidence:
At the beginning of 2007 Site Confidence, the web assurance performance and monitoring company, was acquired by NCC Group plc for a consideration of up to £9.1 million in cash payable in three stages before June 2008.
NCC paid £4.5 million on completion of the transaction, and there is the potential for two further pay outs of £1.0 million and up to £3.6 million dependent on the Company’s trading performance.
Site Confidence had been backed since 2001 by 34 investors associated with Octopus Ventures who committed an aggregate of £750,000 in three equity rounds.
If Site Confidence meets the agreed trading performance targets in the period to June 2008, Octopus Ventures investors will secure a return of up to 4.5 times their original investment.
