Simon Rogerson, co-founder and chief executive officer at Octopus Group, talks to Jayna Rana about the three ingredients needed to earn a customer's trust, how smaller companies are in most demand and why he is supporting his staff to start up their own businesses.
Rogerson says he and Hulatt feel very fortunate in their success and so want to support budding entrepreneurs, who they believe can make a real positive difference in the world. He also believes start-ups and smaller companies are where the opportunities are.
"Smaller companies investing is where the demand is. People are starting to realise the world is changing more quickly and businesses can grow and die faster than ever before.
"Most of the world's biggest companies were only created in the past 15 years, which shows you can create all this scale and disruption in really short time horizons." But Rogerson says he is still frustrated by those that believe investing in smaller companies means taking more risk.
"It is a really attractive asset class and one that has performed very well. The performance of our AIM VCT has been phenomenal and the team has done that by taking less risk than the FTSE," he adds.
"I am frustrated by people's perception of smaller companies that they are too risky. You can diversify that risk away. As for VCTs, you are in a tax-efficient position and have more of a structural advantage than any other investing product in the market."
Familiar names the group has invested in through its venture capital products, often starting in the Octopus Titan VCT - the UK's largest VCT at £580m - when they were start-ups include Zoopla Property Group, travel company Secret Escapes and mobile phone app Swift Key, which was recently acquired by Microsoft.
And, for many names, Octopus remains a key investor as they mature and move from being held in the AIM VCT to the group's UK Micro Cap Growth fund.
"The beauty of our fund structure is that it is evergreen. Once we have identified the real winners, we take them from the very beginning of their life and can hold them for as long as we want. We have known some of our companies for years," Rogerson added.
Adapting to a changing industry
Having a range of different products with different structures, and looking at companies from various stages of development has also meant Octopus has not been so negatively affected by any of the VCT or EIS rule changes that have been implemented in recent years.
Rogerson says: "Legislation has been changing and the last four to five years have been more focused on earlier-stage companies, with even VCT money being channelled down.
"But we have also invested in businesses from total start-up point so that has been music to our ears."
Behind the 'cloudy' outlook for the UK
Ahead of Chancellor Philip Hammond's next Budget on 29 October, Rogerson does not know what to expect but would be amazed if the government "rose back in any way from its commitment to smaller companies".
