Oxford Technology 3 (OT3) Venture Capital Trust is braving tough fund raising conditions in the VCT market and seeking to raise up to GBP10 million for investment primarily in unquoted start-up technology companies. The fund will mirror the investment strategy of its predecessors, Oxford Technology 1 (OT1) VCT and Oxford Technology 2 (OT2) VCT. Investments will be in the range of GBP150,000 and GBP500,000 in Oxford-based technology businesses.
Around two-thirds of the fund will be dedicated to early stage companies and the remaining third in start-ups. The fund defines early stage as having achieved some initial sales, while start-ups are those companies at an earlier stage of their development, having already developed an initial product or service and close to achieving first sales.
Seed Capital Limited, which advised both of the previous funds, will also act as investment adviser to the new fund. Lucius Cary is managing director, founder and controlling shareholder of Seed Capital and has specialised in managing investments in early stage technology companies since 1983. He also sits on the board of directors of the funds with chairman John Jackson, Charles Breese, Michael O’Regan and Sir Martin Wood.
Helen Reynolds, investment analyst at Seed Capital Limited, is optimistic about fund raising: “We have surveyed shareholders from the previous funds and are hopeful that the new fund will get quite a lot of repeat business, although it is a bit nerve-wracking with the number of VCTs that we hear are being pulled from the market.”
OT3 has a challenging time ahead if it is to avoid the fate of VCTs such as Gartmore’s Premier VCT and Pathway One VCT, both of which were recently pulled from the market after failing to reach minimum subscription targets.
OT1 was listed on the London Stock Exchange in April 1997 when it raised GBP3.3 million. In April 1998 the fund raised a further GBP1.5 million, bringing the total fund to around GBP4.852 million. OT2 was launched in 2000 and raised a total of GBP6 million. While the risks associated with early stage technology investments of this sort remain high, the directors remain pleased with the development of both these earlier funds.