Since it was founded in 2018, Cazoo has transformed the way people buy cars in Europe. It has pioneered the online market having sold over 20,000 vehicles across the UK. Its consumers have embraced the selection, transparency and convenience of buying quality used cars entirely online and it intends to roll out this model globally.
What sets Cazoo apart is its business model. It buys and reconditions all the cars it sells before marketing them on its website, where its users can arrange delivery or collection in as little as 72 hours. Cazoo has begun its international expansion and is now Europe’s leading car subscription provider with over 6,000 subscribers across the UK, Germany and France. Cazoo has grown its revenue by 300% year-on-year[1], with expected 2021 revenues approaching $1 billion.
We first backed Cazoo in November 2018 through Octopus Titan VCT and were one of the first investors at the seed funding round. With an estimated market cap of $7 billion at the time of listing, Cazoo will become the most valuable VCT-backed company to go public.
“The dazzling success of Cazoo, in less than two years since first launching, to the public is testament to the talent and ambition of the founder Alex Chesterman and his team.”
Malcolm Ferguson, Partner at Octopus Titan VCT plc
CEO Alex Chesterman is no stranger to this kind of success. He has had a long track record of founding hugely successful companies since he founded Zoopla in 2008, which went on to become the first VCT backed unicorn. “Unicorn” is a term used in the venture capital industry to describe a privately held start-up company with a value of over $1 billion. Octopus has a longstanding relationship with Alex and our investment in Cazoo developed from our partnership with him on previous companies. We invested in Cazoo when it was still at idea stage, and we have been thrilled to see its phenomenal growth into one of Europe’s fastest growing and most valuable venture-backed companies.
“We have backed Alex and his team since the inception of Cazoo and we remain supportive shareholders. It’s a brilliant business and continues to offer exciting growth potential over the long term.” Ferguson said.
Cazoo’s story is also another fantastic example of a VCT’s ability to find and support the UK’s future tech stars, while allowing retail investors to benefit from their early growth too. Opportunities to invest in private markets like this have typically been limited to institutions. VCTs offer this access to retail investors, providing they are comfortable with the additional risks associated with smaller company investing. VCTs are high risk investments and will not be suitable for everyone. It’s important to understand that investor capital is at risk. While we aim to find companies that will experience similar success to Cazoo, many smaller companies go on to fail. Their share price can typically fall or rise more quickly than those of larger companies listed on a main stock exchange. They may also be harder to sell.
As more VCTs start to open for fundraising, now could be a great time for investors who are comfortable with the risks to diversify their portfolio and gain access to the UK venture ecosystem and the potential unicorn companies now being produced.
Octopus Titan VCT key risks
Cazoo is one of the portfolio companies backed by Octopus Titan VCT. Please remember that investing in VCTs comes with risk. The value of an investment in Octopus Titan VCT, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Tax treatment depends on individual circumstances and may change in the future. Tax reliefs depend on the VCT maintaining its qualifying status. VCT shares could fall or rise in value more than shares listed on the main market of the London Stock Exchange. They may also be harder to sell.
Company examples are for illustrative purposes only. They should not be considered as an investment recommendation. We do not offer investment or tax advice. We recommend investors seek professional advice before deciding to invest. This advertisement is not a prospectus for Octopus Titan VCT. Investors should only subscribe for shares in Octopus Titan VCT based on information in the prospectus and Key Information Document (KID), which can be obtained from octopusinvestments.com. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London. EC1N 2HT. Registered in England and Wales No. 03942880. Issued: August 2021.
[1] Tech Crunch, UK’s Cazoo will list on the NYSE by way of a SPAC, valuing it at $7 billionand raising $1.6 billion, August 2021
