This week, Revolut made headlines when it emerged that early investors in the fintech had been offered an opportunity to cash out with returns of up to 400 times their initial investment.
The news arrived in the same week venture capital trusts celebrated their 30th anniversary of backing British startups.
Revolut used crowdfunding rather than VCT backing to fund its growth, but both avenues have helped create a series of British champions.
Listing on London’s AIM, has also been an excellent option for companies, even though it’s fallen out of favour in recent years.
City AM has rounded up five other British businesses that have grown from small startups to industry champions, earning their investors huge returns.
Crowdfunding: Revolut
Banking firm Revolut cemented itself as one of Britain’s biggest fintech success stories after surpassing 50m global users last month and landing a $45bn (£35bn) valuation in an employee share sale this summer.
The secondary sale, brokered by Morgan Stanley, will now be extended to early-stage investors, including those who participated in two crowdfunding rounds.
Users of start-up investment platforms Crowdcube and Republic Europe are in line for returns of around 400 and 80 times, respectively, after buying into Revolut when it was known merely as a digital payment and money transfer provider in the UK.
Data provided to City AM by Crowdcube shows how the UK’s retail investors are increasingly turning to crowdfunding to spot the next big thing.
Since its launch in 2011, the platform has raised some £1.1bn from 445,000 retail investors, with investment jumping 27 per cent this year compared to 2023.
BrewDog, Monzo, JustPark, GoHenry, and Moneybox are some of the other notable names to have raised money through Crowdcube, all of which have seen their valuations surge in recent years.
VCTs: Interactive Investor and Quantexa
“As well as supporting some the most successful British businesses, VCTs are, in and of themselves, a great British success story,” Nicholas Hyett, investment manager at Wealth Club, told City AM.
“VCTs have funnelled billions of pounds into UK start-ups, with current VCT backed companies employing 92,000 people in the UK.”
Interactive Investor is one of the most famous companies to emerge from the VCT scheme. It has grown to become the UK’s largest ‘flat-fee’ investment platform.
Acquired in 2022 by Scottish asset manager Abrdn for £1.5bn, the company now has 430,000 customers that invest via the DIY platform.
VCT experts Unicorn first invested in November 2013, acquiring a stake while the business was still small and relatively unknown.
When Abrdn bought the company, the VCT received £55m in cash proceeds against an original investment of £3.5m, a return of 1,471%.
Data and analytics software company Quantexa is another VCT success.
The Albion VCTs first backed the company in 2017, and in April 2023, it was valued at over £1.4bn.
Quantexa’s flagship product, a Contextual Decision Intelligence platform, gathers data across billions of systems to present a single view and help businesses make better decisions.
The platform’s main focus is helping its clients detect and prevent fraud, financial crime and money laundering.
Quantexa’s technology is now used by blue-chip banks (including seven of the top 10 banks in the UK and Australia), insurers and government organisations, such as HSBC, Standard Chartered, and Danske Bank.
AIM: Abcam and Gamma
While the number of companies listing on AIM has plunged in recent years, listing on the junior market has helped some companies access capital while generating enormous returns for investors.
Founded in Cambridge in 1998, biotech firm Abcam made a name for itself producing high-quality, validated antibodies for research.
The company was listed on NASDAQ in 2020, and was eventually acquired by Danaher Corporation for $5.7bn (£4.5bn) in 2023, but originally began its listed-life on London’s junior market, AIM.
“Abcam is a standout British success story and a testament to the potential growth of AIM and VCT-backed companies,” said Max Ormiston, portfolio manager at Unicorn Asset Management.
Unicorn was an early institutional investor to back Abcam at its AIM IPO in 2005 when the company was valued at just £57m.
“Our total holding period return in the Unicorn AIM VCT exceeded 820 per cent, reflecting the extraordinary success of this Cambridge-based biotechnology pioneer,” said Ormiston, though added he would “always prefer to see British success stories like Abcam retain a UK listing”.
Meanwhile, business call services provider Gamma Communications has been another roaring AIM success.
Speaking to City AM, Amanda Yeaman, co-manager of the Abrdn UK Smaller Companies Fund and the Abrdn UK Smaller Companies Growth Trust, said she had first invested in the company after its IPO in 2014.
When the company first listed, Gamma was valued at £165m and is now worth £1.5bn. It has not incurred any debt and is self-funding through its cash-generative model.
“Since we initiated our position at IPO ten years ago, Gamma has evolved from providing purely Wholesale Line Rental (WLR) to Voice- over-IP (VoIP) services to an ever-growing portfolio of cloud communication services,” said Yeaman.
“They now offer a comprehensive suite of products that facilitate collaboration, communications, and customer experience services to businesses from micro companies to large multinational enterprises.”
After consulting shareholders in September this year, management decided to move from AIM to the main market of the FTSE 250, which is expected to take place midway through next year.