Member Info for steph

https://files.pitchbook.com/website/files/pdf/Q3_2022_US_PE_Breakdown.pdf

This assumes about 80% reductions on the whole of the core portfolio. Complete panic without foundation.

traded tech has only gone down about 25% from peaks which is quite a normal volatility

At the other end of the pipeline seed funds just as valuable as the amount of good new ideas the same. . In the middle where we mostly are there might be some down rounds but nothing like 80% across the portfolio. Sales increasing in core portfolio at a fast pace also mitigates against a down round.

80% observed decrease in our 3 trades shares is being applied to whole of our private pre IPO portfolio.

Just silly

https://www.telegraph.co.uk/business/2022/10/12/economy-latest-pound-sterling-bailey-bank-england-ftse-100-bond/

ot should mean a shorter sharper period of interest rate rises.

short is good as wage inflation expectations do not get embedded. many workers less secure and unable to organize as they could in 70’s

https://www.telegraph.co.uk/business/2022/10/11/rejoice-may-close-fed-capitulation/

It is a good debate to look at our core portfolio share by share and take a stand on wheter or not it is a marekt beating package or not and if the valuaionts on teh whole will stand the test of time. Cazoo clearly not for reasons Sage pointed out 12 mnths ago but what about the rest.

https://www.freightwaves.com/news/irelands-manna-looks-to-bring-drone-delivery-to-eu-us

Manna has a scalable profitable business model. I have read what is publicly available for manna talked to a Canadian drone delivery company trying to do the same.

Night and day. The economics is all down to the regulatory regime. If a single operator is able to oversee 20 drones at the same time the costs of the human factor is split between up to 20 drones. That as manna say is entirely manageable within a 3 or 4 pound delivery charge. The electricity, rent if any and capital amortization is well under a pound a flight.

IN Ireland manna can make money. Probably throughout the EU as they have similar regulations. No human spotters needed on the route (as in Canada and I presume USA ) just a central operator with fly to wire contact. If the drone fails a small parachute automatically opens and it floats down gently not killing anybody which is the primary regulatory concern.

Doubting manna is I’m afraid part of a lemming like tendency of reverse engineering our sp to suspect that all or most of GROW’s portfolio much be poor or we would not be 26.5% of stated NAV. What we have been told by management is that the winners will outnumber the losers in the next 12 months and the valuation overall will hold an d mildly increase.

hard to believe market conditions for tec vc private equity has changed that much due to a pretty standard recession based on damping down inflation.

pandemic panic was much deeper in march 2020. whole global economy reversing by numbers and at a speed never seen before. vaccines were nowhere in sight and most experts thought it would take 5 years

i blogged at the time it would be much faster but a lone voice to be sure.

we were only half nav at the bottom there and from a much lower nav share.

hindsight is always 20 20

sage did correctly call out cazoo before it crashed and was cautious about market in fall of 2021.

my worry is we are reverse engineering reasons why we are 2.50 without evidence that these things are real. it could just be an irrational dip based on fear and limited information.

for my money i think it will end on half yearly results due soon

we have become untethered from recently stated nav/share .

grow have work to do to convince that their calculations take the current market fully into account . clearly a credibility issue

yes but evidence of recent last rounds for s sample of our portfolio or comparables will steady the ship or not if all recent last rounds show big down rounds

sage

of course lots possible but evidence base thin for such declines across our most of our grow portfolio. maybe one or two might take a hit

looking forward to half yearly results preliminary and finals

i trust grow will finally be more specific in company by company valuations so credibility returns,

no time to be aggregated results or vague -as in the past

26.9% and we have cash so even bigger discount assumed on our core holdings -none of which are struggling.

It is silly but markets can stay silly for a while.

27.5% of nav/share.

Our sp is 28% of our recently reported NAV/share which was calculated in current market conditions.

I get 70% or even 60% but the sector has not collapsed. Down rounds only 4% of total sector which is pretty normal. Maybe more to come but not 50% and maybe none that affect our 15 core holdings. Even by the time a downround is knocking at the door on one or two of our GROW companies as they need some cash our companies have been growing by on average 65% saleswise which offers considerable protection. So a conservative future funding round might be at a considerabel lower multiple of sales but still not an absolute decline in NAV/share.

28% makes no sense.

Teh assumed down rounds at this SP across the whole of our core portfolio exceed 3/4. Nothing like that even if the 2.8 bn valuation has been marked down to 1.8bn for graphcore and that continues across all 15 core companies. And even that assumes we did not haircut our graph core holding already to that level which is hinted at but not clear in our finals valuation notes. As I’ve said many times the lack of transparency for valuations of our core companies is hurting us big time. market assuming the worst not the likely and the less said the more the market assumes the worst.

At some point a fund that knows us and has better access than we do to the books will start buying and we will get back to 5 quid as mysteriously as we sent under. From there a longer climb that probably requires some general market recovery -or at least the start of.

We are tying to attach facts retrospectively to justify an irrational emotion based dip.

One thing for certain there is no pending take over or the director buys would not have been allowed. At least not that.

2.7bn with our stake 108 million.

We grew our graphcore nav very little in march 2021 to march 2022 period so maybe we already have a haircut included in our 9.29 nav share and ballie is late.

We are testing a 5 year low from a much much larger base of assets measured in any way one wishes to measure them.

Go back 5 years to this date 2017 and we were 3.21 and our 2017 annual report gave us a NAV/share of 3.70. We are now in 2022 nav/share of 9.29 which included some substantially trimming to any last rounds done too early to reflect current market conditions.

We briefly hit 2.7 march 20 2020 in the peak covid panic but within days started to recover.

So much extreme bad news and down rounds are priced in currently that even a mild profit warning on our half yer results due out shortly will be good news. There is no evidence inflation is hurting profitability of the sector. Innovative companies can pass on increasing costs quite easily. Just as we weathered covid nicely we can weather high inflation nicely. FUnding rounds not needed and those that are occurring rairly down rounds even in current market conditions.

What is really spooking the market specific to our share is our 3 post IPO holdings. It was stupid to hold them and those down pricing in front of the world’s eyes have created the impression that many core holdings might need a similar discount.

In my view we have way overshot a reasonable discount to NAV/share to reflect real market conditions. Of course on any given day 50% chance of up or down so no way of knowing if we are at absolute bottom or not. Driven by sentiment not evidence. But from here over the next 2 years there will be many more on average up days than down days. Over 2 years we will recover to NAV/share and beyond and NAV/share itself unlikely to go down. Sector will stop panicking when more evidence that last round valuations holding for quality companies and with that the multiples of sales used for those that don’t have recent last rounds.

Good luck all.

https://pitchbook.com/news/articles/dry-powder-save-startups-vc

US VC fundraising has set a new annual high through only three quarters of 2022. US-based VC funds have raised $150.9 billion, surpassing last year’s previous record and taking the 21-month fundraising total above $298.1 billion. Given
public market turbulence and frozen avenues for liquidity, we expected LPs to be concerned about their overexposure to this asset class and the potential for timely returns negatively impacting fundraising activity. Entering the second half of the year, we are finally beginning to see that momentum atrophy, as just $29.4 billion in fundraising was added to the dataset since our Q2 report, the lowest quarterly total this year.