Member Info for steph

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.

https://www.edisongroup.com/company/molten-ventures//

https://www.proactiveinvestors.co.uk/companies/news/994372/gb-group-drops-after-possible-us-bidder-walks-away-994372.html

Good on GB to reject. We al must look pretty cheap stateside right now. UK/EU valuations were below US levels all along now exacerbated by pound drop.

I’d be horrified if we got and accepted a take over or management buy out at these levels.

https://uk.advfn.com/cmn/fbb/thread.php3?id=50248978

Agree wiht all that. We are hurting our SP by not giving more valuation detail and structured comparisons with sector share by core share. IN this market no benefit of the doubt given and the worst always assumed.

2 more director buys

pound up a bit by government signalling they are not completely crazy. however 2bn out of 45 bn of unfunded tax cuts still very high but markets liked the shift in direction.

politically still doom for tories at next election but markets not convinced labour a bigger threat than tories now so will be a wash in terms of our sp.

My old forward kpi of trouble ahead is 10 year bond yield premiums over central bank rates.

Situation globally not that bad. USA, Spain, Greece and Italy about 4 to 4.5%. UK briefly spiked above that in immediate aftermath of Truss budget unfunded tax cuts but BOE’s buying program stabilized the situation.

One to watch though as rising bond yields can quickly make governments unable to service debt and then all hell beaks loose.

Japan below 0.3 for reasons I don’t understand. Switzerland very low.

thanks

4.5 would lock in my losses with no hope of recovery. Worst outcome. I am confident that if we hold we will recover to previous high in the not too distant future.

I sort of feel GROW going retail was like a déclassé party crasher to a posh do. Retail exposes second by second market sentiment on valuations that were a nich specialty area well away from the spotlight and by investors looking at locking in their money over a multiple year horizon. QUite different.

Downrounds are not running at a high rate even in this market. This market would need to last a long time for that to start in earnest. Mark to market on last round valuations based on short term market sentiment just not previously needed. Time frame was beyond the short terms dips and surges.

Good. I suspect our less yesterday moderated by 3 or 4 % due to the director buys and we are up today mostly based on that so about 10% impact overall.

One thing that puzzles me on my analysis of 11;47 am is why not more arbitrage. . Why would large funds who hold the component shares privately not see that our SP implies a much lower valuation than they have and top up here rather than wait for next round? Perhaps a retail way in to the sector is new and historically we have traded above trailing NAV/share so historically we were a bit more expensive way of getting in for those who can participate directly in last rounds.

Maybe just not set up to take advantage of what is a new opportunity they have. Strategy of keeping it private unlisted. We may have made a big error in holding anything post IPO. Made us look mixed and not a pure play private equity. They don’t want someone else to do the mixing for them and they prefer to stock pick themselves rathe than rely on “black box’ grow to do it for them with a “trust us” attitude to key information.

All tech seems to start as non profitable and that basic model has not changed. It is not like a small retial outlet that can and should make money on day one and scale up if they have a good niche and can expand or franchisee. Indeed making good profit on the first store enables the growth and bank loans /franchising that facilitate fast growth.

Proper tech is entirely the reverse. Starts with a new product or service that did not exist. This is 100% a loss to develop. Often a spin off form a University for that reason but can be company research department.

Then there is s time sensitive rush to obtain critical market share before a competitor imitates and occupies the new niche. That is why they almost always have a burn rate and not grow organically on retained profits.

GROW firms seem like the cream to me. Few obvious silly ones. On average 65% sales growth which is market beating. Most have runway lengths of 2 years or more gong into this poor market and no doubt can throttle back growth and preserve cash to extend those runways as needed.

As we have discovered valuations of unlisted tech can become volatile when “reviled” by a retail trust holding such as ourselves. But that implied valuation is not the same as last round.

If no retail trust holding private equity it would remain a investment areas for specialists knowing full well last round investment is a medium term holding with no easy exit ramps for a year or more likely several. They pay cheaper for that inflexibility. but that is quite different from retail investors who can dip in or out of GROW in minutes depending on market mood. That is why IPO’s tend to be well above last round valuations. Somewhat different markets both up and down.

Thanks

My fear is a successful take over or employee buy out right now. It would lock in loses and spoil the full recovery to plus 11 I think we will have 12 to 18 months out.

We dipped yesterday below the trough of the covid panic march 20 2020. Portfolio companies much bigger and further along than back then and scare of a recession and higher interest rates not equivalent to economy frozen fears in the middle of covid panic.

nice

The move to the 250 has probably hurt us. We were always a more specialty asset and now we get dragged down with automated sells against low volume that exacerbate any general dip.

We are not a long way off 1/4 trailing nav/share without a peep of a profit warning that NAV might decline. Even at the peak of the world is ending covid panic we were about 1/2 trailing NAV/share. We have some cash and shares in funds of funds for start ups that should not decline in value -bits of that are government. The assumed reductions in valuations of most of our core is just silly. It is as if the whole private tech sector is coming to an end.

NO reason to suppose our companies are trading worse due to inflation or interest rates. They will have a risk of a down valuation if they need to go to the market soon but most have 2 year runways and they all can conserve cash if they chose to and slow down a bit and extend the runway to the other side of this market. No good reason to be below 2/3rds of trailing NAV/share

I’m grimly hanging on topping up cash to my spread bet as I can rather than sell.

The resulting 7 to 8 quid per share liquidation value is about the level of our last director buys. I think the rest is retail panic that will not persist over the medium (12 month) time frame.

Real value of GROW is what would be returned to us if Kwasi/Liz abolished retail trusts overnight and froze traiding and gave the trusts 6 months to liquidate all private company holdings.

I think funds who hold those portfolio shares would be interested in buying. They may on average want a modest discount to the last round price they paid but that would not be too much a discount as it may be the last opportunity to top up until the next round -and for 80% of our shares that will not be any time soon. The opportunity cost to buy in those unlisted growing companies is worth something and different than the assumed value today a retail panic can suggest.

Why don’t funds buy us at 3 quid then? I suppose if the dip is an irrational retail panic it might not be over. They don’t generally play the short term market.

Runway lengths are over 2 years for 80% and that will lengthen as the tendency will be to conserve cash until the market for funding rounds returns closer to normal. .

So in a real competitive tender situation I’d expect 2/3rds of previous round on average and we have discounted previous rounds by 25% already in our SP.

So after the auctions we would have 7 or 8 quid per share returned to us. Not 3 by any measure.

Not bad. SP Targets Still 2.5 times current sp

https://seekingalpha.com/news/3886660-uipath-stock-slips-after-pt-cut-by-certain-analysts-reaffirms-2024-revenue-and-arr-below-estimates

Thanks sage as always a good analysis. You will always have credibility with me as you raised concerns on valuations before our SP started to decline. If I had heeded them even in part I would be in an infinitely stronger position today. I started topping up on the year long decline much too early and have a 6.2 top up average.

. Easy to be a momentum analyst projecting forward up or down. Harder to be contrarian.

I’m going to be contrarian here as you were in September 2021. I wish I have more info on the core portfolio company by company than GROW share with us. For those UK registrations we can look at the company house filings. No idea why GROW do not in one place put all the information that is in those filings as a base. Sales per component company and valuation points (last round and GROW estimates) seem to be sensible and reassuring to investors. Then we can quickly see for ourselves if any portfolio share has become frothy at least in terms of multiples of sales compared to past valuation point. I get the impression that no they have not. sales overall have been increasing at a faster pace than valuations even in the frothy period.

As you rightly point out in a bad market sales growth alone is not the the indicator it is in stable markets. It depends on the ability of the company to convert sales growth and market share potential into net profits in the foreseeable future.

This will vary wildly company by company even with the same sales growth statistics in the same sector. It is a qualitative analysis which is probably why GRWO management so reluctant to publish more numbers. They keep telling us and the market “trust us” “we have quality shares” and the market at the moment is blowing a big raspberry.

I think they did enormous reputational damage with CAZOO. Investors with that very public example are not liking the “trust me” approach anymore. They want more hard information than we have been given so far. CAZOO was a lot of hype and not particularly a tech share. It was really regular retail with a big ad spend to prove it. Anything with a large paid for ad spend is probably not tech. When is the last time you saw a paid for ad for TESLA or LUCID never mind graphcore or revolut. Real tech generates it’s own free publicity.

Ja thanks for the tip.
Generally on this board we are all get rich slowly people. There is a credible scenario where GROw if bought at these levels will also deliver 1000% and much more transparency on how. Even Sage might agree the following scenario is credible.,

1) we tread water for 2 years with NAV/shar growing slowly aligned with analyst predictions. The underlying core protfolio growth in sales slows as cash is conserved and runway lengths are extended. There are few later stage fundraising rounds and no IPO’s. OUr SP gradually recovers to Nav/share which will slowly increase to 10 and then 11.

2) 2 to 5 years out late stage fundraising rounds are back as with some IPO’s OUr NAv grows rapidly in the period in line with current analyst predictions or maybe a bit better as sales per company have been grwoing without much impact on upgrades of NAV. With compounding Nav/share goes up to 20 quid by year 5. Maybe more.

3) we start trading again in year 3 to 5 at a premium to trailing NAV/share again. With a stable market this rises to 30 to 40%.

4) our sp at year 5 is 28, no quite a 1000% return from today’s sp but close and might be 30.

no news to justify why we dropped us tech which we track went up.

some news yesterday that analyst projections of profit down s bit but that means they are still predicting nav increases not decreases. stand still nav/share would count as goon news right now at this sp.