Member Info for steph

very unlikely we will have more than one or two shares with a down round.

“The expectation is that down rounds are occurring at a much higher rate in 2022 than last year because of the quick departure of the market from growth at all costs—which led to huge valuation multiples—to sustainable growth and strong fundamentals.”

“Even with the slowing market through the first half of 2022, only about 6% of round valuations were lower than the company's prior valuation.”

Unlike you I think on average the current valuations are fair value. AS more last round money comes in they will be confirmed at current levels or higher. 65% sales growth on average hides the need for a lot of haircutting. As time goes on even the biggest need for a haircut is overtaken by events. REvolut aside the valuations look defendable as they are. OUr 3 traded shares have roughly their current market value in teh nav calculations. The market is overshooting on the downside for us and it will turn at some point.

Should I buy CAZOO at 50 or will it not survive? UIpath looking attractive. .

must say disappointed in communication by grow management. they are in touch with so many investment funds to fund their portfolio surely they can sell themselves too. doing a poor job of that.

why not invest in their own shares as well. 1/3 nav is 1/3of value according to management.

markets don't usually plunge after tax cuts but here we are with a tory government the markets dont trust on top of every thing else going on.

if inflation expectations moderates wage expectations moderate which combined with the gig economy less unionization and a general fear in the workforce (not present in the late 70’s) even 3.5 % unemployment is not a tight labour market and will not lead to wages pushing inflation. soon as commodity prices ease whole situation will change quickly. oil at 79 in usa is a key indicator.

us oil now 79 /barrel

that has a massive impact on inflation expectations in us as every major street corner has the petrol price in neon lights.

impact on logistics costs, cooling and heating too but with a time lag

even if i do say so myself you heard it first on this bb that oil would drop faster than market predictions. now for rest of commodity based inflation drivers.

Trust we jump on intrims . We should get an update mid October. That should reassure on valuations which are currently 3x sp. That discount is silly. It assumes 80% haircuts on several key shares in spite of 65% sales growth and a 25% haircut already applied by GROW themselves to be on the safe side against last round valuations. . Just overshoot and panic due to lack of information. .

grow just keeps investing in deep tech series a based on its giant seed feeder conveyor belt. eu/uk’s best fund of funds. this was one of my arguments as to why in a stable market we should be a substantial premium to nav/share

seems like the mists of time right now but that normal market will return in a year ir two.

good article

I think so and have nearly 100% of my investable cash in this one share (actually a portfolio of about 69 companies plus the EU’s biggest seed funds). Wish me luck. I think the fed and Uk bank decisions today and tomorrow will sound dovish even though they will raise interest rates substantially. Inflation expectations are coming down and a recession looming.

nothing company specificjust went down with the sector but more so i suspect due to lack of transparency on the details of the valuation methodology used company by company. . market assumed the worst rather than the most probable. 65% sales growth per year overall in core portfolio and management confident nav/share will keep growing even in this choppy market.

“The fall in value of our public company shareholdings has been offset by gains in the value of our private investments at 31 March 2022. The performance of our portfolio companies continues to be strong with average revenue growth rates in the core portfolio above 65% during 2021.”

65% revenue growth is a fantastic figure across our core portfolio. It is well above average for the sector and thus our valuations can be, as a multiple of revenue, above average too. No reason to suppose this 65% has significantly cooled in current market conditions.

We are near the floor reached on march 20 2020 in the middle of the covid panic when the global economy was thought to be about to end. That dip was based on a supposition that revenue in the core portfolio would be affected substantially. It was not and thus the shoot to 11.82 by September 20 2022.

Roll on half year update. Many questions can be answered there. I hope thy put out more information on valuation methodology and it’s application share by share. That would do much to reassure a jittery market.

“Calibrated round enterprise value – Pre and post year-end round enterprise values have been calibrated with appropriate discounts taken to reflect movements in publicly listed peer multiples, future revenue projections and timing risk. Discounts were applied to 52% of the fair value of investments measured at calibrated price of recent investment. The range of discounts taken is between 15%-89%.The weighted average discount taken is 25%.”

Even with that discount we had on page 35 6 core companies with our fair value increases exceeding 60m. THis is aircall, REvolut, ledger, thought machine, airven.

Graphcore, which is our largest holding, had a very modest fair value increase in spite of success after success. Cazoo uipath and trustpilot all showed losses and those losses were included in our last reported NAV of 9.29/share Maybe the market thinks those losses are pending but they are spent in terms of harming NAv/share. We had realization on UI path and trust pilot and cash is cash.

My only worry is that 2021 multiples of sales was less even after the 2022 discounts applied . I wish we ahd more information in this area.

I accept that maybe revoulut was not discounted strongly enough but others are in rude health. 65% average sales increases across the core portfolio hides many sins.

there has been recent funding rounds for Thought machine and avian (our two biggest fair value increases totalling 208m of our increase) so we can be confident that no pending fair value downgrades there. Market was tested recently in current conditions. If 1/3 reported NAV/share is to be justified we need to have an improbable reverse of fair value for ledger, revolut coach hub and aircall.

For my money I don’t think it will happen. We should have had a profit warning by now if it were pending. really no evidence of frothy fair value calculations beyond Revolut and even there rapid growth might help matters.

Roll on half year results. Half year close in a week. Market jittery but we really should be 2/3rds of nav not 1/3rd. It is overshoot.

Our interims will show the changes in valuation by core holding. Wish they would release more information now.

Anyhow every core holing that has an improvement in valuations due to recent last round (even in this market) helps whole portfolio (even those without recent confirmation funding rounds) hold it s value.

more deep tech in our portfolio.

be interesting to know if valuation up or down on previous round b

i expect up which would highlight the unnecessary anxiety our core portfolio valuations will not hold.

https://www.thisismoney.co.uk/money/markets/article-11222053/Falling-gas-price-set-slash-PM-Liz-Truss-bailout-bill.html

I would imagine many are now pivoting to slower growth and profit from fast growth and a 2 year runway. I do think we have a solid tech portfolio with unique niches and not much of the retail type THG that can go up on hope in a tight competitive retail market market and come down just as fast. TGH just had an RNS on results. Must say not bad looking. Lots of cash preserved. Maybe worth a punt at current levels. I’m tempted to do a tiny punt on CAZOO too. I have a small punt on trustpilot.

We never had too many of those retail types in the portfolio .

https://www.theguardian.com/business/2022/sep/12/the-fed-interest-rate-rises-us-inflation-unemployment-recession?CMP=Share_iOSApp_Other

When to buy

I accept I did not see at all big retrace we have had from 11.82 to 3.2. My top up average is 6.5 and I started topping up at 11.2. Seems silly now.

However I am still predicting we have passed bottom -or will shortly. I think we will go up pretty smartly starting in mid October. I think the UK/Eu private tech sector is oversold. Within that I think GROW got even more oversold mainly due to the 3 traded shares crashing and assumptions the rest of the portfolio might be similar. Revolut aside it is not. Even Revolut much more solid than say Cazoo which is in a competitive retail market with a big advertising spend and tight margins.

As mentioned I think the general tech market will recover when inflation peaks. We may be there now and just need a month or two for the hard data to confirm. Central banks are pretty keen to stop raising interest rates but need some evidence for cover. I think they have already overshot and will be cutting rates again towards the end of 2023 to fight a recession. As we found out in the covid dip our tech shares immune to even a sharp dip in the economy. More sensitive to interest rates than GDP growth or lack of.

https://abcnews.go.com/Business/wireStory/uk-inflation-dips-slightly-august-89869111

Tombs has been a hawk on inflation but I think the end is now in sight. 2% inflation, or even the market anticipation of it coming, will make our sector and SP soar.