Member Info for steph

But competition from rivals makes this harder than it sounds. A vc firm that tries to align a funding round with the prices paid in public markets may find that another vc firm comes over the top with a better offer. Venture capitalists are caught between two opposing forces. On the one hand, they see that interest rates are going up and technology stocks are falling. On the other hand, there is an array of tempting startups that are also being chased by lots of rival shops.

The expectations of entrepreneurs matter in this regard. Many will look to the terms their startup peers achieved recently as a guide to their market value, says Simon Levene of Mosaic Ventures, a London-based vc firm. It is not healthy for startup founders to think that capital will always be forthcoming. But try telling them that. An excess of optimism is part and parcel of being an entrepreneur. People who are more mindful of risks get regular jobs. Memories do not reliably stretch back to the dog days of 2002 when vc funding was hard to come by. Founders grew up in a world of near-free money. It will take time for them to adjust to a different landscape.

Finance & economics
Feb 12th 2022 edition
Buttonwood
How unlisted startups’ valuations will adjust to falling share prices
Surprisingly slowly

There are some signs that the public-market reckoning is causing a rethink in private markets. Technology ipos are being pulled. Entrepreneurs are advised more pointedly to conserve cash. And there is tentative evidence that vcs are pulling in their horns. The Information, a tech-industry news site, reported recently that Tiger Global Management, a prominent financier of maturing tech firms, had cut back its earlier offers of financing to a handful of startups.

Is this the start of a trend? Don’t be too sure. A lot of venture capital has been raised from investors. Around $750bn was committed, waiting to be deployed, at the end of 2021. The most gilded startups might be hard pushed to notice any shift. Their big funding cheques are likely to keep coming. In the rest of the startup market, any mark-down to more sober valuations will happen with a delay. For now, at least, the wall of venture money militates against a big reset.

https://www.siliconrepublic.com/start-ups/three-venture-capital-vc-funds-europe-heathtech-life-sciences

Whilst the escalation in tensions is unwelcome, it is unlikely to alter global economic variables that much.
The initial reaction to President Putin's declaration was an immediate risk-off with oil prices spiking. Our sense is that part of the equity move was a miscalculation over the earlier Russian troop withdrawal.
Russia's economy is itself strong with record foreign exchange reserves, signs of inflation peaking (January 8.7pc), its highest current account ever and debt-to-GDP of around 20pc.
The Ukrainian currency has been under pressure recently, while government bond yields have spiked but not to the extent seen during the annexation of Crimea.

At some point funds will prefer to buy grow rather than participate in a last funding round. IN effect gets the same at a discount. We are way below what I though possible without a big 30% general market. Crash. Even a big messy war in Ukraine not a big enough black swan in my book .

I do think the black box on which of our companies are making or not a net profit yet and if not how long are the runaways is hurting us big time.

A while ago grow gave itself permission to buy it’s own shares. No sign of that yet.

Stopped now. I had a small amount of guaranteed stop loses trigger so maybe SP will now go up. Never imagined they would ever trigger.

Thanks for all your analysis. My jinx that the sp drops as soon as I top up is alive and well. I suspect in the engine room of our portfolio the news is not so dire. We had nearly half the portfolio valued on conservative and unchanged multiples of sales. Even if the other half contained a few “frothy” last rounds the proof is the new post retrace NAV calculations and these we are recently guided will be circa 930/share for year end. So 690 as an SP assumes NAV/share decreases that have not occurred and may not occur in the April 2022 to March 31 2023 fiscal year. I think it is an overshoot although when markets panic they do overshoot.

Yes they are certainly a drag right now. Hoping we have disposed of enough at above IPO prices so this does not drag our NAV down.

Topped up again. Wish me luck.

I accept in a big general market retrace we might dip 30% from here even if our sales to nav ratios of portfolio are holding fine. Just caught up in the panic. IN the sense that our nav/share is based indirectly on on sales per share we should behave more like a utility in downturn but we don’t as it is a black box on how much of that sales per share translates into net profitable companies and if not profitable how long is the runway before funding runs out. I do think more transparency would help. I suspect the underlying companies are more probable and have longer runways than the market is assuming.

I am trying to raise more money and will top up further if I do. There is a limit to the leverage I will buy new positions at. I think more than 50% too risky for the reasons you outline. More comfortable at 40% or below. I have not been 80% for some time. If we get back to circa 12 quid I’ll probably take the leverage down to below 20% and then sit on it for a few years.

When North Korea invaded the South, for example, in 1950, the stock market (measured by the S&P 500) dropped by 12.9pc, but recovered all those losses in just 82 days. The 17pc drop in equities after Iraq invaded Kuwait in 1990 was recovered in six months. And even the 20pc fall after the Japanese attack on Pearl Harbour – a serious setback, all things considered – was clawed back in a year, after which the market resumed its upwards climb. There is no reason to think it will be any different this time.

Volatile months for and aft to be sure.

I’m betting that over the next 2 or 3 months a 200 point drop from here improbable but a 200 point rise quite easy to imagine.

Us economy starting to slow so maybe will not be 7 rate rises as Goldman sacks just predicted. Oddly our portfolio does well in a slow down but does badly when rates are rising so a slowdown good news.

I’ll be surprised if us rates get beyond 2%. Quite pointless to raise rates to constrain wages. Wages lagging inflation not driving inflation so just to catch up to wage inflation neutrality wages can run ahead of inflation off 2 years after interest rates stabilize. My prediction is all central banks very reluctant to really raise interest rates due to government debt and will do a lot of talking about it and very little doing. Once the market realizes the wheeze stocks could stage a quick recovery.

War in the Ukraine bearing down on stocks as well but more so 90 dollar oil. 90 dollar oil good for some nations though including oddly Russia. Saudi now running a budget surplus for the first time in over 5 years.

Yes leveraged. Wish it was not. Higher leverage than I normally tolerate too.

For my money I think much higher odds of going up 20% from here than down 20% over the next Few months. No reward without risk though.

Wish me luck.

Topped up quite a bit

Wish me luck

Yes the feedback loop of a disruption of gas supplies is a real factor. Lots of EU gas flows through Ukraine plus sanctions might impede other oil and gas Russian exports making international prices spike.

That said all the military action in 2014 did not result in gas piped throng Ukraine being stopped nor did oil prices spike back then.

Personally I don’t think russia is going into kiev. If there is an incursion it will be limited to donansk and the west can live with that. Russia has no good option to fully occupy Ukraine. They are after diplomatic leverage but of course things can go wrong and spin out of control. I think the odds of that low enough to stay fully invested.

https://www.usatoday.com/story/money/markets/2014/03/17/stocks-monday/6513331/

https://knoema.com/jhxfibc/dow-jones-industrial-average-historical-prices-2007-2020

War sadly unless it directly hurts trade flows does not have much impact on western stock prices. Russia and Ukraine poorly integrated into global economy right now. It is a minnow economically. Western nations are not getting ready to be directly in the line of fire which would risk a much wider conflict. Indeed western (including UK) military advisors and trainers are being flown out not in.

Jitters to be sure but not a reason for any sustained dip. today may be a good time to top up.

Jinx active today. Maybe I’ll top up again.

Tech company valued at £15bn in Europe's biggest capital growth deal
https://www.telegraph.co.uk/business/2022/02/11/tech-company-valued-15bn-europes-biggest-capital-growth-deal/?WT.mc_id=tmgliveapp_iosshare_Ayg7812Nlh8y

Topped up anouther 1,500 this morning and so far so good on that. Maybe jinx finally ending.

I don’t mind being a bit long now compared to long term holding target. Yes volubility and downside risk at the moMent but what an upside right now.

Another 2k shares. Wish me luck.

https://www.dailymail.co.uk/news/article-10496281/Families-measured-increases-rates-year-BoEs-chief-economist-says.html