The SoftBank Imaginative and prescient Fund has been screaming from the enterprise headlines the previous few months, pushed by eye-popping rounds (and valuations!) into among the most notable startups all over the world. But, SoftBank isn’t the one participant quickly shopping for up the cap tables of high startups. Certainly, one other agency, greater than a century outdated, has been combating for that late-stage fairness crown.
… Who the what?
When our fintech contributor Gregg Schoenberg interviewed Charles Plowden, the agency’s joint senior accomplice, in regards to the agency’s prodigious investing, we realized that we have now by no means gone in-depth on one of the vital influential traders in Silicon Valley. So right here goes.
Baillie Gifford is a 110-year-old asset administration agency primarily based out of Edinburgh, Scotland, and has lengthy had a penchant for pre-IPO tech corporations. The agency was an early investor into among the world’s most dear non-public and public tech corporations, boasting a roster of portfolio corporations that features unicorns from almost all generations in fashionable tech, together with all the pieces from Amazon, Google, and Salesforce to Tesla, Airbnb, Spotify, newly-public Lyft, Palantir, and even House X.
Baillie Gifford’s attain stretches means past the 280/101 hall. The agency has an intensive historical past of investing throughout geographies, with one in all its first and most profitable investments coming from an early entry into Chinese language e-commerce titan Alibaba. Extra just lately, Baillie Gifford even held a stake in just lately IPO’d Chinese language electrical autonomous automobile producer NIO, and one the agency’s largest present holdings is South African web conglomerate Naspers — who itself is an energetic investor and developer of rising market tech infrastructure.
The agency’s low profile belies its aggressive capital deployment technique. In keeping with information from Pitchbook, Baillie Gifford was concerned in roughly 20 offers in 2019 and was concerned as a lead or participant in transactions value over $21 billion in combination complete deal dimension — beating out behemoth Tiger World who tallied roughly $13.25 billion on the identical metric.
The agency has about $2 billion centered on non-public corporations, so whereas it’s aggressive in moving into later-stage rounds, it isn’t almost working on the scale of say the Imaginative and prescient Fund or Tiger World. Whereas the asset supervisor primarily focuses on public-equity investing, the agency has participated in funding rounds as early as Sequence A based on Pitchbook and CrunchBase information.
Total, the agency manages $221 billion in property beneath administration as of January 2019.
As one of many earliest asset managers to put money into pre-IPO tech corporations, Baillie Gifford has sourced investments via its long-standing status as an investor. The agency first started actually diving into non-public tech investing within the wake of the dot-com bubble. The agency doubled down on the tech sector at a time when few others have been investing and sifted via the blood tub to seek out low-cost entryways into corporations that at the moment are amongst the world’s largest.
Right this moment, nevertheless, the panorama is undoubtedly a lot totally different. Tech corporations now make up 4 of the highest 5 largest corporations on the planet by market cap, and 7 out of the highest ten. Now, everybody needs a chunk of the pie and there appears to be extra checks being thrown at founders than most may even match of their wallets.
With extra capital at their fingertips than ever earlier than, founders are opting to maintain their startups non-public for longer with a view to keep away from the stress of getting to take care of short-term public market traders who’re as a rule on the lookout for the primary alternative to money out. So why, amongst a lot selection, do corporations proceed to accomplice with Baillie Gifford?
Plowden has some insights on that entrance in our interview, however the abstract is that Baillie Gifford simply sees itself as a accomplice. Not like its friends and most funding managers, Baillie Gifford has no outdoors shareholder house owners to report back to. As a partnership, wholly-owned and run by simply 44 companions, the agency doesn’t face the organizational constraints that beset most companies that handle billions and billions in property.
The consequence? Briefly, Baillie Gifford has quietly been making a killing, and possibly consuming some good scotch alongside the best way as effectively.