I’ve recently started adding a venture capital investor to my portfolio – Draper Esprit. I completely understand why many investors would think I’m crazy. We are late in the cycle and many tech businesses are insanely valued. But I’m moving cautiously, buying a small amount every month.

Why my interest? Put simply I was chatting to my 18-year-old son and he asked me what should a smart investor buy into for the very long term? My answer was to look at the tech space where I think we’ll see huge changes over the next 40 years. Scottish Mortgage is the sensible way of playing this via large-cap investments but if you’re looking for a ‘small-cap’ venture capital investor with an avowed European focus then nothing quite beats Draper Esprit on the public markets.

My advice to Zac…. “why not put some money in this venture capitalist and just be patient”. And frankly, if that’s the advice I give my son, maybe I should share in the risk – and the potential reward. So, I’ve started buying a little every month, especially as the shares are trading at a chunky discount to NAV.

I like the fact that Draper Esprit is a proper tier 1 player in Europe. I also think its target of 20% annualised returns through the cycle is sensible. Its management can also point to some concrete valuation uplifts, with two portfolio businesses Ravenpack and Pollen experiencing recent NAV uplifts which appear to have added about 3.5$ to the manager’s NAV in the recent results.

According to Numis the shares are trading at an “attractive 12% discount to the last published NAV of 524p”.

Here’s the more detailed Numis note on Draper Esprit from earlier this week:

  • RavenPack sees strong NAV uplift. Ravenpack, one of the companies in the group’s core portfolio (holding valued at £15.6m as at 31 March 2019), raised $10m from GP Bullhound as it seeks to expand sales of its analytics platform in Asia. RavenPack is a big data analytics provider for hedge funds and banks. As a result of the valuation at this latest funding round, RavenPack’s NAV increased by £18.3m to £33.9m.
  • Pollen moves to Core Portfolio. Pollen (previously known as Verve), an invite-only marketplace that allows people to bring their friends to the best experiences and share rewards, has raised $60.0m in new finance, bringing the total capital raised to date to $100m. The round was led by Northzone with Draper Esprit participating alongside others, including Sienna Capital, Backed and Kindred. Draper invested £5.9m in this round (as part of a bridge in Q1 2019), with an earlier £3m investment in the Series A round in 2017. As result of the valuation at this funding round, the NAV increased £2.3m to £13.2m and Pollen has joined Draper Esprit’s core portfolio.
  • Led Sweepr investment. Draper led a $9m round into Sweepr, investing £2.7m in the Dublin-based customer experience platform for the connected home, alongside support from Frontline, a seed investor. The funds will be used for expansion.

Buy, TP 680p. We remind investors of the attractions of the investment case: exposure to some of the most exciting technology companies in Europe, which are typically only accessible to VCs; the track record of performance, including successful realisations; portfolio approach providing diversified risk and the multi-platform strategy, which ensures the group has the resources to keep pursing its investment strategy.

And now for something completely different

I’ve always had a soft spot for ‘emotional assets’ i.e alternative assets that form a strong emotional bond with their passionate investors.  The trick with these emotional assets is to find a practical way to invest as most are fundamentally illiquid, as investments at least.

Wine has recently become much more mainstream for instance, but two emotional assets have remained strangely resistant – diamonds and whiskey. With the former, I’ve seen a number of vehicles suggested which allow access to the asset class of kings and queens. Yet none seem to have made it to the main markets.

Whiskey, by contrast, has seen a little more success – there’s already the excellent https://www.whiskyinvestdirect.com/ available to UK investors. Now we have a fund also….the Single Malt fund.

More on that below:

 [The Single Malt Fund is] the worlds first regulated and publicly listed single malt whiskey fund – has arrived in the UK. Supervised by the Swedish Financial Supervisory Authority and listed on the Nordic Growth Market (NGM) exchange in Stockholm, Sweden, The Single Malt Fund aims to raise a maximum € 25 M, and has already started to collect capital from Sweden’s retail investors.

Having been operational for six months, the next phase of growth will see the Fund targeting professional investors via UK wealth managers and family offices, with a minimum investment of €100,000 per investor.

As the only regulated and listed ‘passion pursuit’ on the market, The Single Malt Fund is aiming to tap into growing demand among high net worth individuals for investing in alternative assets as part of a balanced portfolio approach. 

Over the period from December 2014 to June 2019, Rare Whisky 101’s leading index for rare whisky, the Apex 1000 Index, which tracks the best performing 1000 bottles of rare whiskyrose by 162.22%, outperforming the Liv-Ex Fine Wine 1000 (39.58%), FTSE 100 (13.09%), Brent Crude (11.09%) and Gold (19.16%).

Since launching earlier this year, The Single Malt Fund has established its headquarters in Dublin and recruited Ed Forrest a senior executive with over 25 years’ experience at LVMH and Diageo, to run operations for the Fund, including responsibility for buying and selling whiskey for the Fund. Three of the Fund’s most notable investments to date include:

       A cask of 1977 Littlemill – some of the oldest available single malt whiskey from the oldest distillery in Scotland.

       Port Ellen 37 YO: a once in a generation cask whiskey. Only 174 bottles released worldwide.

       A full collection of the Midleton Very Rare releases. The most prized collection of Irish whiskey available.