One upfront remark: I do not recommend to invest in Venture Capital right now. The market is clearly overheated and the asset class is known to be very volatile although Warren Buffett’s Todd Combs seems to just have discovered Fintechs.
This post is ment as a “long-term perspective” view on the sector and not a buy recommendation in the current environment.
How to invest into Venture Capital as a Private Investor
Famous VC funds
Venture Capital, i.e. the industry funding (technology) start-ups is known that almost everything depends on relationships.
It is no secret that a few funds like Sequoia or Kleiner Perkins have produced outstanding returns but these funds are “invitation only”, there are little chances even for larger institutions to invest in them and for individuals without direct connections it is more or less impossible to get in.
A few (random) updates on stocks I own or looked at in the past:
Already 3 weeks ago, they issued a document how and when the merger will be completed. If I understood everything correctly, the ratio will be 20 SFPI shares for one DOM Security share and completion is on or around 13. November 2018.
DOM currently trades at 53 EUR, SFPI at 2,61 EUR, so the relative price is pretty efficient. I plan to stay invested and over time increase the position from 3% currently (after selling 40% at the tender offer at 75 EUR) to a full position. I think it makes sense to stay with founder Mr. Morel for the future.
System1 (or under its old name Braijuicer) is a good example for a stock where it didn’t pay off to hold if we look at the chart:
I had looked briefly at them when Ben from Wertart bought them in early 2016 but back then didn’t take the time understand what the company was all about. After the huge drop I decided to have a deeper lok at the company.
This is not investment advice. Please do your own research and don’t follow any anonymous bloggers.
Let’s continue with this nice “anti Buffett” stock from my post last week.
The people / founders
FitBit’s original founders from 2007, James Park and Eric Friedman are still on board.
Interestingly, although both ar only 41 years old, FitBit was the third company they founded together.
The other companies were Windup Labs, a photo sharing company they sold in 2005 and Epesi, a B2B software company that didn’t work out.
Performance 9M 2018:
In the first 6 months of 2018, the Value & Opportunity portfolio gained +3,38% (including dividends, no taxes) against -2,2% for the Benchmark (Eurostoxx50 (Perf.Ind) (25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%)).
Some other funds that I follow have performed as follows in Q1 2018:
Partners Fund TGV: +6,95%
Squad European Convictions +1,97%
Ennismore European Smaller Cos +2,16% (in EUR)
Frankfurter Aktienfonds für Stiftungen -4,42%
Evermore Global Value -1,59% (in USD)
Greiff Special Situation -1.91%
Squad Aguja Special Situation -3,86%
Paladin One +1,5%
The top 3 performers on a weighted basis were for 9M 2018 were:
Although I wrote a lot about Watch companies over the past few years (Swatch part 1, Swatch part 2, Hengdeli, Fossil part 1, Fossil part 2, Movado, Richemont), no investment came out of it. However I had a lot of fun researching these companies so it was time well spent.
When I initiated the series in 3 years ago, Smart Watches were a big thing and especially the Apple Watch was perceived to be the “Swiss Watch” killer, which, as we know now didn’t happen as they seem to coexist quite well.
Besides Smart Watches, Fitness Trackers were the “hot shit” and especially VC backed FitBit that IPOed in 2015 was taking oer the world.
This chart shows Fitbit against Fossil (blue) and Richemont (green) and we can clearly see who had staying power and who not:
Personal experience 2007-2009
There are a lot of articles currently about the “Great Financial Crisis” which culminated exactly 10 years ago when Lehman Brothers collapsed on September 15th 2008. There is still a lot of discussion around who is to blame for this, however most of this is nonsense as Barry Ritholz nicely summarized here.
My personal story is relatively short but quite lucky: Due to my “day job” back then, I saw many early warning signs in 2007. Although I had no idea how deep the crisis would be, I got mostly out of the stock market by the end of the year 2007.
This was maybe my only successful timing action I ever managed to do with some success. I even made some decent money with shorting that I had just discovered back then and a was on track to positive performance in 2008 when I was caught in the mother of all short squeezes, the famous “Porsche Volkswagen corner” which cost me more than -10% portfolio performance.
Nevertheless especially the years following the crisis taught me some important lessons which I wanted to share:
My 10 lessons (hopefully) learned