Looked at it quite thoroughly & went through most of their PortCos, looks good and legit. With EIS I believe its a very appealing concept. I however don’t have EIS and without that it looks OK. One of the comments show their results without tax incentives;
“1. The non-tax adjusted IRR’s for Funds 1-3 are: 27%, 13% and 6% respectively. However, this includes companies which have not raised or which have failed (1 company). The IRR’s for funds 1-3, only including companies that have raised is 27%, 37% and 79% respectively (non-tax adjusted). It is worth noting that the Fund 1 IRR is the most accurate IRR as all companies have raised.”
Seems okay, loss ratio is quite good. Looking at their first fund, performance seems decent (note that this is gross IRR, my guesstimate net IRR would be like 17-20% ), but 2 remarks on this. 1)Theres little realisation, thus we can expect some zombies amongst the PortCos which will drive returns down, and 2) have to remember that they have the trend with them (ClimateTech); I’m not too sure whether such results can stand up against ‘real VCs’; in my understanding, more or less everyone in this field is doing great. Not trying to say its unimpressive, just pointing out that performance is not only the skill of SA, but also markets overall. Given more competition in coming years, thats important to factor in. Anyway, I’m not sure whether risk/return wise this is superior to public markets or a tech PE trust like Hg given the much higher risk (note that I’m also not sure about my own skills beating public markets, lol). My other concern is the team, it seems rather small, experience is so-so and their lead PM just left.
Other than that, probably one of those rare opportunities where we can invest something that offers experience and diversification in the VC market. And if you factor in some tax reliefs for those that fail, this is seems like a nice opportunity.
Anyone here looking at Earthly? I invested in Ecologi, which seems miles ahead of Earthly, but the valuation, institutional backing and early traction seem very attractive. They are raising on Crowdcube, about a week left on the campaign. Anyone else in this?
Well ecologi have general catalyst backing which I assume will provide them with top tier guidance at the board level. Perhaps this will give them an edge over the long term.
I missed out on them which I’m a bit gutted by
Earthly seems very promising to me. They announced today that Google invested in them as part of their climate tech fund. Team seems very knowledgable and the carbon offsetting market is expected to grow from $300 million in 2021 to $50 billion in 2030 - a massive opportunity. And don‘t forget that Eartly is earlier staged than ecologi with higher upside potential.
Interesting to hear about the US equivalents - I shall take a look! Although I imagine it’s probably not very tax efficient to invest from the UK.
I think it’s great to have an experienced team do the due diligence and negotiate the investment terms, because the opportunity to do so on stand alone crowd investments is very limited (and time consuming!). Nevertheless, I do try to pick a few startups to invest in every year outside of funds like this.
I think without EIS I would also struggle, you don’t get any relief on the downside and if there’s upside you pay significant carry fees on profits and then you also likely face a tax liability on top.
I agree with your assessment on the IRRs, it’s simply still too early to tell. The IRR calcs are based on latest valuations, and not necessarily realised returns. While many of the companies have raised follow-on investments, I think it’s still too early to estimate returns as there have not been enough exits yet to justify it - so time will tell.
Just read an article today (from Finance Feeds) which highlighted that global Equity Crowd Funding exploded last year. 2020 was approx $9BN, whereas 2021 was, wait for it, $100BN+
The new ECF legislation in the US is really helping to drive this where it is seriously opening up opportunities to everyone, not just accredited investors and with more companies having the ability to raise far higher amounts.
IMO this is going to mean more time required to sift through the rubbish, watching out and avoiding excessive valuations, focus on spreading investment into early stage start up funds, invest time in networking with fellow investors to share recommendations (like we do here) and also invest in paid subscriptions from companies like KingsCrowd who assess and rate start ups…
Let’s see what 2022 brings but I’d predict more significant growth is on the way
Just curious, do people here make use of services like Kingscrowd? I personally found their pricing quite steep. I used to daily visit Hellosharky, run by a guy who does scorecard scoring for free and has great vids on yt (check out the carbon credit & marketplaces ones, great learning!), but he seems to have mostly quit now.
I like the look of the app though. Can see it really appealing to people, haven’t played any games but if they’re half good this could really take off. A nice side line in branded games from TV shows or Brands would be a good revenue source.
Gave it a try. The games are primarily spin the wheel, scratch card, a raffle and a lottery type. Whether there will be more different types is anyones guess.
I did win £2.50 though, so not all bad
I guess it will appeal to those who like their gambling. - The spin the wheel conveniently ended up on zero too much for my liking.
James
Not bad seeing as I haven’t even added any money yet.