Zoom AMA #7: Simon Cook, Chief Investment Officer at Draper Esprit, our VC investor, 21st May @ 8PM

UPDATE 2: Thanks everyone for coming to this meetup! And special thanks to Simon for giving his time and answering community questions. :pray:
UPDATE 1: Join the call on this link: [DELETED]

After last week’s insightful AMA with Freetrade’s new board member, Perry Blacher, we are continuing this week with Simon Cook, Chief Investment Officer at VC Draper Esprit, who made a Series A investment in Freetrade last year.

simon_cook

Thursday 21st May
8 PM

The best topics

  • His background and experience as a VC investor
  • Draper Esprit’s involvement with Freetrade

If you are planning to come

  • Like this post, so we get a sense of the crowd size
  • Post any questions below
  • Like the questions Simon should tackle first
71 Likes

Thanks you Simon for doing this!

  1. What made Draper Esprit give the go ahead on this crowdfunding round/why did you not take part in it.
  2. What’s the value that Draper can add to Freetrade/what is your investment strategy for Freetrade?
  3. What got you into the venture capital world?
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Hi Simon👋🏼 Again thank you for taking the time to do this AMA!

When looking to make a potential VC investment, what key characteristics do you like to see in a business?

Thanks again!

1 Like

great question!!

Hi Simon, what depth and sophistication would you like to see from the platform in time to come? By that I mean different asset classes, digital securities, Shorting and so on? The possibilities are obviously large and varied but it doesn’t always pay to be all things to all people? Is there a use case for an institutional offering or not down the line? I am confident FT is remaking how the retail business will work, but the industry itself is largely in need of the same evolution.

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What type of potential exit is most likely for Freetrade (sale, IPO etc)?

What is the time horizon over which you would expect to realise return on investment?

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Hi Simon,

Thanks for taking the time to do this AMA !

Adam talked about a potential series B at the end of the year or early next year.
1 - Will you be looking to participate in this round ?
2 - What do you think about this crowdfunding round valuation ? Are you happy to consider that FT’s will be looking to raise at a higher valuation in a few months for its series B ?
3 - Did you advise FT on this crowdfunding round’s valuation ? And if so, how do you fairly advise on that specific topic versus your interests in a potential series B ?

Many thanks,
JB

19 Likes

Hi Simon

I’m an investor in Draper as well as Freetrade. Have recent events changed your (Draper’s) views on investing in Fintechs positively or negatively and what changes (if any) have these brought to Draper’s approach to investments generally? (More selective, lower or greater risk appetite, greater spread of risk, shorter or longer ambitions etc.)

Thanks

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What were the reasons behind Draper Esprit’s (DP) decision to waiver their pre-emption rights in the context of Freetrade’s crowdfunding Round 6 in CrowdCube (14th May 2020 to 19th May 2020)? Why surrender your rights in favour of the crowd? What value do you see in it? Is this a usual modus operandis for DP, i.e. have you done it before with other companies? What’s the rationale?

Do you plan to increase your position in Freetrade in future VC rounds?, are you happy with what you’ve got and have no intention to add to the position?, or we’ll see how it goes and take it from there?

PS: I’m not complaining. The questions are written in the most neutral way possible, for my abilities that is.

12 Likes

How did you end up in London after growing up in Canada?

What do you think the biggest difference is between the UK and North America? (From an investor’s perspective.)

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Draper Esprit are investors in Revolut as well. How do you think Freetrade can compete with Revolut trading knowing Revolut already have more stocks available in their stock universe than Freetrade alongside dozens of other features in their financial super app?.

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Hi Simon,
Currently Draper Esprit (GROW.L) shares are traded with roughly 40% discount from their NAV. Do you think the market is right implying such a devaluation from your portfolio?
Which companies from your portfolio have the highest potential (besides Freetrade)?
How do you see competitive environment in European VC market? Is it true that more and more VC’s are preferring profitability (or at least path towards it) rather than huge growth? Where does Freetrade stand in this respect?

Thanks a lot for taking AMA with crowd investors, much appreciated!

6 Likes
  1. Do you agree with the valuation that Freetrade has given itself in its recent Round 6, especially in light of the fact that Monzo are now looking to raise funds at a 40% discount to previous rounds?

  2. What do you think the impact of the Covid recession will be on fintech’s?

  3. Why did you decide not to participate in the recent Freetrade round?

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How important do you think it is that we’ve built our own tech rather than outsourcing. What will it mean to our valuation in the long term?

More generally how far should we go with this - how should we judge what’s core and what’s ok to use a third party for.

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Are you happy with Freetrades growth to date?

How involved are Draper Esprit with Freetrades development? Assume somebody sits in at board level?

What are you hopes for Freetrade in 10 years?

It looks like I won’t be able to make this Zoom AMA. Can someone post any key takeaways in this thread please?

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What do you see as the biggest risk to Freetrade’s success?

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Hello Simon! Thank you for doing the AMA.

I have 3 questions:

  1. From what I have seen Draper Esprit is targeting companies that can be scaled globally.

What is your take on geographical expansion for Freetrade.

Should the product be pushed out to as many markets as early as possible to capture early adopters may be even with limited functionality (customer support in English, product at early stage, etc). In a similar manner to what Revolut has been doing.

Or should FT wait to carefully craft the product for every specific market.

Or may be a third option which is a combination of both.

  1. What is your take on the current valuations of fintechs in Europe. Especially considering what happened recently to Monzo (a down round). Do you think that there is a wave of valuation cuts coming around the corner.

  2. The FT’s cap table currently consists of more than 50% crowd funders. How healthy it is for FT’s future? Would you be considering buying out the stakes owned by the crowd over the coming years?

Thank you!

6 Likes

Competition is clearly heating up in the UK, with rival platforms ahead on Product, User nos, revenue, AUA, etc. Clearly, as an investor in freetrade, you must have confidence that that they will fare well against such intense competition.

Could you please outline your thoughts on why: e.g. Do you believe Freetrade will out-execute in the long run (if so, please explain)? Or do you see it as a space with room for many players? etc

1 Like