00:11:46 · Peter Singlehurst
[00:11:46] S0: On on the sec... On the sort of broader kind of private market dynamics, I think you need to separate primary and secondary, capital within private growth equity markets, because I think they're seeing two quite distinct pictures. On on the primary side, so companies raising capital, going to investors, you know, giving them full information and and selecting a small number of partners that they want to work with as shareholders in their companies. I actually think this part of the market has become much more institutionalized, much more professional over the last ten years. I would say, actually, specifically, really since 2020 and 2021. There was a lot of hot money in those years. There were a lot of hedge funds. And what happened in 2022 is a lot of those market participants got really badly burnt, and they left the market. And I think that's a really good thing. You want to see a rational, professional, institutionalized market in the growth stages of the private markets as you see in many parts of the public markets. And you can see this in the financing rounds of some of the most prestigious companies. So if you, you know, talk about Anduril, for instance, which we're shareholders in, if you look at some of their more recent rounds, they have skewed towards bringing in partners who are actually traditionally public market investors that are large asset allocators, that have been doing this for a really long time and have that level of sophistication. And because they get to choose who their investors are, they bring in those institutional investors, and they sort of say no to the, sort of slightly hotter money, should we say. So I actually feel pretty good about the standards, the level of underwriting, and the level of professionalization that you see within the primary parts of the private markets. Secondary markets are a little bit different. There, you do see, sort of slight FOMO dynamics. You will see people wanting to get access to companies where they actually don't even have information. So they'll they'll know about a business by what they read in the press, but I have no idea what the financials are of the company, which... Plus it's crazy. Like, have no idea how you could decide that you want to invest in x y z company. You've never seen a set of accounts of the business, let alone spend time with the management team.
00:13:59 · Peter Singlehurst
So you do see some of that in the secondary markets. There is more liquidity in the secondary markets, and some of that's good. Like, it it can be useful for investors to be able to add to or reduce positions in secondary markets. But what's not good is where you see investors coming into the secondary markets, trying to get access to brand name companies where they don't know the management team, they've not spent time with them, they don't have access to financials, they're and just kinda waiting to pay whatever valuation that that, yeah, that... That's out there. That is worrying. But, like, what sits behind that? Well, what sits behind that is there's a cohort of amazing companies that only a very small number of institutions and investors can get access to. Like, we're fortunate enough to be one of those. We're fortunate enough to be one of those because we've been doing this for as long as this part of the market has existed. But I do believe it's right that ordinary savers should be able to get access to these companies. Like, it's... Tesla creates a lot of wealth for ordinary investors. SpaceX, it's been much more difficult for those ordinary investors to get access to these kind of companies. And so part of what we've tried to do is give ordinary investors access to those kind of companies, and we do this from within these investment trust structures that I mentioned. So the fund that we started doing that for was a fund in The UK called the Scottish Mortgage Portfolio. It's a 15 or so billion dollar fund, but quite quite quite on that number. It might be a little bit off. And north of 30% of that fund is invested in private companies. In 2019, we launched a dedicated fund called the Schiehallion Fund, which today, it's just shy of $2,000,000,000 in net asset value. Anybody can go and buy shares in that company, and they can get access to SpaceX, ByteDance, Bending Spoons, Databricks, Stripe, Anduril. Like, I could go on. You can get access to those companies, you know, for as little as $2 if they wanna buy a share. Very low management fees on that vehicle. Free freely tradable on the London Stock Exchange.
00:15:59 · Peter Singlehurst
And so, yeah, we found ways actually to sort of democratize access to some of these companies, but still do it in such a way where there is, you know, a high level of due diligence that goes into these companies where we are underwriting these companies with full information rights, full access into management. And so individual investors don't have to make spurious decisions about, hey. Well, I'm just gonna buy something in an SPV, and I've got no idea what it is. They know that what's going into the Schiehallion Fund or or Scottish Mortgage has been underwritten to the highest level of sort of, you know, professionalism and and experience from doing growth equity investing for over
00:16:38 · Guillaume Moubeche
[00:16:38] S1: a hundred years. And I I 100%, like, agree with what you're saying and the fact that you as like, you know, an investor with knowledge, with access to the information, you can make like this wise decision and, you know, invest globally, have like this also like portfolio kind of mindset. So you have like a... I mean, the risk is not only on one single asset. However, don't you think that from a psychological perspective, I feel like investing in companies for many people is a bit like, you know, like buying a specific asset. So, I mean, in your case, whenever you buy into a fund and I've invested, you know, like in in many funds, it's it's... Yeah. It's like I'm putting my money, I'm expecting a return and that's it. There is no real like emotional connection. So if the fund invests in an asset, I don't really feel like I own that asset even though I'm investor in a fund. However, if I, like, invest directly into, like, Anthropic, SpaceX, Stripe, whatever, you know, when I'm at dinners and people say, hey, like, what's the latest investment? You know, it's... It it becomes something linked to your status. And I think that what's make people feel good about investing because the moment something becomes a status, you know, it's like the same for people, you know, who love to buy fancy watches or whatever. It's it's become something they are pride... Proud of. And I think like investing in the next companies is something like quite excited for many. So have you ever thought of it? And is it something you think of from time to time? Like, hey, couldn't we maybe have like vehicles that are probably much cleaner than anything you could find on the market with third layers of whomever taking, like, fees on fees, etcetera, etcetera, and just have, you know, like, the the people investing a little bit more involved directly in a single asset.
00:18:40 · Peter Singlehurst
[00:18:40] S0: Yeah. I I suppose in a way what you're alluding to there is that we we talk about investing as if it's one thing, but maybe it's two things. You know, on the one hand, maybe it's everything that you're talking about there, which is, you know, the the excitement of it, the thrill of it, the status of it. And then there's another thing which is solely focused on trying to make high returns over the long term. And sometimes those things can be the same thing, and other times they can be very, very different. We're firmly focused on the latter. And to your question about sort of single asset vehicles and dedicated exposure to individual companies, I mean, this is something that we do for our institutional clients through the coinvests that we offer. And there, again, you're facing off with sort of professional institutions who have diversified portfolios, who can take very informed, again, understanding with information about what to invest in. And so there, we will kind of offer that kind of single asset exposure. Whilst I think there's a lot to be said for the the... That kind of first use case that we're talking about, the individual kind of excitement and and sort of pride of owning particular companies, that can also be quite ephemeral. So the company that can be the pride of everybody's portfolios today can very quickly fall out of favor for reasons that can actually have nothing to do with how the company is performing. And so I think that can be a little bit sort of more easy come, easy go, shall we say. And whilst I'm sure there are investment houses that will happily cater to that, I think one of the reasons that we've been able to survive as an institution for so long is because we focus on that camp of just trying to earn really high returns over the long term. And if people want access to our capabilities, they can absolutely do that in our funds, and we would hope that they would take pride in owning the funds and owning the underlying assets that sit beneath the funds, which are, you know, very much there to give them exposure to these companies, to enable them to make a lot of money over the long term if we do a good job for them. But I don't think you would see us chasing, the sort of, heat and excitement around particular areas unless we had very strong conviction that something was gonna be a great investment.
00:20:51 · Peter Singlehurst
And then you would see us express that through a large position in our portfolios.