The Ledger
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Singlehurst: Baillie Gifford expects 5x ByteDance return despite US TikTok ban
“I mean, like, our base case is that it does get banned, and we still see a path. After making at least five times our money, even with TikTok not being part of that investment case.”
Singlehurst: China remains a massive investment opportunity
“I think it does. I think it does remain a big opportunity.”
Singlehurst: Baillie Gifford's Investment in Northvolt Failed Due to Execution Issues
“Northvolt's been a very bad investment for us. What was the mistake there? I think we were too enamored with the idea of a business like Northvolt needing to exist for, you know, all the reasons of energy sovereignty in, in, in Europe. But what we got wrong wa…”
Singlehurst: Baillie Gifford wouldn't buy OpenAI, Grok, or Anthropic currently
“I think at the moment I would say that I would buy none of them. And it's not because I have a particular, and it's not because I'm critical of those businesses. It's because I don't know what the answer is to enduring competitive advantage at the large langua…”
Singlehurst: 10-year public equity investments should be treated as illiquid assets
“If we're investing in a company with a 10 year view, You probably shouldn't be doing anything two or three years into that investment journey. You should really be thinking of it as being pretty much as illiquid as any private holding.”
Singlehurst: Baillie Gifford deployed $10B across 100 private companies with one bankruptcy
“Over the last 10 years, we've deployed something like ten billion dollars into about a hundred private companies. We've had one bankruptcy of a company which is nothing to be proud of for sure, but I think we thought it was going to be much higher than it was.”
Singlehurst: Probability-adjusted upside can grow as companies scale and execute
“I think that the probability adjusted upside of companies can often grow as they become larger. And so even though ostensibly the price, yes, might be lower in the previous round, As I said, I think sometimes the probability of outsized returns can grow as com…”
Singlehurst: Baillie Gifford's median initial investment target has $200M revenue
“The median company in our portfolios is doing about two hundred million dollars in revenue, is still growing at about 70% year over year and is still very slightly loss making, -14% EBITDA margins”
Singlehurst: Baillie Gifford will always invest at 30-50% chance of 5x
“If something is in the range of 30 to 50% probability of going up fivefold, well then we'll take those bets every time.”
Singlehurst: Passing on Stripe's down round was a mistake
“I think that was a mistake. I think we should have put more in them.”
Singlehurst: Baillie Gifford Passed on Later Capital Requests for Northvolt
“We did make additional investments beyond our first investment, but there were times after that where we all asked for more capital and for reasons around the execution, but also for reasons around the structure of The financing rounds themselves that we belie…”
Singlehurst: Private company secondary exchanges will not work
“I don't think we'll end up in a world where you have sort of exchanges for private companies. I think you just have too much complexity in the share class structures. You have, you know, things like rofers, you have like company control. I can't see those exch…”
Baillie Gifford maintained pro rata in Databricks' $60B round without doubling down
“Remember we did our pro rata in the sixty billion round, which is a little bit different from saying we're doubling down, right? So it's, we stood our hand, we put a small amount of extra capital into it, but we didn't double down in the 60 round.”
Singlehurst: Baillie Gifford passed on Stripe's $50B down round
“We first invested in Stripe at about a thirty billion dollar valuation but we didn't take part in the down round that they did whenever that was, 20, 22?”
Singlehurst: Investors can only truly understand a company by becoming shareholders
“You only really ever understand a business by being a shareholder, and so we feed that into our, you know, to our portfolio construction, and of course then we don't add to those companies where we're not building that conviction.”
Singlehurst: Rapid 2021 funding rounds prevented proper due diligence
“I mean, I think the way it really changed things, particularly last year, was it changed the time frames that rounds were happening in. So we were seeing rounds happening last year at speeds that certainly wouldn't have enabled us to do our necessarily diligen…”
Singlehurst: Diversification should focus on capturing outliers rather than mitigating downside
“Diversification is normally thought of in terms of downside risk mitigation. We would think about it much more in terms of diversifying to maximize the probability of capturing outliers.”
Singlehurst: Nine of Baillie Gifford's Top 10 Investments Are Founder-Led
“I think these numbers will be a little bit off. It's something like nine out of nine of our 10 biggest investments are still founder led.”
Singlehurst: Baillie Gifford Directs Carry to the Firm, Paying Partners via Bonuses
“So Cary goes to the firm. And then we remunerate people through, through bonuses, which is a synthetic carrier, I suppose.”
Baillie Gifford paused 2021 fund deployment through 2023 over inflated valuations
“So the last fund that we raised, we did a, we closed it in 20, 21. We deployed very little in 20, 22 and 20, 23, because valuations were still too high. There were all kinds of games being played with convertible notes and everybody sort of Pretending that com…”
Singlehurst: Baillie Gifford Employs Public Valuation Methods for Private Investments
“Our valuation methodologies probably look a lot more like the sort of public market valuation methodologies, because we're trying to find companies where we think we can have very long term intrinsic value, which is much, much greater Than the market price tha…”
Singlehurst: Baillie Gifford models a 5x base upside for every investment
“So we are very consistent in how we model upside for every company we look at. We try to model to a five times upside.”
Singlehurst: Baillie Gifford accepts liquidity risk if compensated on entry price
“On the sort of path to exit and path to liquidity, I think this is where Having a very long-term time horizon, like, we are willing to take a little bit more risk there, again, just provided we are being paid to take that risk.”
Singlehurst: Baillie Gifford takes business model risk over product risk
“And have really been for the last kind of five or six years on companies that we define as being true growth stage companies. So where we're not taking product risk, we're taking business model quality and scalability risk.”
Singlehurst: Baillie Gifford requires 5x upside to double down on follow-ons
“So if you're going to double down on a company, then absolutely. Yeah. You need to see a five X on a reinvestment.”
Singlehurst: Public and Private Growth Investing Share Core Analytical Questions
“The core analytical questions I think are pretty similar. You have different sources of information, whether you're doing public or private, but like you're still looking for the same characteristics, right? Like if you make it very simple, you're still lookin…”
Singlehurst: Growth-stage venture-backed companies are at an all-time high
“There have never been so many venture backed companies that are sort of entering our part of the market.”
Singlehurst: Baillie Gifford began researching and buying Tesla stock in 2012
“I was working on Tesla in 2000 and 12, and we went on to buy that for various strategies.”
Singlehurst: Baillie Gifford avoids investing in M&A-focused companies
“Very few of our investments get acquired. And that's partly because we steer away from any company where we get a whiff of them potentially being bought.”
Singlehurst: Baillie Gifford's moat analyses look like dynamic meditative essays
“We are not trying to accurately nail down what a company's competitive advantage is or will be. Actually, if you look at the reports we write, the analysis that we do on competitive advantage, it looks more like a meditative, meditative essay than a set of ass…”
Singlehurst: Baillie Gifford usually leans toward continuing support during ambiguous struggles
“I think we probably fall more often on the side of continuing to back businesses and sometimes those are the best decisions we ever make, and sometimes they're the worst decisions we ever make but Founders and companies will more often find us leaning on the s…”
Singlehurst: Baillie Gifford's one bankruptcy was late-stage diabetes company Intarsia
“So that company that I mentioned, the one that went bankrupt, was a business called Intarsia. It was a company that was developing a therapy for type two diabetes, and when we invested in it was a very, it was late stage in this, in the sense of being in phase…”
Singlehurst: Baillie Gifford investment teams do not use Bloomberg terminals
“You won't see a single Bloomberg terminal on the desks of investment teams.”
Singlehurst: Baillie Gifford passed on multiple private investment rounds in DoorDash
“One of the ones we really missed was DoorDash. We had a few opportunities to invest in that privately.”
Singlehurst: Baillie Gifford hires non-finance backgrounds to avoid narrow worldviews
“And so the reason we hire from a range of academic backgrounds is because we bring in people with lots of different perspectives. Perspectives on the world rather than hiring people who grew up dreaming of being fund managers where you might well end up with a…”
Singlehurst: High turnover prevents investment teams from developing true trust
“I think that just gives rise to a kind of level of trust and a level of working together that we couldn't have if this was a sort of organization where kind of people came in for a couple of years and then left. And if it was more of a kind of high turnover so…”
Baillie Gifford trims large private holdings to fund new growth investments
“So some of our large high profile companies that we have trimmed in the private markets and we've recycled that capital into new interesting high growth private companies.”
Baillie Gifford is a shareholder in chip developer Tenstorrent
“We are shareholders in business, a company like Tens Torrents, which is working at the sort of the chip and the infrastructure layer.”
Singlehurst: Many 2024 Baillie Gifford Investments Were Already Profitable
“Last year, you know, quite a few of the companies we invested in, they were already profitable, or they were all turning profitable this year.”
Singlehurst: Wise grew from $50M-$60M revenue at initial investment to multi-billions
“Wise was actually a little bit smaller than that when we first invested. I think it was probably about 50 or sixty million dollars in revenue. It's now a multi-billion dollar revenue business.”
Baillie Gifford reviewed 600 private rounds and made 11 investments last year
“So just as a team, we met a thousand companies. We looked at 600 private financing rounds. We did 65 first cuts of our diligence process. We did 30 deep dives, and we made 11 new investments.”
Singlehurst: Intarsia Was Baillie Gifford's First Portfolio Company Bankruptcy
“Like, the first company we invested in that went bankrupt was a company called Intarsia. It was a, it was actually a biotech company that was developing a GLP-I. I mean, imagine if that company had managed to stay solvent, it would have been an astonishing inv…”
Singlehurst: Baillie Gifford evaluates deals via probability-tested upside scenarios
“We create scenarios in which we are deliberately contrived where a company can be a very high returning business and a high returning investment for our clients. We think about the probabilities or the things that would have to come to pass for that to be the …”
Singlehurst: Scottish Mortgage Fund is a century-old permanent pool
“We started, we set off doing that from within a permanent pool of capital that we've managed for the last 114 years. Called the Scottish mortgage funds, confusingly named. It's got nothing to do with mortgages. It's a hundred year plus permanent pool of capita…”