Century-old asset manager Baillie Gifford says it’s in no hurry to score exits
But Baillie Gifford, a 114-year-old Scottish firm that invests in VC-backed companies out of several evergreen vehicles, claims to be a more patient private market investor than many of its peers.
“By virtue of having permanent capital, we really don’t care whether companies go public or not,” said Peter Singlehurst, head of Baillie Gifford’s private companies team. “We don’t need or particularly want liquidity. We don’t view IPOs as access. The only reason IPOs are interesting to us is because it is an opportunity to put more capital to work.”
(Courtesy of Baillie Gifford)
With that approach in mind, Baillie Gifford has conducted a series of deals with startups that are high risk, capital intensive and—in many cases—still don’t have any revenue.
The firm’s portfolio includes Psi Quantum, a quantum computing company; Solugen, which is working to decarbonize the chemical industry; and several battery-recycling and electric-vehicle companies.
One of the latest additions to the firm’s portfolio is Upside Foods, a pre-product cultivated meat company formerly known as Memphis Meats. Despite raising a $400 million Series C, it may be years before Upside Foods will generate meaningful revenue, said Alex Frederick, a PitchBook analyst focused on agrifoodtech.
Chris Evdaimon, an investor on Baillie Gifford’s private markets team, has met with five or six leading cultivated meat and vertical farming companies around the world.
“Chris has been looking at these [categories] not because we need to make an investment in something like vertical farming, but because these are areas that could be transformative,” Singlehurst said.
The firm’s private companies group has a culture of taking time, sometimes years, to research cutting-edge business areas, Evdaimon said, adding, “We measure one opportunity versus another. There are no geographical restrictions nor industry or sector restrictions.”
While Baillie Gifford has a large portfolio of up-and-coming technologies, the majority of its investments are in more mature, revenue-generating companies such as Stripe, ByteDance and Epic Games.
On Thursday, the firm announced that it co-led with T. Rowe Price a $160 million Series E equity investment in Convoy, the Seattle-based operator of a digital freight network and marketplace that reportedly plans to generate over $1 billion in revenue this year.
Since launching its private markets strategy, Baillie Gifford has invested $10 billion primarily into mid- to late-stage companies, and it deployed a further $40 billion into a subset of those companies that ended up going public, according to Evdaimon.
The asset manager has backed 101 companies and recorded 33 exits, including Airbnb, Wise, AllBirds and Ginkgo Bioworks, PitchBook data shows.
Despite the valuation pullback now affecting pre-IPO companies, the firm doesn’t plan to alter its investment approach. Still, Evdaimon acknowledged that valuations have dropped, and the firm is even seeing some deals with convertible notes for companies struggling to raise another round at a flat or higher valuation.
Baillie Gifford’s private companies team has seven dedicated investors and writes checks ranging from $2.5 million to $250 million, with the sweet spot sitting between $40 million and $150 million.
While the firm may have built a portfolio of some of the hottest VC-backed businesses, Evdaimon said it prides itself on a “boringly consistent” approach to investments.
Singlehurst said Baillie Gifford’s location and history are a major part of the firm’s ethos, adding, “When you’re based in Edinburgh for over 100 years, you don’t evolve in the same way as a City [of London]- or Wall Street- or Silicon Valley-based investment firm. You end up with a very different culture, a different way of doing things, different time horizons.”
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