Rarer than a unicorn? This venture capital firm just floated in London
Draper Esprit, the European firm which has backed startups such as LoveFilm, Graze and Lyst has made its stock market debut in a rare move for a venture capital firm..
With a dual listing on Aim and Ireland's Enterprise Securities market (ESM), shares on London's junior market were up as much as four per cent on the first day of trading, after an initial pricing of 300 pence per share, raising more than £100m.
Draper Esprit, now listed under the ticker symbol GROW, is an offshoot of the Silicon Valley Investment firm DFJ, a backer of Baidu, Tesla, Twitter and Skype among others. Draper Esprit is part of DFJ founder Tim Draper's Venture Network with both owning equity in Esprit.
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The firm's chief executive, Simon Cook, said the listing, delayed from last year, will open up the often lucrative world of tech venture capital investment to retail investors.
Our motivation for evolving our venture capital business model was twofold, firstly, we wanted to be able to invest for longer in our emerging companies and to be able to build bigger stakes as companies remained private for longer periods, capturing more value for shareholders. Secondly, we wanted to further democratise funding for entrepreneurs.
Draper Esprit's portfolio of 24 companies is valued at just over £74m and institutional investors include Neil Woodford's Invesment Management fund, Baillie Gifford, China's Huarong International Holdings and Ireland's Strategic Investment Fund.
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Venture Capital investors largely operate as a limited partnership with capital raised from institutional investors through different funds, though it is similar to listed investors such as Imperial Innovations, the investment group also backed by Woodford and spun out of Imperial College.
"Traditionally the limited partnership model in Europe has restricted who can invest in venture capital backed companies and many growing technology companies are not accessible to institutions or public investors until they go public," said Cook who was inspired to take the firm public by the popularity of crowdfunding.
Now everyone can participate in the growth of VC backed companies from their earliest stages through series A and B to their success in the later stages up to and including their IPO.
And the unusual move could even spark others to follow suit.
“Draper Espirit has an impressive track record and I am sure that its flotation will attract considerable interest," Said Tim Hames, director general of the British Private Equity and Venture Capital Association (BVCA).
"This is a relatively unusual move for a VC firm but it reflects the strong performance of and renewed confidence in the whole sector of late so I suspect that others will seriously consider the same route.”