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Early stage tech investing need not be the exclusive preserve of the rich and connected

(PA Wire)

Even at Darktrace’s knockdown valuation of under £2 billion, early-stage investors will be trousering huge profits. Among them, Dr Mike Lynch, a man in need of some good news lately.

But what of the rest of us? We who aren’t billionaires or tech investors with every hot start-up in our contacts book: how do we get a share?

Most early-stage tech is backed by a tiny number of angel investors and specialist, small venture capitalists investing a few wealthy people’s cash. Mere mortals miss out.

Even our lumbering pension funds rarely manage to back young, fast-growing companies until after they float and much of the explosion in value has already happened.

A company called Draper Esprit could be one answer. Draper is an early stage VC with a difference: anyone can buy or sell its shares on the stock market and access some of the profits it makes when it finds big winners.

Figures today showed those are coming through thick and fast.

Its investment in Romanian robotic software group UiPath just increased 10 times via a Wall Street float. It’s made fortunes from Cazoo, soon to be valued at $7 billion by a US Spac, and was in Transferwise and Trustpilot, also IPOers, among others.

The Net Asset Value of its portfolio leaped 31% over the past year.

Clearly, this won’t last for ever. There will be a dip in the current exalted tech valuations, but VCs use the dips to make more investments to come good when the peaks return.

For people considering buying Draper shares, the bull market for tech has two opposing impacts: first, it means the share price is high — 20% above the current NAV.

But it also means Draper has the funds to do more deals and hire more people to find them, thus increasing the chances of hitting the next “10x”.

As Draper’s track record gets longer and more investors buy into the story, the shares could have a lot further to go yet.

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Tech investor Draper Esprit sees portfolio surge on stakes in Cazoo and other big winners