The glossy magazines that chronicle the lifestyles of the rich and famous might show the glitterati at the opening of a new ultra-chic Mayfair nightclub.
Rock up to the same spot a week later with your mates after a ‘sesh’ down the Dog and Truck and a couple of burly shaven-headed six-footers will likely show you and your friends (physically if need be) where to go.
In other words, these exclusive haunts aren’t for the rank and file plebs; they are for the handpicked few.
The analogy works in the world of investing, specifically when it comes to getting in on the early rounds of promising start-ups. It’s an exclusive, paid-up members-only club.
In Silicon Valley, for example, you must be a fund of significant size and reputation (or a billionaire) to gain access to the Series A rounds of the next Uber, Palantir, or Airbnb. Single-digit millionaires need not apply. Riches beget riches.
Here in the UK, the story is a similar one: only a small cadre of venture capitalists and well-heeled individuals tend to see the pitch decks of the best new, innovative growth businesses.
The AIM-listed investment firm is chaired by Lorne Abony, the Canadian serial entrepreneur, while his predecessor was Jim Mellon, the UK mining magnate.
FastForward has been given all-areas access to some exciting early-stage innovators and has holdings in nine businesses in the fintech, ed-tech, life sciences and cannabis sectors.
The net asset value (NAV) of these stakes has grown to £20mln, or 12.63p a share, in the last six months yet FastForward’s share price has slipped to just 6.05p.
A 50% discount to NAV is an unaccustomed position for the company, which has tended to trade at a premium to its portfolio’s value.
In January 2018, for instance, the shares were changing hands for 24p, and less than a year ago they were marking time at 12p.
“It’s quite an unusual thing to be trading so far below NAV, especially with the assets we have, which tend to increase year on year [in value],” said director Ed McDermott.
Key investments doing well
Two investments that have done particularly well are EMMAC, a cannabis company co-founded by former investment banker McDermott, and Juvenescence, a biotech incubator focused on human longevity.
The most recent fundraising for the latter provided a 58% valuation uplift.
EMMAC, meanwhile, has issued a loan note that could convert into equity at 62.5p a share – more than double the 30p FastForward bought in at.
None of this seems to have been recognised by the market, though it should be noted it has been a rough year for companies listed on London’s junior market with Brexit and the recent general election exerting a huge drag.
“We’d like to see a little more liquidity within the portfolio of assets,” said McDermott, setting the scene for 2020.
“2019 was a period of building up towards that. We could see three IPOs [initial public offerings] next year, maybe more.”
Listing a business on the stock market via an IPO provides an opportunity for FastForward to realise value.
The cash it then receives can be reinvested in new opportunities, though there may even be scope for a pay-out, according to McDermott. “Should we get a liquidity event then we are of the mind we would look potentially towards dividends.”
Hopefully, the thumping victory at the polls of pro-business candidate Boris Johnson will settle nerves. Next year should be about value realisation.
“We don’t know what 2020 holds in terms of the market, but whatever your view, the Conservatives are much more business-friendly. That provides more confidence for anything that might float on this side of the pond,” McDermott. “We are quietly confident.”