Augmentum Fintech PLC (AUGM.L) Earnings Call Transcript & Summary

Good morning, and welcome to the Augmentum Fintech plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Tim Levene, CEO. Good morning, sir.

Good morning, and a very warm welcome to all those who are listening and for those who are watching the recording, I hope you're all having a good day. I'm going to spend the next 30, 35 minutes really taking you through a bit of a whistle-stop tour of the last 6 months. But equally, looking forward, identifying some of the trends we're seeing in the market, the opportunity ahead, some of the challenges that we face, how we're looking to tackle them and of course, why we're optimistic about what is to come. So in -- without further ado, what have we seen over the last 6 months? From a headline point of view, in terms of NAV, quite flat and steady, but I think what that doesn't reflect is significant continued underlying growth, both in many of our companies at the top line and even more so in the bottom line, which has been very encouraging, and we'll talk a little bit about that journey that those companies would be on and where they go next. You will see that equally important for us is to ensure that the balance sheet remains robust. What does that mean? That means we've got enough capital to lean in and support those portfolio companies going through growth where we want to defend our position or in some cases, increase that position and a cash position north of GBP 20 million kind of gives us that firepower. Our cash number is going to ebb and flow over time. Realizations come. And of course, that bumps it up and then that gives you the opportunity to either invest further in your portfolio, invest in new opportunities or, in some cases, look to return some of that back to shareholders. When we first IPO-ed, the challenge and the objective was to build a well-diversified set of fintech companies. We always talked about a portfolio of 25 to 30 businesses. And you can see your portfolio has 27 companies in it, which we think gives you a really well diversified set of assets, not just by stage and but also by sector, and we'll give you a sense of how that is playing out. Fundamentally, we are backing businesses that we want to see grow. We are looking to back outlier winners in the space. As often happens in venture, you can't always pick winners. And absolutely, we are in the business of taking calculated risk. But of course, there will be some businesses that don't deliver that outcome. But it also takes time, and we'll talk a little bit about that time line as well. But fundamentally, these are businesses that are growing and growing well. And ultimately, the true test of this portfolio, I would say, a good measure for a venture portfolio is after about 10 years. So we're a little bit over halfway through that is a tangible proof points. What are the realizations? What is that return of capital? What is that IRR? And today, it's 8 exits, GBP 103 million or so. And each of those exits on average have been at 33% above that holding value, and that's really, really important. So where does this portfolio sit and I won't dwell too long on this slide. But this is a slide where you can see those sectors where we've had particular conviction where our thesis has been strong. And this will kind of wax and wane depending on exits, depending on maturity of companies within these segments. But fundamentally, these are the types -- core types of areas where you should expect us to invest over time. And as I said, I will talk through that journey that we've been on, the frustration of the underlying NAV staying steady rather than growing, which doesn't reflect significant underlying growth, which we think will kick in over the next 12 to 24 months. And hopefully, that will be proven out in time. But of course, in any portfolio, you've got to focus on those companies that make up the bulk of the NAV, and we will typically treat the scrutiny in terms of honing in on those companies on anything that is taking up about 80% collectively of the NAV. And you can see here 9 or 10 businesses that are making up around 80% of the NAV. And of course, you have a lot of high-growth exciting companies in the remaining 16, 17 or so. But rightly, investors' scrutiny is on those companies that make up today, the bulk of the NAV, and we expect a number of those companies that are in the remaining 17 to grow and scale over time and start to feature substantially in this top 9 or 10. But of course, at any moment in time, the question is what is that valuations policy? How do you approach it? I think when it is straightforward is when there has been an external funding round in one of the businesses within the period, and that typically will set the price for that company, and that makes it quite a straightforward approach to valuations. Our valuation approach is we have an independent valuation committee led by one of the directors of the Board and of course, BDO, who are the company auditors as well. And so that is typically the process. Largely, you can see in Tide and Zopa's case and in BullionVault' case, small movements either way. In some cases, it might just be marginal multiple or a funding round, but largely stayed flat. I think the 2 that have seen movement both on the upside and on the downside. In Iwoca's case, a SME business lender performing exceptionally well, a phenomenal management team with very strong tech and data capabilities, had a record year last year. We expect them to have a record year this year and as such, have been written up accordingly. I think on the flip side, one of the things that we do, and I think one of the things and reasons that I think many investors find the Augmentum proposition attractive is that requirement to really look at these assets on a 6-monthly basis rather than rely on historical funding rounds. And I think in Vault's case, it's a business that was a real market leader in account-to-account payments, open banking. I think that whole sector has seen not quite the level of adoption and growth we and others would have expected. And as such, that is reflected in the write-down there. Just to reflect that isn't growing as strongly as we would have hoped. It raised a significant round a couple of years ago. It sits on a good amount of cash. It has a long cash runway. We've worked with management as we often do over the past 12 to 18 months alongside other investors to really understand and articulate what some of those challenges are, how they can address them and in order to get back to growth. And I think we've seen a lot of good progress in the business over the past 12 months and confident that, that business will get back on track. And of course, as we've done before, we've written stuff down and then we've written it back up as and when it's demonstrated that it's back on the right trajectory. And I would say the only other business that you'll see a tick down is XYB, which is a business we've got a lot of enthusiasm for. They are really building the next generation of Banking as a Service software. We call it BaaS 2.0 modular solutions to Tier 1, Tier 2 banks. They have a lot of really exciting conversations and deals in the pipeline, but it's a slow sales cycle, and that just simply reflects dilution as a result of further funding rounds, but one in which is definitely a business to watch where we have a significant equity position in that business and one in which I look forward to reporting back on in future. Now you can see what should you expect over a 12-month period. And I would say it somewhat depends on: one, the external market; and two, the strength of our balance sheet and the ability to put money into existing companies as well as new companies. So around GBP 30 million a year being put into our companies or into new opportunities. And so relatively quiet period. And I think what that really tells you is despite the fact that this is a high-growth, Series A, often early-stage set of assets, the challenge to us back in '22 when there was a huge selloff as we know in the market was these are capital-intensive, heavily loss-making businesses. VC is a sector that requires a lot of capital. How is it that you can be able to demonstrate that this is not a hugely cash consumptive portfolio. And I think credit to many of our founders and CEOs in the portfolio who really took on the message in 2022 and really took a long hard look what is the type of growth we want to be delivering. Our message to them was growth at all costs no longer is rewarded in the market. So for a business that is established, growing well, but still growing 80%, 90%, but burning a lot of capital in order to drive that growth, our challenge to them, we'd rather grow at 50% and burn a lot less money or get to breakeven or even to profitability if you can kind of manage that balance. But as I said at the beginning, this is not a strategy where we're optimizing for profitability. This is a strategy where we're optimizing for growth, where we can build businesses that become category leaders in that space, true disruptors and can ultimately become kind of outlier success stories to us and to our investors as well. So from our point of view, I think that path over the past 2 to 3 years of more, what I would define as measured growth, the right type of profitable growth, both at the top line and the bottom line, a much firmer scrutiny on underlying unit economics, customer lifetime values, customer payback, all of these philosophies, which we've always held there and for those of you that have been a shareholder for a while and have heard me on these calls, we often talk about strong underlying fundamentals, structurally profitable propositions, ones in which we're absolutely prepared to invest in, but we recognize that at point in time, there is an ability to turn down that dial and shift to profitability. And that sometimes requires businesses to get to a certain scale, and we're absolutely eyes open in terms of understanding what it requires to get to that point. But at that point in time, often we will ask the question of our portfolio companies, can you make that shift? And many of them have done that very successfully. But how do you measure this portfolio when there are a few peers in the listed space? And fundamentally, our competition is very much in the traditional kind of VC space, GPLP structures. And so we do look at it in 2 vintages. And of course, the true test of the venture portfolio is after a decade and as I said at the beginning, when you're halfway through, are we on track? And I think for us, delivering realizations where we see the path so far in our kind of most mature cohort and even in our newer vintage, I think both are tracking well. Fundamentally, though, what should we be delivering, what is success? It's delivering 3x money. It's delivering an IRR of 20%. And I think that will be the measure in 3 years' time. But as I've said, despite the fact that you've seen a flattish NAV, we believe that we're on track. We believe that there is a lot of growth to come in many of the companies in the portfolio. And as importantly, and we'll talk a little bit later, what can you expect in terms of tangible realizations to really kind of prove out the NAV. And of course, I recognize there will be and have been a few questions on discount and what we're doing about that. And I will talk about that in that presentation as well, just to give you a sense of what we're doing. So what should you expect to see in this portfolio in terms of behavior, in terms of maturity, in terms of path to liquidity? This is what we hope the portfolio should look like. And what do I mean by that? I mean the bulk of the assets in the early and the mid-stage. We want to take a number of bets -- calculated bets, yes, but not all of those companies are going to progress through to being kind of scaled businesses. But we need to be able to spread our bets to ensure that when we do get it right, that can be the opportunity to really deliver that outsized return. And as you would expect, you would hope that your early companies are growing very quickly, albeit off a low base. And again, as they get more mature, that growth tends to reduce. But we would like to see our businesses operate to the rule of 40. One measure metric is not necessarily the only thing you should be looking at, but we'd like to see these businesses growing at the late growth stage at around 25%, 30% or more, many of which in the portfolio are doing. But the reason you want around half of your NAV, and as I said, one of the challenges is, of course, to manage that over time because you've got 27 companies growing at different paces and you can't always control that scale is that you can give investors a sense of visibility of when am I going to see some of those exits come out, when am I going to see those realizations to give you the ability to both scale and recycle that capital as well. But I talked a little bit earlier about the shift in the market in '22 when there was a massive selloff as we know, in the venture space, kind of post ZIRP environment. And it became increasingly clear that the days of almost unlimited capital for venture companies were over. The metrics that investors were looking at were very different. The -- what I would somewhat unfairly sometimes classify as tourist investors that were coming in with a fire hose of capital, paying huge prices and offering companies vast amounts of money were gone and gone for arguably ever. It was going to become increasingly important that as you continue to grow, investors will be looking for businesses that are going in the right direction from a gross margin and profitability point of view as well as pure top line growth. And I would say most of, if not all, and there are a couple that frustrated us in terms of not adapting as quickly as they should have really shifted their focus, in particular, those established assets. And you can see kind of a dramatic and positive improvement in the underlying kind of profit profile of the portfolio, very significant profit growth while also kind of growing at the top line as well, and it is about kind of managing that balance. So this is something we've been really pleased to see in the portfolio for it to become less cash consumptive, but also allowing these businesses to be masters of their own destiny as well by choosing as and when they want to raise more money, if at all needed. And I think that's really kind of played out very effectively. I think for us, it is important to have one eye on the path to breakeven if there are businesses that are still in that aggressive growth philosophy or in some cases, where businesses aren't growing as quickly as we would have hoped, have a limited amount of cash, and we have to look forward. We have to look forward 12, 18 months to say, if this business doesn't hit profitability, do we believe that it can raise further capital externally in the market? And if we have cause for some concern, then of course, you want to extend that runway to give the business that little bit more time. So for us, we want to see growth. We want to see cash efficiency, but we absolutely want to encourage our businesses where it makes sense to absolutely continue to invest in growth. So I don't mean this flippantly, but in some cases, would we rather one of our portfolio companies lost GBP 10 million, then made GBP 10 million? Absolutely. If that net GBP 20 million could be deployed to continue to kind of scale in the domestic market or international, we absolutely want them to do that because there is a huge price to go for in the market, and we really want them to be going for it rather than sitting there managing the business purely for profitability. Of course, there will be a moment in time where that shifts, but for many of our businesses, that time is not now. But of course, despite that strong underlying positive message, we remain deeply frustrated at the share price performance, which is what our shareholders really care about. Yes, we recognize that many of you take a long-term view. We know that a lot of our shareholders are taking a 10-, 15-year view, putting it in SIPPs, putting it in ISAs, but this is something that is being measured on a daily basis. There are a lot of external factors out of our control. Structural issues in the London market that are driving this discount. I think the question that often is asked is what are you doing about it? What more can you do about it? And I think when you articulate the message of saying, here is the NAV. When you strip out the discount and the cash, the implied portfolio value is trading at a much bigger discount, high 50s. And then when you apply the top 5 assets, the top 9 assets, you can see you don't need to believe a lot to come to the conclusion that this is a hugely undervalued proposition from a pure share price market cap point of view and that there's significant upside from this point. I think it's something we've been talking about extensively to the market for the last 2 years. As I said, there are some things that are out of our control: macroeconomic, geopolitical, the outflows in the London market, the shift from wealth managers to much bigger investment trust. We've seen a much smaller pool of buyers in investment trusts such as ourselves than we did 5, 6 years ago. And that means we need to look further and wider in the market in order to kind of help close that discount. And I think we have been spending more time on that, and we will spend significantly more time next year on really looking at what we can do to significantly close that discount because it's deeply frustrating for us as well. So in terms of what are you seeing in the market? Well, it's pretty stable when we start to look at comparisons with the public market as well. And you can see there's an increasing focus as well in the public markets on an improvement in profitability for these listed fintechs as well. And it's been a steady positive progression in profit margin as well. We saw a big dip back in March as a result of kind of the tariffs that really forced a big selloff in the market. And really, those kind of implied next 12-month revenue multiples have come back to where they were about 2 years ago. You should see them in around 5, 5.5x. So what does that mean in terms of our valuations and how do we compare with those kind of high-growth listed fintechs? And we have always tracked below that. And I think that's another important data point to give real comfort and confidence to investors that this is a really fairly valued portfolio. And then when you apply that discount, of course, you see a huge delta between the high-growth listed fintech index trading at around 5.5x versus what our implied number is as well. And again, it's really important that we get that message out to the market that we've got a cohort of fantastic businesses, many growing incredibly quickly, and there are some that we believe will deliver a really positive outcome in the next couple of years. So what we also do is really look at some of the highest profile, best-known listed fintech businesses, both in the U.S. and the U.K. And then an example of some of those well-known, high-profile fintechs and private markets, just to give you a sense of how they're growing, what the forward revenue multiple is. And you can see the range there of 5.5 to 6.5x. And again, when you apply the market-adjusted multiple for the Augmentum portfolio, that is a really significant discount, but more a bit of a sense check to give investors -- prospective investors, analysts comfort again that there is a portfolio there that is growing well, but also fairly valued. And we're using a lot of these data points, both in our underlying valuations, but also in articulating the message that there is a lot of value to be found in the portfolio. But of course, delivering that same message that we have been doing over the last couple of years hasn't had the desired impact in terms of narrowing that discount. What we want to focus on are the elements where we can control. And I think it is quite clear to us that retail is playing an increasingly important role in -- amongst our shareholder base. So just to give you a sense, we will have around 5,000 retail investors on our books, on our share register. Retail directly will hold about 25% of Augmentum and that was a lot lower 4 or 5 years ago. So probably that's doubled in that period. So I think we have done a good job in opening up the eyes of many retail investors who didn't know about us and do know about us and have started to kind of buy into the trust. And of course, we need to do more of that. We need to be more visible. Platforms such as IMC are fantastic, but it's only twice a year. So we need to think about what more we can do to tell the story. Alongside that, because the marginal bar, the wealth manager, the traditional investment trust bar has really stepped away in the last 2 or 3 years, we need to go further afield. And we need to tell the story not just on a domestic basis, but internationally as well. And we started spending more time in markets, whether it's in the Middle East, whether it's elsewhere in Europe, whether it's in North America, telling people that they can get exposure to a basket of 27 diversified private fintech assets, many of which are growing well, that have huge future potential. And that is again something that we need to be doing more of. And I would like to think there are some very substantive buyers in the market that have yet to come on the register, and we'll continue to focus on that alongside pushing and educating and articulating to an audience -- a retail audience that doesn't know about Augmentum. And hopefully, we can bring more on to the register over the coming year, which will help narrow that discount. And of course, just remaining present, relevant in the public eye. And that's important. That means doing a lot of things that perhaps we weren't doing 2, 3 years ago, more podcasts, more press, just making sure we are in the public eye to shine a light on our underlying portfolio companies and of course, making sure when people do write about fintech, they do talk about the opportunity for people to get exposure to the asset class, they talk about Augmentum and that's certainly something we are keen to carry on developing and making sure we're at the table, making sure that, in particular, the U.K. recognizes the huge contribution that U.K. fintech is making to U.K. plc. It is an incredibly fast-growing sector. It has been one of the great success stories. But we're really reliant on government, regulators, central bank, anyone crafting policy. And it's really important that we spend time and effort to make sure that we have a seat at the table and are helping influence our industry in a really positive light. And myself in particular, I do spend a fair bit of time on that, and it really does pay dividends as well. And I think that will continue to do so. But of course, in this market, people want to see tangible proof points, and they want to see exits and they want to see more exits like we've delivered over the past 5 years. Now when you're building a portfolio, typically, businesses we come in at Series A. So these businesses take on a journey. We would expect them to take on average around 7 years to exit. Yes, the portfolio takes time to mature. But as and when we've exited, as I talked about earlier, that 33% premium to the previous holding value is a testament to the fact that we believe the valuation approach has been robust. It doesn't mean that we always expect to exit businesses at 30% above, but that just gives you a sense of what we have done. And ultimately, our job is to try and deliver more of these proof points to articulate to the market that as a whole, being priced at a 50% discount is not encapsulating the real value, underlying value in the portfolio. But what do we think we can deliver over the next couple of years? I think we can deliver as much as we have done in the previous 7. And that's really exciting. What I would also say is we're absolutely not looking to sell crown jewels. And we're not looking to sell assets early just to prove out the NAV. We're often asked, why didn't you sell X in this funding round that NAV just so you can tell the market you see that was a fair price. And I will tell you and unashamedly, it is really hard to find winners in venture. And when you find a winner and you have conviction in it, you ride that winner and you ride it because that could be the business that delivers a full return of the market cap or even of the NAV. So what are those potential fund returners in the portfolio, and we absolutely want to be able to hold on to them and maximize that return to then deliver that back to shareholders and not sell them too early. And I've seen many a VC fund over time in order to raise their next fund, and these would be more traditional funds, sell out of things just so they could prove their DPI or their IRR or their MOIC and then go raise the next fund. And then that cohort of companies, in particular, one company might have delivered another 5x or 10x. And I can think of 2 that I've been in, which I won't mention, but 2 very high-profile assets in the fintech space that have delivered unbelievable returns that were sold out of early funds just so they could raise that next fund. So we want to sell businesses when they're ready to be sold. We want to sell them at fair value. But I do believe there are a number of assets in the portfolio over the next couple of years where we can present that opportunity and deliver that back to shareholders and those important proof points as well. But not that any of you will need reminding, but this is a patient capital vehicle. These are businesses that take time to mature. They will go on up and down journeys. It is really a straight line up. I look at 3 of our most successful businesses currently that are established: Zopa, Iwoca, Tide, all businesses that are generating hundreds of millions of pounds each in revenue now, hugely successful, plenty of growth still to come, but they've all had near-death movements. So very, very challenging periods, and it's about riding through those difficult periods and coming out the other side. And I think 3 of them have come out the other side and are really performing exceptionally well and have very bright future ahead, but it does take time. And so you can see the average hold in portfolios, around 4.5 years. And so it would -- it should come as no surprise. Over the next couple of 2 to 3 years, you should expect a good number of realizations. And that gives the time for those earlier businesses to mature, to develop and for some of them to really break through at scale. But we need to give those earlier businesses time to gestate and prove themselves. And the way we can do that is to give investors confidence that there are businesses in the portfolio that can deliver tangible proof points within that period while those younger evolving, developing high-growth businesses have the opportunity to develop as well. As I said, this is where our sweet spot is. Series A in particular, is where we believe we have the most value, where we have edge, where we have huge experience as a team. Collectively, we've invested in over 100 fintechs and there are a few, if any, fintech investors in the market that have as much experience, both in number of investments, but also in delivering exits as well. And collectively, that's over 35 exits as a team over the last 15 or so years. So in the last couple of minutes, I'm going to rattle through the market. The focus rightly has been on the portfolio and on the approach and what's next. But the market still remains strong. You've got to discount '21 and '22 as outlier years, which we won't see again for a very long time, if ever. But the market has very much stabilized. There is still a lot of capital flowing into our space and largely stayed stable when you look at the average size of funding round other than at the seed, which has seen real increase there over the past few months. But this is a data point that we use in every presentation, and we will always use it just to remind people how big the opportunity is ahead. So yes, we recognize that everybody is very excited about AI and a lot of generalist funds are shifting focus and efforts and capital to AI. But rest assured, in our view, where we could have any greater conviction that over the next 5 to 10 years, there will be a very significant number of businesses in the fintech space built that become very valuable that don't exist today in every sector of financial services. So there is a massive opportunity out there. We are absolutely at the forefront of that, and we believe that we can capitalize not just within the portfolio or new opportunities as well. This is a sector that will continue to grow at 4, 5x the pace of the traditional financial services sector, and that is both growing the market, but also seeking market share. So there is a big opportunity still to go for. And in some markets such as insurance, the revolution is yet to really happen. We're seeing signs of it really gaining momentum, and I think that is a big opportunity. And the reason that these businesses in many cases are winning is simply the fact that incumbents are really struggling in many cases to digitally transform. These are large, in some cases, slow-moving, bureaucratic organizations built on legacy infrastructure despite huge focus on innovation, very significant balance sheet, a lot of talent internally. They recognize increasingly that they are either competing head-on or partnering with third parties who can supply, build, install, integrate the technology that they've been struggling to build or their cost base, their infrastructure is just too unwieldy to be able to focus on a customer segment that historically they feel they can't generate a positive return on investment on. And I think that has really given companies such as ourselves, whether it's a Tide or Zopa or anything. I walk lots of these businesses. They maniacally focus on one segment where you can build a very significant business. You can build something from scratch without any legacy, and that has allowed those types of businesses to not only thrive, but really scale and continue to see significant opportunity ahead. And of course, innovate new frontiers, whether you are a bull or a bear on digital assets or crypto on blockchain or DeFi, this is where you see the true innovators break through. And it is very rare to see an incumbent play any role in this space. And we've seen the likes of Coinbase and of course, Robinhood and others make very significant inroads and build very substantive businesses when there is something fundamentally new. And so you will see more and more businesses kind of feature as a result of some of these dynamics in the market. But it does not mean that there isn't a significant collaboration with incumbents because fundamentally, the vast majority of these businesses that are built will be acquired by incumbents over the next 10 years. And so more so today than ever before, there is a much greater willingness amongst financial services and often established software players to partner, invest, acquire in many of the next-generation fintechs in the market. And you can see a number of our businesses have either been acquired or are partnered or have investment -- minority investment from some of the biggest names in traditional financial services. And despite the fact that many will say it's been a quiet year for M&A, this asset class remains hugely strategic. And that means you are being acquired, whether it's from traditional financial services players or software providers who continue to look very closely at the innovations being built in the market and will increasingly become more and more acquisitive as they recognize they cannot solve all their own problems and challenges themselves in digital transformation from within. And you will see this trend continue. And the year-to-date so far has been quite strong. While the IPO market, which is less important from an exit point of view, it's all exits in fintech over the last 5 years, well north of 90% have been through M&A. So the IPO market is an important factor, but it is far from being the be-all and end-all. However, we have seen signs of recovery from the nadir in -- back in '22. Of course, we all saw what happened in '21, and there are green shoots in the market, and you can see some of the companies that have IPO-ed in the last few months, and we expect to see a few more like that. So wrapping up, just to give you a sense of what we are seeing the impact in fintech on AI, how much time are we spending as a team? I mean the reality is, we are. This should come as no surprise that of the growth, the focus from many of the S&P 500 as well in terms of both engaging with AI, talking about it. But the reality within the financial services space is there's a huge amount of pilot proof of concept. We're not seeing at scale yet tangible use cases within the biggest companies in financial services, and that really presents an opportunity for the innovators. And I would say a lot of our underlying portfolio companies are AI first in their approach. They have some phenomenal talent and talent that really wants to work solving some of the bigger problems in an environment and an organization where they can really deliver impact. It's often quite hard within some of the largest banks and insurance asset managers to deliver innovative impact for good reason. And as such, that really is a differentiator when it comes to acquiring that talent. Just in terms of wrapping up, when we talk about what role does AI play in the portfolio? Well, you can see a number of examples here where -- and this is not far from exhaustive, where you can see the approach that many of our portfolio companies are taking, whether it's through underwriting, whether it's through compliance or fraud detection, whether it's in a pure trading approach or in a workflow or customer service point of view, we are seeing this day-to-day. And this is not new. This is being built over a period of several years and continues to be a very significant part of their IP development. So finally, just in terms of what does that mean for us as a sector. Well, we need to take a long hard look at what we're doing, how we're using AI and how we can be more efficient as an investment team. We have a huge source of information that gives us, in our view, our differentiation in IP. So that means we're tracking over the last decade, 8,000 companies, nearly 15,000 people that we've interacted with. We have over 10,000 pitch decks. So all of this is hugely rich information if it can be analyzed, adapted, collated in a way that really gives us edge because the market is. Becoming competitive, the pace of decision-making has increased as well. The market does become preemptive. And our job is to filter through the huge amount of noise to give you some of the very best future potential fintechs in your portfolio, and that's very much what we are doing by both working with off-the-shelf technology, but also kind of building and looping that together. And we've been working with someone for the last 6 months who's really taken a full view of how we work, what we use from a technology point of view, the information that we're feeding in and is building something that we think will give us continued edge in the market. So I'm going to stop there and make sure we've got time for questions. I will leave just that slide for you. And do feel free to type in any questions, and I will answer them as and when right.

So a question now on -- I think -- I hope I've answered the question on the discount. If I look at one of the questions here, I'm just going to add shareholders at the top. The one question that I haven't answered was what the Board is doing about the discount and what time scale? I think it's quite important to say we are the manager. The Board is independent. So there are 5 members of the Board. And when it comes to discount management, whether it comes to buyback, return of capital, that's something that's answered by the Board, not by the manager. So that's not for me to say. But of course, hopefully, I've alluded to some of the options that are available, and we're very much supportive of working on narrowing that discount. The question from Nathan, are the management incentives focused enough on the share price? Or are they allowing management to make money when the shareholders are not making money? Well, I think it's fair to say that the management aren't making money on the management incentive. The management incentive is on delivering realizations across the portfolio that needs to compound a 10% IRR on an annualized basis. So you have what's called an accrued management incentive that is built in, but it isn't paid out. It's only paid out if you deliver those realizations, and it's just an accounting feature. So no, we're not getting paid on not delivering. I think it's a separate question. Should there be an incentive on share price? Again, not something that we can't mark our own homework, something for the Board to consider. And just to let everybody know, all these questions, we share with the Board as well, so they will get a good sense of what shareholders are asking for as well. A question from now, given the vehicle is quite small, does it make sense to return capital to investors? Surely, that just widen the discount further. I mean I think it's a very good point. I mean, ultimately, scale is key. And I would kind of agree normally that what you don't want to do is shrink the size of the trust. I think the question, and I don't want to get into a whole debate about discount management because, again, that's -- I'm giving an opinion, not telling you what the Board should do. It might be that some might think that you need to shrink a little in order to grow because it's very hard to grow if you have a very stubborn discount. And so fundamentally, for us as a management team, we want to reinvest what we realize, both in those businesses within the portfolio where we have high conviction, but also in new opportunities as well. However, and as I see a number of other questions, there's a significant amount of scrutiny and focus on this discount. Not everybody agrees. And so from my point of view, I think you have to do something. It doesn't mean that it will necessarily work, but I think doing nothing is certainly something that shareholders won't be particularly happy about. Another question here. It's in your control to buy back shares at a massive return on investment given the current discount, which will be a higher return than you can achieve and investing further in your existing portfolio or new portfolio companies. Do you acknowledge this? Not really. I mean I do totally acknowledge that it's accretive. I get that. The question is, if you are backing businesses that you believe can deliver a 20% IRR over time, then yes, there's some risk. There's obviously a one-off gain. And so I think it's just about striking the balance. And this is a question from Reginald. You've heard the question before. Shareholders says it doesn't make sense to shrink the size of the trust. So I think there's valid arguments in your point, but in the previous point. And so it is about managing the balance. And you can't buy back all your shares so you become so small and frankly, irrelevant that you don't have any power in the market. So I think it's just about striking the right balance and recognize that. To what extent do you think the performance fee has on the discount to any of the, question from Bill. I don't think it really does. I think the performance fee, as I say, is notional in a sense. It's crude. Again, that's a question for the Board to manage and answer. But I think we don't hear that from the institutional shareholders really. I mean ultimately, we hear a lot of other questions and issues. So not something -- I think something worth thinking about for sure, but not something that we hear on a regular basis. I've spent the last 3 days on a pretty extensive roadshow. I've probably spoken to 30 investors, and it doesn't really come up other than the fact that we acknowledge that it might be one part of the challenge. A question from Kevin, to what extent does overregulation put a break on the success of small fintechs? Yes. I mean I think it does sometimes in specific situations. I would say that we have a lot of businesses where we leverage our experience on working with regulators, giving them kind of access to what we think are the right people. We've navigated over the years -- I mean even if I go back 25 years when I was part of building Betfair, that was an eye-opening experience of trying to craft legislation that hadn't ever been anticipated alongside traditional bookmakers trying to put you out of business. And so that was kind of a great eye-opener of going on a path when you're building something quite innovative that regulators haven't anticipated or regulation hasn't anticipated. And I think that's one of our real points of differentiation where we can bring a lot to bear as a team collectively. Whether it was in peer-to-peer lending, whether it was an equity ground funding, we've really had a very effective playbook. And I would say current approach from regulators, particularly the FCA is much more collaborative. It's going back a little bit to where they were 10 years ago where there was much greater engagement. There was much greater encouragement of innovation. They're more willing to work in a kind of sandbox environment for certain ideas and propositions and companies. And we've seen really encouraging signs in the last year from the FCA in that regard. So I mean, it can put a break on it. But at the same time, I think in many cases, there's a way through. Question from Jonathan C. We have seen others in the growth capital sector seeing NAV rising in the last 6 to 12 months: Seraphim, Molten, Chrysalis. When will we see Augmentum NAV rising? Why is it underperforming sector... [Technical Difficulty]

Tim, I think we just lost your audio momentarily. I'm just going to reconnect you.

No. How is that?

Perfect. We can hear you now.

Sorry, when did you lose me there? Was that just...

Just as you started answering the question.

I'm going to ask that question again, which is we've seen others in the growth capital sector seeing NAV rising: Molten, Chrysalis, Seraphim. When will we see Augmentum NAV rising? Why is it underperforming the sector on NAV growth? So I think for us, most importantly is, are these businesses growing? Is there underlying growth, both at the top line and of course, where it makes sense at the bottom line? I think hopefully, I've articulated that. This is a long-term asset class. We totally recognize that you need to report twice yearly, but doesn't mean that you can always see beautifully the tangible progress of the portfolio in that time. And so you will see us overachieve at times where others don't, and that's just kind of the mix in the portfolio. So I'm really confident in the direction of travel. I would encourage shareholders to stay patient, look beneath the headline math, look at the companies, look at what they're doing. And hopefully, that gives you a real cause for optimism. And ultimately, yes, we need to deliver. We know that, and we're working really hard in order to do that. Question from [ Curt Lou ]. Hopefully, I'm pronouncing right. Are you looking to buy portfolios of other VCs given the market is down? Well, look, I mean, I always think we're opportunistic. We are somewhat restricted by the amount of capital that we have on our balance sheet. There's very few, if any, things to buy in the public markets and no one quite like us. But of course, there are a lot of I would say, more traditional GP, LP structures where there might be opportunities either in individual assets within the portfolio or whole portfolios that we could take on to manage in time. I just think the -- yes, it's just about being opportunistic and being -- having the right conditions in order to be able to do that. Final question from Nathan. Given the fact that the Board is independent, would it not be better if the Chairman joined this call? Well, there you go, that's a fair question, Nathan. I mean I think fundamentally, this is about -- these calls are about the manager giving an update on the portfolio. Our job is to manage, navigate, invest in the portfolio companies. And I'll certainly feed that back that if it makes sense for the Chairman whose focus is very much on the governance of the trust, whether he would do that? But I would say that's not necessarily the purpose of the call. But hopefully, despite that, there has been a number of questions answered. Always grateful for the support, feedback -- constructive feedback that shareholders give us. As I said earlier in the call, really recognize the importance of retail investors. We also recognize the patience that you've had, some of the frustrations, but hopefully, you recognize that we're working incredibly hard to address some of those and very much look forward to speaking to many of you again at the full year results in late June. And of course, I do know many of our retail shareholders as well who I bump into we'll see events as well. So it's always great to hear from you. So thank you again, and wish you a good rest of day.

Tim, thanks for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Augmentum Fintech plc, we'd like to thank you for attending today's presentation, and good morning to you all.