Draper Esprit makes provisions of €110m as Covid-19 hits companies

Portfolio companies poised to take advantage of automation, cloud trends - investor

Dublin and London-listed venture capital company Draper Esprit has made provisions of £99 million (€110.2 million) across its portfolio to account for the impact of the coronavirus pandemic.

But the company remained confident about the strength of its investments, with the majority of the companies backed set to take advantage of a pick up in activity due to Covid-19, such as cloud technology, digitalisation, automation, online financial services and gaming/entertainment.

Before the pandemic, Draper Esprit was on track to achieve 20 per cent growth in its portfolio.

The provisions represent a 21 per cent adjustment across 53 per cent in value terms of Draper Esprit’s portfolio.

The company is set to report its results for year to March 31st next month. Draper Esprit said its gross portfolio value is expected to have increased in value by almost £100 million (€111 million) over the year, with the core portfolio accounting for 70 per cent of this.

A total of £90 million (€100 million) has been invested over the year, with £48 million since September 2019. The core portfolio accounts for £26 million (€28 million) of investments since September 2019.

Among the funding rounds closed during the year were for Graphcore, Revolut, Aiven, Evonetix, Freetrade, Aircall and a number of other unannounced funding rounds. The group said revaluation gains of £65 million since September 2019 were offset by revaluation adjustments across its portfolio of almost £80 million (€89 million), due to the impact of Covid-19. Five of the 18 core portfolio companies were affected, with the remainder in the emerging stage portfolio.

Accelerated trends

The company’s executive directors have deferred 20 per cent of their salaries for three months; the deferred balances will be used to purchase Draper Esprit shares in the market when they are paid. Non-executive directors have deferred fee increases over the same period.

Draper Esprit has not laid off staff or furloughed them, nor has the company applied for any government support schemes.

"Over the medium term, we believe the recovery from the pandemic will sharply accelerate the trends which Draper Esprit's portfolio businesses focus on. Transformations such as secure cloud infrastructure, remote financial services, online gaming and entertainment, and digital health, all stand to benefit from the societal shifts which the crisis has engendered. These dynamic businesses are weathering the current environment well and we are confident they will emerge stronger when economic activity normalises," said Martin Davis, chief executive

“Draper Esprit’s position as one of Europe’s most active VCs, and our long and deep understanding of the needs of this community, put us in an excellent position to play a leading role in helping innovative businesses of all sizes emerge stronger from this crisis.”

Meanwhile, Draper Esprit said Simon Cook is to step down from the board from July 1st, taking on the role of founding partner and continuing to manage a portfolio of companies including Trustpilot, Ledger and Freetrade.

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