Tim Levene on Weathering The Covid-19 Storm

This is an excerpt from AltFi’s Alternative Lending State of the Market Report 2021, which is available for free here.

Three years is often seen as the magic number when it comes to establishing a track record, and that’s what Tim Levene, chief executive of alternative finance-focused investment trust Augmentum Fintech is banking on.

The investment company launched on the London Stock Exchange in March 2018 to become the only listed fintech-focused venture capital firm in the UK.

It raised £94m through an initial public offering, alongside a £700,000 crowdfunding round on Seedrs, with investors hoping for returns from an investment objective that backs fast-growing fintechs shaking up the lending and broader financial services space in the UK and Europe.

“Three years is a good milestone to sit and reflect,” says Levene. “When we listed, I said to investors that they should start to judge us towards the end of year three. I felt the portfolio would show real maturity towards the end of year three, which is the end of 2021.”

So far, its shares are up 66.5 per cent over three years as of 20 April and are 89.9 per cent higher annually. Its three-year performance lags the technology and media Association of Investment Companies sector that the fund sits in, albeit with a different strategy.

Investment companies in the technology and media sector have experienced share price growth of 104.9 per cent over three years, but are up just 38.8 per cent over the past year, which is under half the rate of Augmentum Fintech’s annual growth.

The Digital Shift

Much of the fintech sector has been helped by the pandemic over the past year and the shift online caused by lockdown restrictions. That is good news if you run a portfolio focused on backing companies used to using online technology to attract and retain customers.

Augmentum Fintech’s largest holdings as of September 2020 were DIY investment platform Interactive Investor and business current account challenger Tide.

Augmentum Fintech also has exposure to alternative lending through investments in business finance provider Iwoca and peer-to-peer lender-turned banking brand Zopa, as well as a small stake in Seedrs.

“Generally, anything digital-led has benefited over the past year,” Levene says. “A lot of our portfolio has seen accelerated digital adoption. What we don’t know is what behaviour sticks once we go back to normality.”

He says many of the demographics who were unsure about the move to digital financial services have recognised that the barriers aren’t that high.