Tom Slater

I led Baillie Gifford’s first private equity investment in 2012. I’d spent an autumn in San Francisco, familiarising myself with its venture capital pipeline. Off the back of that, we looked at Alibaba. Some others on our investment floor decided the Chinese firm was too expensive, but we pressed on and took a holding.

Two years later, shortly before its initial public offering (IPO), Alibaba hosted a lunch in London’s Bishopsgate for 500 investors. Afterwards, its executives travelled across town to our tiny office in the city. That they did so reflected the support we had provided over what had been a tricky period and spoke to the relationship we had built with co-founder Joe Tsai, its then chief financial officer and current executive chair.

Building conviction, providing support

One lesson I took from the experience is to stay open-minded when first meeting entrepreneurs aiming to build category-defining companies. That proved useful when Meituan’s founders presented implausible-sounding projections for their meal delivery business. What they’ve since achieved is mind-boggling. Another insight was the importance of keeping the faith. Understanding why you own something, knowing the people involved and trusting them to solve the problems they encounter are critical when you aim to stay invested for a decade or longer.

I combine my role on the Private Companies Team’s investment committee with heading Baillie Gifford’s US Equities Team and managing Scottish Mortgage. There’s no better source of information than direct access to those building the economy’s future. I regularly visit existing and prospective holdings on the US west coast and in China. And seeing a generation of our private companies make the transition to public markets, I’m optimistic we’ll enjoy even deeper relationships by having supported them on that journey.

Distilling complexity into clarity

There isn’t a formula for what makes a company special – each is exceptional in different ways. And that’s what I’m looking for. With insurtech Lemonade, for example, it was the leadership’s attention to detail in running the business and caring for staff as much as the way the app’s interface looked to customers.

I don’t think we get an investment edge from having a deeper understanding of a company’s technology than anyone else. It’s not for a lack of interest. But as a long-term investor, I’ve found it more valuable to focus on softer factors such as understanding the executive team’s dynamics, how that feeds into the company’s culture and the broader context in which the business operates – and then distil all that complexity into two or three big reasons to act. That’s how you know you've found a partnership worth pursuing.