Buying into private companies.

April 2022

Key points

Businesses are staying private for longer, creating more opportunities to invest in the likes of SpaceX, Epic Games and Stripe, which are yet to appear on stock markets. Peter Singlehurst, head of Baillie Gifford’s Private Companies Team, explains what’s changed and why it matters.

© Epic Games, Inc.

The value of an investment in the funds, and any income from it, can fall as well as rise and investors may not get back the amount invested.

In 1996 there were over 8,000 companies listed on US stock markets. Twenty years later that number had almost halved. More companies are choosing to stay private. Baillie Gifford has over $10bn of assets invested in private companies, and a further $20bn of assets in public companies that we first invested in when they were private.

The list of the unlisted includes some of the most innovative companies in the world: In the US they include SpaceX, the advanced rockets and spacecraft firm founded by Elon Musk and Epic Games, the firm behind the hit video game Fortnite. In China they include ByteDance, owners of TikTok the most downloaded app in 2021. The fact that so many start-ups are staying private for longer gives Peter Singlehurst’s private companies team plenty to choose from.

Singlehurst suggests founders now understand that staying private allows management to maintain focus and gain a competitive edge: “They can maintain a small, concentrated, aligned group of shareholders, focus on their operations and the long-term vision,” he says. “Everything else being equal, they can build better businesses by staying private for longer, with higher probabilities of success.” 

Investing in high-growth private companies can make Baillie Gifford a better public market investor, by helping the firm make better-informed decisions for clients. It’s one reason why private companies have become a key area for Baillie Gifford, since the first investment in Alibaba by Scottish Mortgage Investment Trust in 2012. Previously, investors scoured stock markets for promising companies. Now more companies fall on the other side of what Singlehurst calls “the very artificial boundary of the initial public offering (IPO) line”.

He is clear about what his team offers. It doesn’t include the operational involvement in company formation or initial strategy-building. Early-stage venture capitalists are better placed to do those. But once companies begin thinking about becoming public, this is when Singlehurst’s team can add value: “At the stage we invest, the companies are normally generating substantial revenues. Many of the companies are profitable, fast-growing and have proven product-market fit.”

Peter Singlehurst, head of Baillie Gifford's Private Companies Team.

Introducing colleagues to the next generation of companies that could form the backbone of Baillie Gifford’s public market investments is part of the Private Companies Team's remit. Singlehurst explains: “When companies transition to the public markets, rather than having a couple of weeks to decide about an IPO of a company you’d never heard of, we’ve helped colleagues to build an understanding of these companies over years.”

This is true of the eco footwear business, Allbirds. Once one of the team’s holdings, it is now a public business. When the company came to the public market, management turned to Baillie Gifford for help in pulling together a new framework for evidencing its environmental, social and governance credentials. “We were the only investor on the advisory committee,” Singlehurst explains. “I think that was because we, in all likelihood, will continue to be Allbirds’ partner for many years to come, whereas many other earlier-stage investors won’t.”

That alignment with founders on time horizons, and that ability to provide continuity of ownership for companies as they transition to the public markets is a need that Baillie Gifford is well-placed to meet. Singlehurst explains the difference, “Many investors view an IPO as an exit and sell after a lock-up expires. Our thinking, and that of many of the companies we back, is that it results in an arbitrary decision that has nothing to do with the company’s ability to make exceptional returns for your clients.” Instead, Baillie Gifford focuses on whether the company can continue to create returns. “We want to continue to own those shares and continue to be partners and supporters of those businesses to maximise the potential returns for our clients,” he says. Providing they are executing on their vision, and the upside remains, founders know that Baillie Gifford will stay the course.

So where does Singlehurst see opportunities? “The companies that I’m the most excited about,” he says, “are those taking technology developments from one field and applying them to surprising different fields.” He cites the Texas-based ‘green chemicals’ company Solugen as an example. “In one sense, it’s a chemicals company. But it has found a way to make base chemicals, such as hydrogen peroxide, using enzymatic catalysts, which are much more efficient than the metal catalysts traditionally used in the industry.” He believes this could be a game-changer: it results in a better product that is cheaper to produce and is much better for the environment. The inspiration came from healthcare. “One of the founders was an oncologist, and he discovered these enzymes in pancreatic cancer cells which make hydrogen peroxide,” Singlehurst explains.

Here is a business taking advances and insights from healthcare and applying them to fields such as water purification, that have traditionally been very carbon intensive. He sums up, “It’s the intersections of these different industries where I see so much opportunity and where I get particularly excited about businesses. And that’s where Baillie Gifford’s broad geographic and generalist remit is a particular strength.”

Words by Gillian Christie.

You can hear more of Peter’s thoughts in the Baillie Gifford podcast Short Briefings on Long Term Thinking at

This communication was produced and approved in March 2022 and has not been updated subsequently. It represents views held at the time of presentation and may not reflect current thinking.

The Monks Investment Trust plc, The Baillie Gifford European Growth Trust, The Baillie Gifford China Growth Trust, The Keystone Positive Change Trust, Baillie Gifford Shin Nippon, The Baillie Gifford UK Growth Trust plc, The Baillie Gifford US Growth Trust plc, The Edinburgh Worldwide Investment Trust plc, The Scottish Mortgage Investment Trust plc and The Pacific Horizon Investment Trust plc have a significant investment in private companies. The trusts’ risk could be increased as these assets may be more difficult to sell, so changes in their prices may be greater.

A Key Information Document for each of the relevant Baillie Gifford trusts can be found at

This communication should not be considered as advice or a recommendation to buy, sell or hold a particular investment. This communication contains information on investments which does not constitute independent investment research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions.

Baillie Gifford & Co Limited is authorised and regulated by the Financial Conduct Authority. Baillie Gifford & Co Limited is an Authorised Corporate Director of OEICs. Baillie Gifford investment trusts are listed on the London Stock Exchange and are not authorised or regulated by the Financial Conduct Authority.


18007 10008246