View transcript
<p><strong>Your capital is at risk. Past performance is not a guide to future returns.</strong></p>
<p> </p>
<p><strong>Martina Hodges (MH): </strong>Good morning, everyone, and welcome to our Q2 2026 webinar series. My name is Martina Hodges, and I am a member of Baillie Gifford’s Financial Intermediaries team, and I will be your host for the next 20 minutes or so. </p>
<p>I am delighted to be joined today by Dale Ledbetter. Dale is an investment specialist in our Private Companies team, and that is the Strategy that we will be focused on this morning.</p>
<p>But first of all, before Dale shares his insights, I want to draw your attention to the Q&A button at the bottom of the screen. We would love for this to be as interactive as possible, and I know that you all have questions. So please do send them through that function, and I will do my best to try and ask Dale. </p>
<p>We appreciate those clients, and you know who you are, who submitted questions beforehand. We’ve weaved that into the conversation. So, thank you for that.</p>
<p>So, those that are less familiar with Baillie Gifford, we are a privately owned investment management partnership, headquartered in Edinburgh, Scotland. We have been managing $270bn in assets for our clients all over the world. And so, during our 118 year history, we’ve been trying to find exceptional growth companies and invest in those at scale for many years. In fact, some of those companies we’ve been investing in for decades. </p>
<p>And for those opportunities, we’ve been predominantly finding those in the public markets. So, for example, we invested in Amazon since 2004, we invested in Tesla in 2013, and NVIDIA in 2016. And as we have heard many times over, currently we’ve identified that many of the best growth companies have been staying private for longer. And in reaction to that, we invested in our first private company back in 2012, after being approached by Jack Ma. So, yes, you guessed it, our first investment was in Alibaba. </p>
<p>And since then, we have invested over $10bn across 170 private companies, 68 of which have gone public, either through IPO or M&A activity. And we remain top ten shareholders across 30 percent of those IPOs.</p>
<p>So, Dale, given that we have a long history of investing in these private businesses – so now it’s more than a decade – how would you say that our approach has evolved over that time?</p>
<p><strong>Dale Ledbetter (DL):</strong> Martina, that’s a really interesting question. I think what’s important to understand is that this is not nostalgia for us. How we think about product-market fit, how we think about business models overall is fairly consistent with how we think about that in the public domain. We still look at businesses over longer time horizons. We still are trying to focus on exceptional businesses, and also the underlying fundamentals of a business, rather than their share price. It just so happens that the world around us has changed. </p>
<p>And as you mentioned, companies are staying private for longer, and able to capitalize themselves more efficiently in private markets. So we’re applying the same philosophy that we always have, but just earlier in a company’s growth trajectory. </p>
<p>Of course, as you do more private investing, and we have more data points – as you mentioned, we’ve invested in 170 companies since 2012 – you’re able to increase your pattern recognition. You understand what a good series C company looks like, which is the place where we start to play in private growth markets. And you also understand why a company may have failed, or a pattern in terms of failures over time.</p>
<p>And I think, also, the level of scale can sharpen your conviction on what not do. There are investments that we did, historically, or ten years ago, that we may or may not do today. So that capital discipline, being able to walk away from pot rounds, and making sure that their pricing fits into our framework are things that I think have evolved over time. And also, our network has increased. And that network increases the sourcing funnel and improves our due diligence quality, and allows us to make better decisions. </p>
<p>I think another important factor is, in private growth there is likely less data than there is in public markets. So, you have to really lean into the people and the culture of a firm in order to give yourself a good sense of what a potential outcome may or may not be.</p>
<p>And I would also touch upon our position sizing, our portfolio construction. We are investing in a liquid asset, and it’s not easy to erase your mistake in the same way it might be in public markets as a result of that. But I think what is probably the most important thing I would mention is that access and reputation can compound. Being a known, patient, founder-friendly investor becomes a competitive advantage in rounds that are often oversubscribed.</p>
<p><strong>MH:</strong> Yes, Dale, I agree with that point in terms of our reputation. We certainly have shown that in the public markets, which has really helped us to gain access. Which leads us on nicely into our next slide. Both of us mentioned that companies are staying private for longer. But what would you say is driving that shift? And how does that really change the opportunity set for us and others as long-term investors? </p>
<p><strong>DL: </strong>Yes, there’s no question that public markets are shrinking and private markets are growing. In the 1990s you had 8,000 public companies. Today you have around 4,000 public companies. And the main structural drivers of that are, being a private company enables founders to continue to maintain control. They don’t have to be subject to quarterly reporting or active scrutiny or the overall short-termism that can happen once you enter public markets. There’s a regulatory and compliance burden of being a public company, and sometimes that is a real cost to scale your business. </p>
<p>So, ultimately, you can build a better business in private markets than you can in public markets. You can take technological risk, you can take M&A risk, etc. And this is something that is a benefit of being a private company. </p>
<p>Secondly, there is an abundance of late-stage private capital which companies can now access. There’s a plethora of growth funds, [unclear] funds, crossover investors. Which means a founder no longer needs to go public in order to scale their business. </p>
<p>And thirdly, one of the reasons that companies historically have gone public is to pay their employees. Well, today you have structural liquidity programs, tender offers, which enable these private companies to pay their early-stage investors or their employees and generate liquidity before IPO. So that removes the pressure of doing a traditional listing. One example in our own portfolio is the company, Stripe. They have signalled many a times that they may never go public, but they’re a $160bn value private company.</p>
<p>And what that means for long-term investors is that the growth phase of a company’s life is happening before it enters public markets, not after. So the definition of growth has to expand, it can no longer be about buying quality growth stocks in public markets. It’s following a business across its full arc of their life in private and public markets. And quite frankly, that is what makes Baillie Gifford a different trader platform. We are building multi-decade relationships with these businesses in both private and public markets. </p>
<p>You would know this better than I would, but our average going in public markets, I believe, is eight years. And so founders are aware of that dynamic. And so that’s why they tend to partner with us and want us at their cap table.</p>
<p><strong>MH: </strong>And Dale, just picking up on something that you said there about Stripe and their $160bn valuation leads us onto our next slide which touches on valuation. So, not only Stripe, but many of today’s private companies are valued at hundreds of billions of dollars. Do you think that that reinforces the case for investors where they increasingly need exposure across private markets in order to access a lot of the world’s fastest growing businesses?</p>
<p><strong>DL: </strong>Emphatically yes, without a doubt. Some of the largest private companies today will rival in size with many of the mega-cap companies. And if you’re not investing private growth, it increasingly means that you’re missing out on some of the most meaningful companies in the world altogether. These are category-defining businesses that have created value before they’ve listed in public markets. You can’t wait until they become a headline name in order to get access to those businesses. Long-running proof points of this are companies like Alibaba, that you mentioned at the opener, and then also Spotify. </p>
<p>But then, more recently, is a company like Bending Spoons who went public earlier this month. We initially invested in Bending Spoons in August of 2023 at a $1bn valuation. They ultimately went public at $18bn valuation. They bootstrapped themselves for growth. And in their big start of their success was their first Silicon Valley acquisition of Evernote. And that’s when we invested in them at that inflection point, and then they made several acquisitions, 50 overall, but several acquisitions since we have been investors. They entered public markets on a strong footing as a business growing rapidly at the top line, but also a profitable business, and that’s what’s being rewarded in public markets – scale and also profitability as well.</p>
<p><strong>MH:</strong> Which probably leads us nicely into your chart on unicorns. So, we have seen these continue to grow, and the chart shows that a smaller number of these account for a significant share of the value. I don’t know, but how do you even go about identifying these exceptional businesses? </p>
<p><strong>DL: </strong>Yes, I think what it really comes down to is long-term structural themes being supported by underlying fundamentals. And also, trying to ask yourself which businesses can be category-defining in ten years. I think there’s no question that AI’s one of those longer-term themes. But there are a lot of AI companies being created. Are these companies also supported by underlying fundamentals? In our own portfolio, Anthropic is clearly one of those names where the theme is also being mirrored with the fundamentals. </p>
<p>We also look for founders that have that quality and ambition. We’re looking for founders that want to build durable, or lead to durable outcomes, not just focus on the next funding round. Sometimes you have to be willing to invest before there is a consensus, which often leads to the best returns. </p>
<p>And again, I can’t stress enough, your network and your access really matters. As you said, it’s a great deal of concentration in private markets, similar to public markets. So, being able to source these opportunities and work with founders via your network is critical for you to enable you to get an allocation. We received our full allocation at over 90 percent of the investments that we have made since 2012. </p>
<p>And, lastly, it’s a willingness to be wrong a lot. We don’t always get it right. But this business is about asymmetric outcomes, and we have shown a track record of being able to identify those companies that can generate those types of returns.</p>
<p><strong>MH:</strong> So, this is a quick plug to – I’m encouraging you to ask some questions. I know that you’ll have some. So please do click on that Q&A button at the bottom of your screen. </p>
<p>Okay, Dale, so you mentioned two of the hottest letters in the alphabet and that’s AI. Turning to the current market environment, we would be remiss if we didn’t mention AI right now. But investment here has really accelerated dramatically over the last few years. So, from your perspective, where are you seeing opportunities? </p>
<p><strong>DL:</strong> Such a prevalent amount of opportunities. I think we look across the full stack. So we’re looking at the infrastructure layers, that’s compute, power, data, specialized chips, which is needed to build and scale AI. One example in our portfolio is a company called Tenstorrent. It’s an AI chip semiconductor company. We’re also looking at the applied vertical AI where AI is being embedded into specific industries or workflows that are changing unit economics, not just general-purpose model providers. </p>
<p>An example of that in our portfolio is Tempus, which uses AI applied to precision medicine and healthcare data. We supported that company privately and then, ultimately, also in public markets. Another example is a company called Altruist, which some of the audience may be familiar with, given this is an intermediary channels quarterly call, but it’s a RA and wealth management platform. So, that’s two examples there.</p>
<p>And then we’re also looking at picks and shovels implementing AI safely and effectively into large organizations. That would be a company such as Rippling, which is a HR, IT, finance software suite for small and medium-sized enterprises.</p>
<p>And then lastly, and selectively, we’re looking at the frontier labs themselves, because of the different traded technology and the distribution that they offer, but also that being justified by the price. And so Anthropic, again, would be an example there.</p>
<p><strong>MH: </strong>All right, so taking this a little step further, Dale: How do you distinguish between the AI businesses that have genuine long-term potential and those that are just benefiting from short-term excitement?</p>
<p><strong>DL: </strong>Yes, I think it would be interesting. I think everyone is trying to figure that out. I don’t know if anyone has the correct answer at this stage. But I think ultimately, for us, it’s relying on fundamentals, bottom-up research, direct engagement with management, rather than just following the round. So, you have to look through the amount of capita that’s been raised or the headline valuations and really look at these companies and decide whether they have a durable technical or data advantage. Whether they have real customer usage slash retention. Whether they have a path to defensible economics, versus their compelling narrative.</p>
<p>So, I think you also have to be wary of where there’s extreme funding concentration – we have a narrow set of capital chasing certain names – because that can lead to valuations exceeding fundamentals. So, having that price discipline really matters, especially around AI in today’s environment, and we’ll come to it later, but also around defense as well. </p>
<p>And so I think, leaning into Anthropic a bit more in terms of our theme there, it’s a differentiated lower cost training approach. They’re focused on enterprise customers, which means that we think they’re stickier contracts, better pricing power, as an example. And also, their positioning of promoting safety and interpretability makes it very much accepted for regulated environments like financial services, or life science. And what that is, is a fundamentals base case investment as opposed to an “everyone is investing in AI” investment. </p>
<p><strong>MH: </strong>Dale, you mentioned defense, defense technology. So obviously alongside AI, we’re seeing renewed investment in this area. Do you think that these are the kinds of structural themes that we should expect to remain attractive over the next ten years? </p>
<p><strong>DL: </strong>Yes, I think so. Both reflect a broader shift to hard tech or national strategic sectors such as defense, strategy, advanced manufacturing – those are all attracting a lot of growth capital currently, it’s not just software. And if you think about it, defense tech is really being reshaped by the same forces as AI. It’s about autonomy, software-defined hardware, faster iteration cycles. This is stuff that the legacy primes have not historically delivered.</p>
<p>The common thread amongst AI and defense is that these are long-duration shifts, they’re large, they’re structural, and they’ll play out over many years. And it’s exactly the types of themes that a long-term investor should want access to. And also, you want to access them while they’re private, versus waiting until they become a public business. A prime example there is that we are investors in Anduril, which is a defense company that’s built around autonomy and software-defined hardware.</p>
<p><strong>MH:</strong> And we are seeing this already, but just clicking onto the AI Native slide. So, the next wave of IPOs could be dominated by AI Native businesses. How significant do you think that could be?</p>
<p><strong>DL: </strong>Yes, so I think this ultimately reinforces our thesis, that by the time these businesses list, a huge amount of value has already happened in private markets and the public investor is effectively arriving late to the story. I think the second significance is that there’s a blueprint now for companies staying private for longer. With SpaceX, like you mentioned, Anthropic, etc. Well, Anthropic may not be the longest one, it’s rapidly expanded. </p>
<p>But there are a lot of AI Native companies that will stay private for longer. And that means the access that public investors have to these companies will be more narrow. And so, you’ll miss out on the value created by these AI Native companies that are being generated today by not investing in private markets, or investing earlier in that company’s growth trajectory.</p>
<p><strong>MH: </strong>All right, so – as if your insights have not been compelling enough to convince us to all invest in private equity – if you had to leave investors with just one key message about why now is the right time to consider private growth investing, what would it be, Dale? </p>
<p><strong>DL: </strong>Well, I think the structural shift is not temporary. The most important businesses today are in private markets. I would say that private growth is likely the new small-cap or the new mid-cap. Lastly, I would say that the philosophy that led us to Alibaba and Spotify years ago is the same philosophy that led us to SpaceX, Bending Spoons, and Anthropic today. And that continuity across more than 170 companies over a decade of investing is, at best, evidence as to why now is the moment to take private growth very seriously.</p>
<p><strong>MH: </strong>All right, thank you, Dale. Always insightful. We appreciate the update on our Private Companies capability. And for everyone who joined us, we are very grateful for your participation today. If you have any questions following on from the webinar, please feel free to get in touch with your relationship manager.</p>
<p>One of the things I would love to draw your attention to is that, onscreen, you should see a couple of links to our Insights page. If you have time, click on those, it takes you directly to our Private Companies website. We are featuring on there some articles on Vinted, Altruist, which Dale mentioned, Tekever. </p>
<p>And as always, please do give us your feedback. We really want to make these sessions as valuable for you as possible. As a reminder, this is part of our webinar series. We have some remaining sessions, one tomorrow, and another couple that are featured next week. And we would love for you to join us. </p>
<p>So, thank you for joining us. We really wish you a restful and refreshing summer. And we really look forward to reconnecting with you next quarter, if not before. So, until then, thank you again, and take care.</p>
<p> </p>
<h3>Risk factors</h3>
<p>This communication was produced and approved in July 2026 and has not been updated subsequently. It represents views held at the time and may not reflect current thinking.</p>
<p>The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.</p>
<p>This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research, but is classified as advertising under Art 68 of the Financial Services Act (‘FinSA’) and Baillie Gifford and its staff may have dealt in the investments concerned.</p>
<p>All information is sourced from Baillie Gifford & Co and is current unless otherwise stated. </p>
<p>The images used in this communication are for illustrative purposes only.</p>
<h3>Important information</h3>
<p>Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). Baillie Gifford & Co Limited is an Authorised Corporate Director of OEICs.</p>
<p>Baillie Gifford Overseas Limited provides investment management and advisory services to non-UK Professional/Institutional clients only. Baillie Gifford Overseas Limited is wholly owned by Baillie Gifford & Co. Baillie Gifford & Co and Baillie Gifford Overseas Limited are authorised and regulated by the FCA in the UK. </p>
<p>Persons resident or domiciled outside the UK should consult with their professional advisers as to whether they require any governmental or other consents in order to enable them to invest, and with their tax advisers for advice relevant to their own particular circumstances.</p>
<p><strong>Financial intermediaries</strong></p>
<p>This communication is suitable for use of financial intermediaries. Financial intermediaries are solely responsible for any further distribution and Baillie Gifford takes no responsibility for the reliance on this document by any other person who did not receive this document directly from Baillie Gifford.</p>
<p> </p>
<p><span class="source-text">202714</span><span class="source-text"> </span><span class="source-text">10062452</span></p>
