Strategy: A generalist that will focus on areas in which the investment team has particular expertise.
Issues
Track record: Given Vala’s short history, the track record, so far, is limited, with no exits.
The investment manager
Positives
Team: The Investment Committee has a broad range of entrepreneurial experience and a successful track record, prior to Vala, of building and exiting companies.
Issues
Key man risk: Jasper Smith is the key person for Vala, although that risk is being reduced as the team grows.
Nuts & bolts
Duration: The fund is evergreen, with two closings per year, and investors receive a proportionate share of the next tranche of investments.
Diversification: The manager aims to provide eight to twelve investments for each investor, with no more than 20% in one company.
Valuation: This is a mixture of last transaction and internal valuation.
Fees
Fees: The fee structure is straightforward, with an initial fee charged to investee companies, plus an annual fee and the performance fee charged to investors, with the aim of focusing Vala on exits.
Performance fee: This is charged at 20% on aggregate returns over 110% of subscription.
Risks
Target returns: The target return of 2.5x capital after fees after seven years suggests a medium- to high-risk investment strategy.
Companies: The fund supplies risk capital to early-stage companies, with a mix of pre- and post-revenue investments. There will be a spread of company returns, as the successful ones will do very well, but those who fail may do so completely.
