13 questions for Augmentum Fintech’s Tim Levene

Which sector shows the greatest promise in 2022?

Of course I am talking about my own book, but the structural opportunity for the fintech sector is still significant; with fintech revenue penetration of the global financial services sector in the single digits, there is plenty of scope for further disruption over the coming year and beyond.

What is the biggest financial risk today?

Geopolitical instability is still the biggest single risk where we have felt the inflationary effect in recent months. Investors like as much certainty as possible, even if the outlook is not what we ideally want. We can all adjust our strategy if we know the cards that have been dealt, but when someone keeps switching decks, that’s when the job becomes increasingly difficult.

Describe your investment strategy

Augmentum is the UK’s only listed fintech fund. We aim to generate long-term capital growth through investment in a diversified portfolio of fast-growing, high-potential private fintech companies based primarily in Europe. We seek exposure to early-stage businesses that have the potential to be category leaders, have strong underlying financials and can become multi-billion pound businesses. They should deliver truly disruptive propositions in the banking, insurance, wealth and asset management sectors, as well as those providing services to underpin the financial sector

Which famous investor do you admire?

Any investor who can consistently deliver above average returns for their particular asset class must be respected. In the world of venture capital, there are a few superstars who have not only delivered incredible returns consistently, but are also fundamentally “good people”. The likes of Bill Gurley (Benchmark Capital), Danny Rimer (Index Ventures), Nigel Morris (QED Investors) and Josh Hannah all come to mind.

Name your favorite “Forever Stock”

In addition to owning a significant position in Augmentum, as a private market technical investor, much of my capital is tied up in private companies. Still, I always watch new tech companies list and try to buy them before they hit the hype cycle. The challenge with companies staying private longer is that the valuations they list are much higher than 10+ years ago. This makes it much more difficult to find the 10x+ bagger we all strive for. But I’ve been a holder of Amazon since 2008 and despite trading in and out I always want a healthy amount.

What would you never invest in?

We’re in the business of taking risks, and sometimes we need to take a contrarian view to find that outsized return. However, I am incredibly conscious of avoiding fads – there is no shortage of FOMO in the venture industry and it is my job to ensure that the team remains objective, disciplined with a high bar around our investments, investing in companies with substance and transformative potential , rather than just sewing. We have invested in less than 0.3% of all the investment opportunities we have assessed in recent years.

Growth or value?

Growth. However, we live in a market where growth stocks can also represent compelling value. With discounts of 30%+ for growth-focused mutual funds like Augmentum, there is a strong case for underweight growth investors to look to selectively take advantage of the price break.

House or pension?

House. If I do my job properly, I shouldn’t need to rely on a pension to secure my financial future.

Crypto: brilliant or bad?

Potentially brilliant, but not yet proven at scale across multiple use cases. It is our job to be at the forefront of technologies with transformative potential in the financial sector. We believe there are a number of blockchain applications that hold promise across commerce, digital currencies and payments.

What can be done to improve diversity in fund management?

As an industry, Venture Capital and Private Equity have made great strides in recent years in improving their diversity profile, but there is still much to do. It is an industry where we are seeing a new generation of diverse young talent develop in real numbers, but it will take another 5-10 years before the effect can be felt at senior level. We also have in our industry several non-profit organizations such as Diversity.vc focused on making our industry more diverse and inclusive.

Have you ever been involved in a company and been particularly proud (or disappointed) of the outcome?

I invested in Interactive Investors in 2015, when it’s fair to say that most in the VC community considered ii a “digital dinosaur” that had been around for a while but failed to truly scale. It was a contrarian investment, but it was clear that there was an opportunity for a lower-cost, digital-first challenger to compete directly with Hargreaves Lansdown. We bought 10% of the company for £2m and over a period of seven years the management team did an extraordinary job of growing it both organically and through acquisitions. The business was sold to Abrdn in 2022 for £1.5 billion.

What’s the best advice you’ve ever received?

“The biggest risk of all is not taking one.”

What would you be if you weren’t a fund manager?

I have been an entrepreneur since 1998. Before starting Augmentum I was involved in founding a number of companies including Flutter.com (which merged with Betfair in 2001) and the juice bar chain Crussh. I love helping to build businesses and working with talented entrepreneurs. It makes the job I do hard to beat.