Tekcapital portfolio company Guident could enjoy a substantial valuation uplift this summer as the company rolls out its autonomous vehicle safety SaaS solution.

The UK Investor Magazine Podcast was recently joined by Guident CEO Harald Braun for a deep dive into the company’s latest developments. The focus of this podcast was two recent announcements.

The first was the expansion of the strategic partnership with Auve Tech concerning Guident’s Remote Monitoring and Control Centre safety solution and its integration with the Mica autonomous shuttle. The second was a new partnership with Star Robotics representing Guident’s entry into the robotic surveillance and inspection industry.

The calibre of Guident’s two partners should not be underestimated. 

Estonia-based Auve Tech has partnered with SoftBank affiliate Boldy to make Mica shuttles available in 50 locations across Japan by 2025.

Auve Tech is an Estonian Deep Tech start-up selling autonomous vehicles to Japan, a country synonymous with technology and vehicle manufacturing, and Guident is helping Auve Tech launch in the US.

Star Robotics has secured venture funding and is revenue-generating in a real-world setting with material scalability.

The two partnerships demonstrate a huge addressable market for Guident. Most major players in the Level 4 autonomous vehicle market are already billion-dollar companies and Guident is carving out a potentially market-leading safety solution with a broad base of applications.

Unique Proposition for UK Investors

Guident and Tekcapital shares especially present UK public equity investors with a rare and arguably unique opportunity. 

Speaking with UK Investor Magazine, Harald Braun touched on a proposed funding round designed to accelerate growth across the company.

As one would expect, Braun did not disclose any specifics of the round. There is no detail on the funding level or valuation, yet. The details are confidential for the time being.

We do, however, know it will be a venture capital round in US private markets.

From a valuation uplift perspective, it is a very exciting time to be a Seed/Pre-Seed investor in growth companies in the Electric Mobility and Autonomous Mobility space. And that’s exactly what Tekcapital and its shareholders are.

Guident has one foot in the clean technology subsector, Electric Mobility – which attracted the most venture capital investment in 2023 – and the other foot in the Deep Tech Autonomous Mobility sector.

According to Dealroom, VC investors poured $22bn into Electric Mobility in 2023. This sector includes electric vehicles, electric vehicle charging and lithium battery technology. US VC investors allocated just under $4bn to the Deep Tech Autonomous Mobility. One could argue that Guident is a communications company, but its technology’s foundations are certainly rooted in the aforementioned industries.

Tekcapital currently owns 100% of Guident, which was valued at around $20m in terms of NAV on TEK’s balance sheet in the half-year report.

This is pocket change in the grand scheme of things. On the successful completion of the proposed funding round, one would expect a substantial uplift in the Guident valuation. 

There is serious capital around for mobility companies and Guident is at the forefront of making the next wave of autonomous mobility safer. To compound the attractiveness of Guident’s revenue-generation model, the company is adopting a SaaS offering that tends to command higher valuations.

Guident Valuation

The UK has a problem in pricing technology risk and attributing a long-term value to big tech. This hasn’t always been the case, but a combination of Brexit and higher interest rates has made the current environment particularly challenging. UK public markets struggle to look at the bigger picture and real-world benefits of technology. That’s why ARM chose to list in New York.

However, Tekcapital investors need not worry about the UK’s current deficiencies with pricing technology risk when considering Guident because the company is tapping up US private equity investors who readily support early stage innovation in the sector.

US investors tend to have a much longer time horizon and have a bigger appetite for risk. The ‘Magnificent 7’ is evidence of this.

London’s public markets may change their risk tolerance and approach to big technology in the future, but for now, Guident will enjoy a supportive environment in the US. This should feed directly into Tekcapital shares.

The FTSE 100 was closing in on a record closing high on Friday as the index smashed through 8,000 and continued past the record closing price in early trade.

The index did ease off as the session progressed and fell back below record levels.

“With the FTSE 100 breaking past the 8,000 level – and at 8,039 points at the time of writing – the blue-chip index is honing-in on a record high if it can hang on to those gains by the end of the day,” said Jason Hollands, Managing Director of Bestinvest

“Some positive headlines for the UK equity market will certainly be welcome news given it has been somewhat unloved in recent times and endured a raft of negative stories about investor outflows and companies switching their listings overseas.”

The FTSE 100 rose on Friday as traders digested the news that the UK economy grew 0.1% in February and looked set to exit recession. As FTSE 100 companies largely earn there revenues overseas, the move was a matter of improved sentiment rather than a more upbeat outlook for earnings.

“Gross domestic product rose 0.1% between January and February, which was in-line with expectations and thanks to growth in manufacturing, especially in utilities. These figures mean the UK economy is likely to have expanded in the first quarter overall, marking an end to recession,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

“With that said, the levels of growth being displayed aren’t very inspiring, particularly for our large services industry. Falls in construction activity also indicate a broader malaise the UK is yet to shake off.”

Mining companies were among the top gainers as the inflation trade continued to support commodity stocks.

Oil majors Shell and BP enjoyed higher oil prices with BP among the best performers.

However, higher oil prices does no favours for airline profitability and easyJet and IAG sank as a result. EasyJet was down around 5% at the time of writing.

New data released by AJ Bell reveals the investment platform’s ISA investors shunned individual UK stocks and UK-focused funds and trusts during the busy ISA period starting 1st January 2024 and running to 5th April 2024.

Breaking down investor activity in funds and individual stocks, AJ Bell found ISA investors had a preference for global equity funds and US stocks enjoyed the biggest inflows.

The popularity of overseas funds is unsurprisingly given the strength of overseas indices in early 2024, but Laith Khalaf, head of investment analysis at AJ Bell, warned Jeremy Hunt’s new British ISA could face difficulties if current trends persist.

“Judging by the most popular investments with ISA investors so far in 2024, it looks like Jeremy Hunt is going to have to rely on individual stock investors to do the heavy lifting when it comes to the UK ISA. Fund and trust investors are still very much going global with their ISA money in search of superior returns,” said Laith Khalaf, head of investment analysis at AJ Bell.

“None of the twenty most popular funds and trusts chosen by ISA investors so far in 2024 appear to be eligible for the UK ISA, based on the rules currently proposed by the Treasury.”

Khalaf noted a grey area around Investment Trusts and the British ISA, which one would hope is clarified given the discounts some Investment Trusts trade at currently.

“There is however some confusion over whether investment trusts will be included, even those that invest overseas, on the basis they are themselves listed UK companies,” Khalaf said.

“Likewise, presumably the government would look favourably on allowing Greencoat UK Wind into the UK ISA, seeing as the trust invests in a portfolio of UK wind farms. As things stand though, the Treasury proposals for eligible investments only cover UK shares and bonds, and the funds and trusts that hold them.”

Most popular funds and trusts with ISA investors

Source: AJ Bell, net flows from DIY investors in ISAs from 1 January 2024 to 5 April 2024 excluding AJ Bell funds.

Compounding the problem for the British ISA, individual stock investors also choose to look beyond London’s markets for a large proportion of their cash during the ISA season.

“Stocks that provide exposure to the US market and offer ways to play the artificial intelligence theme have been among the most popular choices for AJ Bell customers investing in an ISA between the start of January and the end of the tax year on 5 April. With some of the best gains in recent years having come from US shares, it’s no wonder investors have fished for opportunities across the pond,” said Dan Coatsworth, investment analyst at AJ Bell.

“Four out of the top 10 most popular stocks for AJ Bell ISA transactions by net flows are listed in the US. At the top is chips giant Nvidia which has delivered stellar share price gains since early 2023.”

While AJ Bell’s data is bad news for the British ISA, it does demonstrate UK investors’ prudent approach to investment by making savvy picks in some of the world’s best-performing shares.

“Successful investing is often about looking for opportunities away from the mainstream and one multi-billion-dollar stock has attracted quite a bit of interest from AJ Bell customers despite being relatively unknown in the UK,” said Dan Coatsworth, investment analyst at AJ Bell.

“Samsara has been a hit with people investing in their ISA this year, perhaps because it offers a different way to play the AI theme rather than going down the obvious route of Nvidia or one of the big tech providers. Samsara runs a platform that brings together important operational data for businesses and governments, and it uses video technology that incorporates artificial intelligence.

“In third place on the ISA list is Microsoft, seen as a trusted way to play the tech space. Millions of people use its programmes on their computers, laptops and phones, while it is also a major player in the gaming space.”