Taxi! Cab firm’s backer could give profits a lift
IT IS hard to imagine life without Google. Founded little more than 20 years ago, it has become an essential tool for almost everyone who uses the internet.
The company was co-founded by Sergey Brin, who is now one of the world’s richest men, with a $50 billion (£40 billion) fortune. But the 45-year-old was born in modest circumstances in Russia, moving to the US when he was six years old.
Brin is probably the best-known Russian emigre in Silicon Valley, but he is far from alone. It is said that one in eight tech entrepreneurs in the Californian tech hub speaks Russian, because they or their families were born in the former Soviet Union.
The Russian connection has proved a key benefit for TMT Investments, a business that invests in promising tech firms in America and Europe. TMT is listed on London’s junior AIM market and was founded in 2010 by a group of Russians who have spent years in the tech industry and built up a network of contacts around the world.
Many UK investors were highly sceptical about TMT when it joined AIM in 2010, but it has steadily proved the doubters wrong. The shares were listed at $1, but are now $3.69 and should continue to gain ground in the coming months and years.
TMT has one overarching aim – to make money for shareholders. It has done pretty well so far. The group looks for unlisted businesses that are generating sales and growing fast, but are still reasonably valued. It then buys stakes in these firms, helps them to develop and, ideally, sells its holdings within a few years at a considerable profit.
In 2012, for instance, it spent $1 million on a stake in Wrike, a software business that aims to help companies manage projects more efficiently. TMT sold its holding for almost $23 million earlier this year – a huge return.
Like many of TMT’s investments, Wrike was founded by a Russian emigre, who took to the TMT team not just because they are tech experts but also because they shared his language and culture.
The company has stakes in 25 businesses, the most successful of which is Bolt, formerly known as Taxify. Founded by 19- year- old Markus Villig in 2013 in Estonia – where Skype also started – Bolt allows users to order taxis from their mobile phone, much like Uber, but it is particularly popular in Africa and Eastern Europe.
TMT spent $320,000 on an investment in Bolt in 2014. Today, that is valued at $22 million. The company has a couple of UK investments too, including MEL Science, an e-commerce business run by a Russian. It sells chemistry sets with virtual reality headsets so children can see molecular changes when they carry out experiments. Popular as gifts, the chemistry sets are also used by schools, and MEL is keen to expand into other areas of education.
Every year, the TMT team see hundreds of businesses, going through a rigorous selection process before picking firms they believe will be successful. Investments average $1 million to $2 million each and the breadth of the portfolio means that even if some decisions don’t bear fruit, the impact on the group is slight.
Over the past nine years, the company has made almost $40 million from selling stakes in businesses in which it has invested. The group does not pay regular dividends but it has made two one-off payments to shareholders, the first in 2016 and the other earlier this summer.
Looking ahead, prospects are bright. TMT takes a reassuringly conservative approach to the way it values its portfolio so several are likely to be revalued at higher prices when they are sold. At the same time, the group has a number of attractive deals in the pipeline, which should generate returns over the next few years.