Extuple invests in cloud-based technology companies to fit the investment objectives of its principals. The Fund was launched to external investment capital to better fund the team required to execute its strategy, spreading the costs across a larger capital base.
The Fund was designed with 4 key attributes:
It takes a long time to build great technology companies. While that’s suitable for institutions like pension funds, most investors aren’t comfortable locking their capital away for long periods and that’s why public markets were invented.
Because all our investments are large public companies, the Extuple Cloud Fund offers investors a high certainty of liquidity. They are also easy to value, which means that we can offer an open-ended fund that can grow at a manageable pace, instead of seeking all of our committed capital in advance.
We only invest in Cloud companies.That’s partly due to Extuple’s thesis about the growth of the cloud and the innovation that it incubates. But it’s also the industry in which we have spent our careers, and the industry where our experience really adds value. The narrow focus means we will never be anyone’s complete investment solution (except for our own), but we can form an important component of many.
We only have fifteen portfolio investments at a time. We believe 15 provides sufficient diversification (to the extent that we are not a complete investment solution) while retaining the ability to generate above market returns.
The number itself is not as important as the fact that its concentrated and fixed. To add a portfolio investment…we have to sell one. And to select the 15 best investments, we perform a deep dive on approximately 100 companies that fit our criteria really well out of the 350 cloud companies we track globally.
The Cloud companies in which we invest exhibit high growth rates and relatively high price volatility. Our strategy is Antifragile, in the sense described by Nassim Taleb, which makes a virtue of volatility and disruption, instead of trying to eliminate it or deny it.
Price volatility is an opportunity in our view, presenting opportunities to create additional value, as long as the fundamental research needed to take advantage of it has been completed.