Peter Singlehurst on Long-Term Investing Across Public and Private Markets

Peter Singlehurst came to investment management after studying philosophy and joining Baillie Gifford's graduate scheme. The firm was primarily a public-market investor when he joined. As high-growth businesses stayed private longer, colleagues saw an opportunity to apply similar company analysis before listing, starting within the long-lived Scottish Mortgage investment trust.

The firm created a dedicated private-company team in 2017. Singlehurst says the aim is to combine private and public investing, offer long-term capital and keep costs low for clients. His account reflects Baillie Gifford's own investment model and commercial interests.

Singlehurst does not call himself a venture capitalist: he associates the term with very early investments, whereas his team focuses on mid- and late-stage growth companies whose business models and competitive advantages can be analyzed. It seeks to be a financial partner across the transition from private to public, rather than an operational adviser to a two-person startup.

Baillie Gifford hires people from varied academic backgrounds because basic financial analysis and valuation can be taught, while experience develops through practice. Singlehurst believes diverse perspectives are harder to manufacture if everyone enters investment management with the same background.

He calls the division between public and private markets an artifact of finance. In his view, the qualities of a good company—a large opportunity, strong management, a business model and defensibility—matter in both settings, even though the way shares trade differs.

The two teams can also inform each other. Private investors draw on public-company relationships and analysis; public investors learn about emerging businesses before they list. Singlehurst says a continuous relationship can benefit companies and clients, although his firm has an interest in presenting its approach favorably.

Asked about alignment between venture firms and limited partners, he says it can weaken late in a finite fund's life. He worries that fundraising cycles and carried interest can encourage a manager to realize and distribute an investment even when continued ownership might better serve clients. This is his critique of incentives, not a claim about every venture fund.

His team uses deliberately constructed upside scenarios and asks what must happen, and with what probability, for an investment to earn high returns. It considers market size, financial characteristics, capital needs and the evolution of competitive advantage together, rather than relying on a higher future sale multiple.

Stebbings questions whether competitive advantage can be predicted early. Singlehurst agrees that no one can pin it down precisely: the firm's work is closer to an exploration of hypotheses about how an advantage might evolve and deepen as a company grows.

Long-term support is conditional, not unconditional. If conviction disappears, Singlehurst says the firm generally stops adding capital to a private company or considers selling a public holding. Harder cases arise when the reasons for poor performance are unclear; the team often leans toward support, but sometimes decides the situation cannot be changed.

For portfolio construction, the firm starts with relatively standard positions and intends to add as conviction deepens. Singlehurst believes being a shareholder helps investors understand a business. It does not add to holdings where that conviction fails to develop.

A lower earlier price is not always the best risk-adjusted opportunity, he argues. If execution strengthens a business and its competitive position, the probability of a large future return may rise even as the valuation increases. That is his investment judgment, not a guarantee that paying more will improve returns.

Rather than viewing diversification only as downside protection, Singlehurst describes it as a way to increase the chance of owning outliers. His team also groups businesses by underlying common characteristics rather than conventional sectors. As an illustration, he places Tanium and SpaceX together as infrastructure supporting communications, through endpoint security and satellite broadband respectively.

At the time, he says portfolios often contained roughly 40 to 45 companies, with significant concentration among the top ten. Some funds had at times held more than half their value in those ten positions; successful private holdings that became public contributed to this, and subsequent market volatility had reduced some concentration. These are historical observations, not fixed limits.

Singlehurst says that over roughly ten years the firm had deployed about $10 billion into around 100 private companies and had experienced one bankruptcy. He attributes part of that experience to investing in relatively mature, often revenue-generating companies. One bankruptcy does not establish that the other investments were profitable or that losses were absent.

Stebbings asks whether so few bankruptcies signal insufficient risk-taking. Singlehurst says the team asks the same question and looks at whether its companies are growing rapidly, not simply surviving. He says the strategy seeks independent companies with the potential to expand many times over five, ten or fifteen years, rather than near-term acquisitions.

Discussing the 2021 growth-financing market, Singlehurst says some rounds moved too fast for his team to do the diligence it wanted, so it walked away from companies it otherwise found interesting. He worries that shareholders who do not understand a business may be less useful when conditions become difficult.

On the future of crossover funds, he declines to predict whether they will retreat or continue investing. Their clients and limited partners, he says, will influence the answer through their willingness to provide further capital.

Some venture investors add substantial operational value, Singlehurst says, but he believes others use the promise of services to justify high fees without delivering comparable value. Baillie Gifford does not claim the same early-stage operating skills; it emphasizes financial partnership and advice about public markets.

He often advises private companies not to rush into an IPO. Public ownership can bring shareholders with different objectives and intense quarterly scrutiny. He suggests the listing process should attract a small group of aligned long-term owners and discourage investors whose priorities conflict with the company's plans.

Singlehurst considers employee liquidity a good reason to go public, while questioning IPOs driven mainly by an early investor's need to distribute fund proceeds. His firm may conduct secondary transactions with portfolio companies to provide liquidity to employees or early backers, typically alongside an existing primary investment and in coordination with the company.

His role has evolved from analyzing companies personally to building a team capable of doing the work together. He values an environment in which colleagues can learn, acknowledge uncertainty and make mistakes. A firm is exceptional, he says, only if more than one person can contribute at that level.

Stebbings reflects on giving colleagues room to reach their own conclusions and attention when they need it. Singlehurst agrees that people need space to explore; he also credits trust, communication and long working relationships with helping a team remain resilient during difficult periods.

For younger investors unsettled by the 2022 market, Singlehurst advises testing and concentrating on their investment philosophy and process. Share prices are outputs that investors cannot control, he says, so his team seeks to distinguish fundamental signals from daily market noise. A sound process still cannot eliminate losses.

He recalls an investment in Intarcia, a company developing a type 2 diabetes treatment that later failed to obtain regulatory approval and went bankrupt. He had assigned the outcome a high probability based on available clinical and historical information. The experience made him wary of treating an apparently likely outcome as nearly certain.

He also cautions that people can underestimate the probability of unlikely outcomes. Since the future unfolds only once, an investor cannot replay history to directly observe the true probability. His team seeks open, high-trust conversations among a small group of decision-makers rather than a large formal committee.

As of the 2022 conversation, Singlehurst calls Tesla his biggest winner and says the investment taught him about asymmetry. He also learned that even a successful long-term holding can pass through periods when its owners look or feel wrong. He treats the ability to hold through those periods as a behavioral challenge, not proof that every struggling company will recover.

He says Baillie Gifford's long-term culture helps its investors resist the temptation to trade simply because public shares can be sold. The firm's Edinburgh location also provides some distance from financial centers, which he believes helps it focus on its own reasoning, while acknowledging isolation has drawbacks.

A significant missed investment was DoorDash. Comparing it with Postmates, he says he focused too heavily on differentiating their competitive advantages and gave too little weight to the DoorDash founder's commitment to helping small businesses. He presents this as a lesson from hindsight.

Singlehurst names Albert Camus's The Myth of Sisyphus as an influential book, drawing from it the idea that people can create meaning despite life's absurdity. He also changed his view of games after seeing how digital distribution and in-game purchases could change incentives and extend business longevity.

He believes becoming a father made him more empathetic and hopes colleagues experience him that way. He also recognizes that being an outsider—in geography and in his team's approach to venture—can create both an independent perspective and insecurity.

Memorable founder meetings, he says, change his sense of what a company might become; he mentions Epic Games and Solugen. For a recent publicly announced investment, he cites a round the firm led in Grammarly the previous year, praising its product and leadership. Baillie Gifford's investment gives it a financial interest in that assessment.