Waterhouse VC: Turning Back the Clock

Every month, industry investors Waterhouse VC publish an article that spotlights different aspects of the ecosystem.

We started the fund on 19 August 2019 and I am very pleased that our 5 year anniversary is fast approaching, with outstanding results for investors over the past year. The fund returned 53.3% for the 2024 financial year, a result our team is proud of.

While global equities have been favourable over the past 12 months, our performance has not relied on these tailwinds, outperforming the S&P 500 by +31%. Returns have been achieved across each pillar of our strategy (Option Deals, Professional Betting, Global Equities).

We’re pleased with the fund’s performance since launching, particularly given the challenges of finding attractive deals during a period of exuberance for growth assets in 2021. Last year’s results bring the return since inception to 102% per annum before all fees. An investment of $100,000 at inception in August 2019, assuming reinvestment of all distributions and before fees, would be worth $3.06m as at 30 June 2024.

Winner’s circle

The fund has generated a positive return in 8 of the last 12 months. Two businesses in particular, Project Tennis and Saintly, contributed significantly to the fund's performance.

Project Tennis is a professional betting syndicate specialising in tennis. Waterhouse VC invested in the syndicate in July 2023. The syndicate has achieved:

● Profit of £5 million in 2023, tripling 2022 profits.

● Industry-leading win rate of over 5% on betting turnover.

This income stream is uncorrelated with financial markets and is passed through to our investors, with the fund set to earn back its entire investment within two years.

Saintly is a crypto wagering operator and B2B platform. The position was exited in August 2023 and has been the largest single contributor to the fund’s performance over the last year. The deal delivered a 23x return, showcasing our ability to leverage our industry network for strategic exits and move quickly when an opportunity arises to achieve the best possible outcome for our investors.

Class of 2024

Successful years are not just about outperforming the market, though we certainly prefer it. They're also about setting the fund up future performance with opportunities on attractive deal terms.

On this front, we are seeing an acceleration of deal flow on the back of our compounding track record and industry network. The fund completed three option deals in the June quarter, one of which we discuss in depth below.

B2B focus

Our primary focus on B2B suppliers to wagering operators has not wavered. We prefer B2B for four key reasons:

Project Marston

As the fund matures, our deal flow has accelerated, particularly in professional betting syndicates. We last discussed professional betting in February. Successful betting syndicates are extremely rare and the largest syndicates have maintained dominance for over two decades. Waterhouse VC currently owns an economic interest in two professional betting syndicates - Project Tennis and Project Marston.

Project Marston is a professional betting syndicate focused on live dealer online blackjack. Globally, online casino (live, RNG-tables and slots) grew at 21% annually between 2019 and 2023.

Live casino has been the fastest growing segment within online casino, with an annual growth rate of 24% over the same period. This growth supports the proliferation of professional betting activity focused on the segment.

One of the UK's largest bookmakers recently led Project Marston's funding round. Waterhouse VC invested in Project Marston in June and betting operations were immediately scaled up. The fund is on track to earn back its entire investment within 12 months.

"We’re entering a huge, growing market that is as yet, largely unexploited and I strongly believe this has the potential to run very profitably for years." - Founder, Project Marston

Onwards and upwards

The fund is currently in advanced stages of due diligence or recently signed agreements with 7 businesses, 2 of which are professional betting syndicates:

1. Horse racing betting syndicate

2. Cricket betting syndicate

3. B2B technology solutions provider focused on horse racing

4. Affiliate marketing business

5. B2B technology supplier focused on global lottery

6. Subscription business that offers daily giveaways

7. Customer engagement and retention tool using skill-based gaming

We look forward to discussing these businesses in future newsletters.