December 2019 Fund Update

Welcome to the December 2019 newsletter for the Waterhouse VC Fund.

The Fund specialises in gambling assets or businesses that offer services to the gambling industry. We believe these investments have little correlation to the general economy in an industry that has continued to be popular throughout the ages. Our aim is to leverage our unique expertise and existing assets to create high growth opportunities.

Since inception, the Waterhouse VC Fund is up over 30%. If you would like more information on the Fund, please get in touch.

An Evolution in tech investing

A focus for the Gambling Fund is on tech companies providing behind-the-scenes services to the well-known customer facing wagering operators.

These are companies we know well, having worked with them closely in the past. The companies on our radar have strong competitive positions, existing relationships with companies benefiting from growth in Asia and North America, and are often overlooked by investors.

This month we focus on Evolution Gaming, a Swedish-listed company that develops and licenses Live Casino solutions to gaming operators globally.

The company runs a game like roulette or blackjack from a casino table, which is live streamed to end users who places bets from their devices. It does this for blue-chip customers like William Hill and Unibet. They also run on-premise studios at physical casinos in Belgium, Romania, the UK and Spain.

Evolution grows with it's customers. The highest growth is in Asia and North America where their existing partners expand into new markets. Even in mature, highly-regulated markets in Europe, live casino games are capturing a greater share of the total gambling market.

This is evident in their strong and consistent growth rates (see below), recently at 50% year on year.

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As a Business to Business (B2B) supplier, Evolution has relationships with gaming operators, who then have the task of acquiring the end users. While the fund does not currently have a position in Evolution, we like that the company doesn't have to go through the licensing process (though they are still exposed to it), doesn't have to spend large sums on acquiring new customers, and is not burdened in the same way by strict regulations and taxes.

This, coupled with a strong, mission-critical product offering leads to high margins and free cash flow. This makes it the type of business that is very much on our radar.

If you're a wholesale investor, interested in opportunities in the gambling industry's growth markets, and want to partner with someone who knows the space intimately, please get in touch.