Tom Waterhouse of Waterhouse VC appears again on the fund’s 2025, and descriptions his expectations for the yr forward.
Waterhouse VC was established with a easy perception: wagering expertise represents a major but usually missed alternative throughout the funding panorama. Regardless of the sector’s scale and structural progress, it stays underserved by conventional enterprise capital. Over the six years since our inception, these tailwinds have solely strengthened, validating our give attention to the “picks and shovels” of the worldwide playing ecosystem.
The fund is designed to mix the Waterhouse household’s trade experience with a curated community of wagering trade professionals throughout our investor base. This collective area information underpins how we establish, assess, and assist portfolio firms.
Our progress in 2025 wouldn’t have been potential with out the belief of our buyers and companions. We’re sincerely grateful to your continued assist and sit up for the problem of compounding your capital all through 2026 and past.
Resilient efficiency
The Waterhouse VC Fund concluded 2025 with a gross return of 12.6%, achieved regardless of a considerable 7.7% foreign money headwind.
Because the Australian greenback strengthened towards the US greenback over the yr, the reported worth of our US-based holdings – which comprise our whole equities technique – was lowered when translated again into AUD.
In 2025, returns had been primarily pushed by the equities portfolio, with a modest contribution of dividends acquired from our portfolio firms.
Whereas no choice offers had been exercised in the course of the yr, we entered 2026 with 11 dwell offers within the portfolio. These uneven alternatives symbolize a major pipeline for the fund as they mature.
The yr in deal move
Our funding workforce maintained a excessive degree of exercise all through 2025, evaluating over 450 distinctive companies. The screening course of noticed 66 firms progress to due diligence, in the end leading to six new choice offers.
Two themes dominated the yr and can seemingly set the tone for 2026.
Prediction markets transitioned from area of interest playing merchandise into recognised monetary devices; the current development of hedge funds promoting for devoted prediction market merchants suggests the sector may mature right into a mainstream asset class. We first explored this shift in our November 2024 and February 2025 newsletters.
Prediction markets seem to have planted the seed of a easy expectation, significantly amongst younger customers, that it’s best to be capable to wager on something. That shift expands the bettable floor space far past sport and pulls wagering nearer to tradition, information move, and on a regular basis moments. We’re following the house carefully and stay in lively dialogue with startups and syndicates constructing the infrastructure, liquidity, and distribution layers for this rising ecosystem.
Unsurprisingly, the appliance of Synthetic Intelligence has not missed wagering, with AI quickly being thought-about “desk stakes” inside operator expertise stacks. Whereas we recognized a pointy rise in AI-first firms in 2025, we preserve a excessive bar for funding. For Waterhouse VC, the query is simple: Does the product resolve an costly downside and ship a measurable business end result? We see significantly fertile floor in personalisation and social gamification – applied sciences that transfer the dial by making the consumer expertise extra intuitive and interesting.
Updates from the portfolio
One such instance is our just lately prolonged choice in Voxbet, which is about to launch “Move The Guess.” This function permits customers to collaboratively construct and share parlays (also referred to as “multi-bets”) by way of a easy hyperlink, immediately addressing the rising demand for social betting whereas eradicating the friction of guide bet-building. This issues as a result of parlays now symbolize the highest-margin phase for operators, yielding maintain percentages considerably larger than straight bets.
With main US gamers like FanDuel validating this idea via comparable social sharing options, Voxbet’s aggressive edge lies in its “plug-and-play” functionality. It delivers this subtle performance to any operator with out requiring a pricey or time-consuming overhaul of their core infrastructure. We imagine this positioning units the stage for a major new part of progress as operators globally search to guard and broaden their margins via higher consumer engagement.
One of many standout performers in our portfolio is a enterprise centered on the quickly rising dwell vendor on line casino phase. The enterprise has efficiently scaled its operations throughout a number of platforms and jurisdictions, a lot sooner than anticipated. Our place has returned 19x our unique (modest) funding in dividend earnings from the corporate’s income thus far, which is able to develop and turn out to be a significant contributor to the fund because it continues its growth.
Past the index: Our equities technique
To handle the fund’s capital reserves between choice workout routines, we make use of a scientific world equities technique. The technique follows a strict methodology – there is no such thing as a discretionary inventory choosing. We monitor a choose group of the world’s high funding managers – the likes of Bridgewater and Pershing Sq.. When these buyers take significant positions, allocating greater than 1% of their portfolios, we listen. Not each funding they make meets our standards – we give attention to companies buying and selling beneath 20x earnings, with sturdy progress and conservative stability sheets.
One of the compelling features of this technique in 2025 was its industrial composition in comparison with broader benchmarks. As of 31 December 2025, the Info Know-how (IT) sector weighting inside our 13F technique sat at roughly 9%. In distinction, the S&P 500 stays closely concentrated in a handful of mega-cap tech names, with IT accounting for a staggering 32% of the index. It’s significantly spectacular that our portfolio has stored tempo with these indices with out counting on heavy overexposure to a single trade. This diversification supplies us with a extra strong basis in periods of sector-specific volatility.
Methodology presents benefit
Moreover, we imagine our methodology presents a superior various to conventional index investing all through the cycle. Most indices and inventory screeners are constructed upon “descriptive attributes” – statistical measures resembling trade classifications, market capitalisation, and free float out there to commerce. These statistics describe how an organization has carried out, however they don’t seem to be predictive of the way it will carry out in future.
Our strategy shifts the main target from descriptive to predictive attributes. By monitoring the conviction of elite managers, we’re figuring out options that predispose a inventory to do nicely sooner or later. Whereas indices look within the rearview mirror to pick out shares primarily based on the place they’ve been, we leverage the collective intelligence of the market’s finest minds to place ourselves the place the expansion is heading.
The yr forward
Because the fund approaches its smooth shut goal, we’re more and more trying “nearer to house” to drive the following part of efficiency. Whereas our attain has expanded globally, our biggest edge stays rooted within the community – evidenced by our most profitable exits, resembling BetMakers and Saintly.
With a rising workforce, we’re evolving our strategy from being skewed in direction of figuring out exterior alternatives to extra actively placing collectively the constructing blocks from inside our personal ecosystem. We’re making a proprietary pipeline by participating with companies on the level of formation, a stage the place Waterhouse VC can exert most impression. This ensures we’re specializing in the alternatives which have traditionally pushed our highest greenback worth returns.
A main focus for the approaching yr is the execution of high-leverage alternatives inside our present portfolio, most notably with listed firm Racing and Sports activities (RAS). Moreover, we’re monitoring the shifting regulatory panorama in our personal yard, significantly the upcoming regulation of on-line gaming and on line casino licenses in New Zealand. This transition represents a major alternative for the “picks and shovels” suppliers who can facilitate a easy, compliant entry for operators into this new market.
Turnover leakage
Lastly, we stay centered on fixing the multi-billion-dollar challenge of “turnover leakage” to unlawful offshore operators, which we wrote about in our July 2025 and September 2025 newsletters. In markets like Australia, an estimated 14% of racing wagering flows to the gray market.
Nonetheless, racing is just one piece of a a lot bigger puzzle. The “product hole” created by home restrictions on on-line on line casino video games and dwell in-play sports activities betting has funnelled a staggering quantity of liquidity offshore. Current information signifies that Australians now lose roughly $3.9 billion yearly to unlicensed abroad platforms – a determine projected to hit $5 billion by 2029 (Accountable Wagering Australia).
New integrity tech options are important to seize this misplaced liquidity. The yr forward is outlined by a transfer towards chasing larger issues and a more in-depth proximity to the operators who outline the worldwide wagering ecosystem.
Waterhouse VC is a fund that specialises in world publicly listed and personal companies associated to wagering and gaming sectors. The fund is barely out there to wholesale buyers.
Since inception in August 2019, Waterhouse VC has achieved a gross complete return of +3,777% (annualised at 78%), as at 31 December 2025, assuming the reinvestment of all distributions.
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