Shareholders who backed the launch of Augmentum Fintech in 2018 have had a frustrating time. But now is not the time to give up on this venture capital investor in challenger banks and financial services disrupters, with shares in the investment trust bouncing off a three-year low.

Since the end of October, Augmentum shares have rallied 25pc, buoyed by hopes that interest rate rises, that have crushed valuations of early-stage companies in the past two years, may have peaked and could be cut in 2024.

Half-year results in early November demonstrated how over-sold the ￡278m portfolio of unquoted businesses had become. With the shares slumping from a September 2021 peak of 173p to 79p over two years later, Augmentum’s market capitalisation had fallen below the total of its ￡51.8m of cash and its top three holdings: in small business lender Tide, technology subscription platform Grover and online bank Zopa.

This ignored ￡125m in the fund’s 21 other investments – a ludicrous situation, given Augmentum’s record in refusing to pay hyped-up valuations for technology companies at the top of the market in 2021, thus avoiding the big write downs suffered by other growth capital funds.

In the six months to September, the value of its investments held steady, edging 0.8pc higher.

The rebound has lifted Augmentum’s market value to ￡173m, but at 98.7p the shares today are effectively back where they started at the trust’s flotation in March 2018.

That’s despite the underlying net asset value (NAV) per share growing to 160.2p at Sept 30. In other words, shareholders who bought in at the initial public offer (IPO) have seen no growth in their investment despite the portfolio generating a total return of about 60pc.

Questor first tipped Augmentum in January 2019 at 98.4p, then again at 117.5p in March 2022 and most recently at 109.3p in August last year. If we had foreseen how bad the slump would be we would have been better in selling 20 months ago. We didn’t and, at the risk of sounding like a broken record, the shares still look highly attractive on a 38pc discount to asset value.

Having held on for so long, it would be wrong to abandon Augmentum when its investments are bearing fruit. While the shares have gone back to square one, most of the companies it invests in have progressed well. The top 10 holdings accounting for 82pc of assets grew revenues by an average of 74% in the year to September, according to the company.

Under chief executive Tim Levene, Augmentum has made five profitable exits from investments since launch, most notably the sale of broker Interactive Investor last year to fund management group Abrdn from which it netted ￡42.8m. During the latest half-year, it garnered a further ￡22.8m from the sale of zero carbon workplace pension provider Cushion to NatWest bank, a deal on which it made 2.1 times its original investment.