Private equity and technology prove key investments
The fast-growing technology sector is an important investment for investors wishing to remain socially considerate, while private equity or venture capital funds can help cushion portfolios against any equity market downturn, says chief executive officer of Crestone Wealth Management, Michael Chisholm.
A panel of peak venture capital (VC) body investors said VC investors should target tech businesses with a sustainable differentiation over a long period to help build wealth over time and protect portfolios against market downturns.
Chisholm said these investments not only present opportunity to high net worth (HNW) and ultra high net worth (UHNW) investors to access high growth assets, but also provide investment opportunities that are uncorrelated to traditional assets and asset classes.
“The challenge for investors is to find opportunities that tick the right boxes as investable assets, plus have the bonus of helping to solve some of the bigger problems in the world today,” said Mr Chisholm.
Paul Bassat, co-founder and partner at Square Peg Capital, agreed, adding that valuations should be a secondary consideration to “is this an amazing company and is it solving important problems?”.
Blackbird Ventures’ managing director, Niki Scevak, said the private life of companies has extended from six years to 11, which means tech companies are no longer pre-revenue when they reach the initial public offering (IPO) stage, but bona-fide companies with significant valuation uplift. She said subsequent VC funding rounds pre-IPO present an opportunity for investors to participate in any valuation uplift.
The panel said artificial intelligence (AI) would have the most significant impact on technological advancement over the next decade, and successful investors should select businesses that would apply AI well.
“The defining theme in the next 20 to 30 years will be AI which will change the world in ways we can’t imagine,” said Bassat.
Daniel Petre, co-founder and partner from AirTree Ventures added that differentiation was key, and whether a company could disrupt a market place was a key consideration.
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