The investment world is shifting. Uncertainty, what financial markets hate the most, has never been so high and disruptive. With negative interest rates, cash is no longer an option. Where else can you go if you are looking for more stability and some performance? Real Assets seem to be the way.
According to McKinsey, private equity asset managers raised a record sum of nearly $750 billion globally in 2018, extending a cycle that began eight years ago.
Moreover, investors now have the opportunity to invest in an endless number of new companies (startups) specialised in what is broadly called “new technologies”. All sectors, all continents are concerned.
What was considered pure science fiction some years ago (AI, Internet of Things, advanced disease diagnosis, decentralised currencies and other blockchain technologies…) is now a reality.
It is like being back to the time of the gold rush during the 19th century in the USA. A lot of noise, a lot of service providers and advisers taking no risk but looking for free upsides (bars, restaurants, tool and food providers, to name few, in the case of the gold rush), a lot of candidates, a lot of incompetence, some fraud and very little gold.
So, the first key question is: who to use to choose your investments?
In a world where all seems to be based on communication, more than on the capacity to deliver (take the recently ICO bubble for example), the old fashioned golden rules still apply: reputation, track record, access and skin in the game.
Then, the second question is: how to invest?
Investments are illiquid, most probably including a lock-up period. Most of the companies considered do not have a very developed communication process in place to share information and reports. A full-time ongoing professional investment monitoring and valorisation process are required. A highly regulatory framework remains the proper way to protect investors, as much as it can, of course.
Finally, one needs to take into account 2 additional specific features concerning such investments.
The first is the geographical location of the investments where the entire world is the playground. This is where access to deal flow, local network and worldwide specialised company support kicks in.
The second, even more vital, is that capacity investment is limited. To allow global reach, the financial industry needs to accept any qualified investors (European, US taxable and non-taxable, else…). That is not an easy one but required if one shares the spirit of global access and decentralisation.
Recently, we created and launched such a structure for a very famous VC. Very time consuming but worth the effort as all targeted investors (US and Non-US) could join. So it is possible.
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Like many things, all is a matter of trust, access and delivery.