VENTURE CAPITAL

Contrary to most beliefs, privately held companies represent the vast majority by numbers and value, outsizing the number of exchange traded ones. Anterion advise investors on how to access this huge market.
 

Whereas most listed shares are traded on a daily basis, the shares of privately held companies are not. Hence, transactions are not on "Auctions" via an Exchange, but based on private negotiations between seller and buyer.

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In order to access this market, most professional investors can only invest via Private Equity funds. 

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What has changed over the past decades?

Being a successful fund manager (GP, General Partner in a limited liability company) 20 years ago was a matter of being skilled at financial engineering Today, however, it is different.

 

Special skill-sets are now required; deal sourcing and -structuring, operational optimization, ability to digitalize, to understand very complex technologies, to build an attractive eco-system around you to attract talent, and to be financially savvy - to set yourself aside in a hugely competitive market.

 

What to do?

If investors are able to select the most talented managers, they are likely to achieve above-average returns. Just as in the world of listed securities. Obviously, spreading your investments is key. But how to do that when you, as an investor, have limited time and capital at your disposal? 

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In our view, supported by industry data, smaller successful funds run by newer managers will outperform the larger, more well-established names. The reasons are multiple, one major reason being that the smaller funds operate in a SME market niche where the larger capital providers cannot participate and, hence, avoid auction-pricing on their deals.

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The problem with this is, however, that smaller funds do not fit all investor's investment appetite. Larger pensions funds, for example, cannot invest in these vehicles due to their size.