Some of the most sophisticated investors, the so-called "Endowments", consider venture funds as a separate asset class to which they assign a fixed portfolio allocation of 4-6%, with Private Equity typically at 5.7%. This self-categorisation is supported by the unique characteristics of venture funds, including their lower correlation with major equity indices, which can be attractive in times of market volatility. This section elaborates on how and why these funds are given a distinct role in a diversified portfolio.
Endowments such as the Yale Endowment have a long history of successful venture investing, which has contributed to their reputation as some of the most capable and sophisticated investors globally. This section delves into how endowments like Yale have developed and adapted their investment strategies over time to maximise their returns from venture funds. The focus will be on how these institutions evaluate and select venture funds, as well as how their long-term commitment to this asset class has shaped their overall investment portfolios.
Investing in venture funds is often lumped in with private equity and is considered riskier and more illiquid than more traditional forms of investment. The perception of higher risk is likely due to the funds' specialised niche orientation, often investing in younger, start-up companies that have not yet proven their business model or market potential. In addition, there is a general scepticism towards funds, not least fund-of-funds concepts. Nordic Bloom offers (unique access to) investing in venture funds in the US, primarily in the so-called first quartile funds. In this introduction, we dive into the concept of venture and look at why these investments can be interesting and what special considerations come with investing in such funds.
Fund-of-funds offer a particular advantage by offering investors access to a wider range of venture funds, potentially spreading risk and increasing the chances of achieving higher returns. This structure enables investment in multiple funds, including those that may not be available to individual investors due to high minimum investments or limited access. It further explores how Nordic Bloom and Knightsbridge Advisors collaborate to offer a cost-effective, EU/EEA compliant fund platform designed to maximise investors' access to top-tier venture funds.
This section provides a detailed analysis of historical returns from venture funds compared to traditional asset classes such as equities and private equity. By highlighting returns over different time periods, it illustrates how venture funds can deliver exceptional returns that often exceed market standards. This section will also cover the factors that contribute to these returns, including sector-specific growth and innovation, as well as the key risks.
Persistence of performance is a key concept in the venture capital industry, which refers to the phenomenon where top-performing funds tend to continue to deliver superior returns over time. This section explains how this phenomenon can be observed among top-tier venture funds and what factors contribute to this sustained success. There will also be a discussion on the importance of networks, access to quality deal flow, and strategic support as crucial factors for a fund's success.
Investing in venture funds involves significant risks, especially with early stage funds where uncertainty is high. This section explains how diversification through a fund-of-funds structure can help manage and mitigate these risks. By spreading investments across a larger number of companies and projects, the fund can achieve a more stable and predictable return profile, while leaving room to capitalise on the potentially high returns of the most successful startups.
English 
Danish