The below diagram illustrates the selection proces in 2020 for one of our first class venture fund partners. As can be seen, the selection proces goes from filtering several thousand potential portfolio company investments to actually only investing in a few. This is the kind of selection proces that together with great diversification significantly increases the probability of long term success.
Our venture capital funds are characterized by a focus on technology, extreme selection, risk diversification and investment on wholesale terms as a means of achieving good returns.
This focus can be explained in this way:
- The technological development and adaptation of new technological applications is ever faster; not least within IT, healthcare and the environmental technology
- The extreme selection is achieved by the fact that we have access to invest in about 15 of Silicon Valley’s first class venture capital funds, normally “By Invitation Only”, each year typically screening thousands of Early Tech and Life Science companies for only to invest in a few
- Risk diversification is achieved by our “primaries” funds typically investing in around 1,000-1,500 portfolio companies over a 5-year period
- The wholesale terms are achieved by not charging subscription fees and typically getting good discounts by investing larger amounts
- Although historical returns are no guarantee of future returns, they can be a good indicator, especially when it is the case over many years
We have been investors ourselves for almost 10 years and in the last few years we have onboarded around 100 investors investing about DKK 1/4 billion
Over the next three years, we even have the opportunity to take advantage of the depressed investment market to invest especially in socalled “secondaries”, i.e. already existing venture investments, which in times of crises are normally traded at attractive discounts. The specific fund has a 3-year investment period and typically a 5-year exit period, i.e. basically an 8-year exit horizon. We can also offer good discounts to investors who are involved from the start. It is expected that this fund will make around 100-150 secondary investments.
Alternative investments are investments in other than listed shares and bonds. This can be investment in unlisted shares, real estate, alternative energy, infrastructure, etc., including through funds targeting such investments.
Alternative investments are a supplement to listed shares and bonds and serve to increase returns, diversification and stability in the overall portfolio. The prevailing volatility on the stock and bond markets makes consideration of alternative investments particularly relevant.