“Knowledge is power” – Sir Francis Bacon.
#DataDrivenInvesting #PE #VC #PrivateEquity #FamilyOffice #Investing #Fintech
I explained in my last post “The Next Edge in Private Equity” why I believe that tech-savvy, data-driven investors can gain an advantage.
I have been working with my colleagues at Claridge over the last several months on an initiative to leverage technology, as well as traditional and alternative sources of data, to improve our processes and efficiency. As a family office, we are a tight-knit group and we believe technology can provide us with an edge through differentiated insight and productivity gains. We have identified over 200 solutions, tools, and data sets. I guess that you can label us data junkies! We have been using several resources for a long time, we have tried some more recently, and we plan on trying others occasionally in the future given the high price points or the more niche use cases. It is a burgeoning field; we are constantly discovering new resources. You will find below a summary of the resources we deem most helpful and the ones we believe could add the most value to private market investors.
The private equity industry has experienced substantial growth over the last 30 years. There are currently over 3,500 firms globally with over $1 Trillion in dry powder (nearly 2x the amount in 2012). We have witnessed the industry maturing and becoming more competitive than ever. The business model of the industry has proven to be very successful and lucrative, incentivizing bigger funds, the creation of more and more firms and thereby crowding the marketplace, intensifying competition for the most attractive targets.
In such a high stake environment, the traditional industry model is increasingly being upended. Less information asymmetry between investors and entrepreneurs, less reliance on financial engineering to generate returns, and more focus on differentiation and value add services. Firms must fight harder than ever for an edge. In an era where data is the new oil, I believe that tech-savvy, data-driven investors will gain an advantage over their peers.
Capital is flowing to thousands of innovative upstarts and mid-market companies who are driving the growth of the food industry and taking an ever increasing bite out the dominant market share of Big Food’s legacy brands.
It is summer and you’re probably thinking how to best enjoy this amazing time of the year (super short for us in Canada) with your friends and family. Do yourself a favor and simultaneously make a small move that will potentially change someone’s life and definitively make both lives better. Hire a student entrepreneur!
Private equity (PE) is one of the most coveted corners of finance. Hence, entering the industry is very challenging. Whether you’re a student trying to jump start your career or a recent graduate seeking to transition in this exciting field, here are a few tips.
“Unfortunately, there seems to be far more opportunity out there than ability…. We should remember that good fortune often happens when opportunity meets with preparation.”
― Thomas A. Edison
The world of investment management has always evolved rapidly. However, upcoming shifts are of epic proportions. We are currently only witnessing the tip of the iceberg in terms of changes that will impact the profession. Technological and macroeconomic pressures abound. Don’t be left behind. Reinvent yourself or risk being disrupted!
Family offices are growing rapidly in scale and gaining significant influence. Yet given the inherently private nature of their activities and because the term is used loosely for marketing purposes, the field remains misunderstood. Each office is unique and reflects the distinct personality and objectives of its principal(s). From single to multi-family offices, staffed with a few investment professionals to full-service offices with hundreds of professionals, here is a sneak peek into an exciting corner of asset management and how ultra-high net worth families protect and create wealth.
- It’s a Family (Office) Thing. They now manage over $3 trillion globally – more than hedge funds. The Rockefellers and Gates are not the only families to have created one, but you’ll need at least $500M to $1B for a full-service family office. The trend towards family offices is accelerating. Here’s why.
- The New Rising Class. John D. Rockefeller was the United States’ first billionaire in 1916. According to BCG, there are now nearly 500 billionaires in the U.S – 100 new billionaires were created in the last five years alone. According to a recent UBS study, from 1995 to 2014, the number of global female billionaires grew even faster – by a factor of 6.6, versus 5.2 for men. More than 80% of female billionaires hail from the U.S.; though 19% of them were self-made. There are over 12,000 Americans who are worth more than $100M.
- Ultra-Wealthy Hold More Private Equity Than Stocks. According to Tiger 21, aggregate investments in PE – at 23% of total portfolio value – exceeded the value held in stocks. The biggest change in asset ownership has been the growth of PE, up from 12% in 2007. Over the same time frame, stocks dropped from 28% to 22%. Only real estate, at 25%, exceeds PE’s share of Tiger 21 wealth.
- Pritzker Group and Other Wealthy Families Skip PE Firms to Invest Directly. Families increasingly prefer to invest directly in private companies. Traditionally, wealthy families served as limited partners in PE firms, which in turn backed portfolio companies. But over the last several years, family offices have begun hiring professionals to invest in private companies directly. Doing so successfully requires tremendous scale and expertize in a competitive investment environment.
- Germany’s intensely private and immensely wealthy Reimann family. Inspiring story of a family making bold investments in consumers products and coffee.