Family office investments into disruptive technology companies are set to increase as next-generation heirs look to tap into their potentially lucrative returns.
Speaking to CampdenFB, Ian Wallis, co-founder of investment firm Star Tech NG, said it will be the next generation of family office investors, who grew up using well known applications such as Facebook, Spotify and Uber, who will want to invest in the next wave of tech giants.
“Certainly the next generation of investors in the families will identify, as the wider millennium community do, with these companies because they use them—they use applications such as Uber, Spotify, Pinterest,” he said.
“I think it chimes and resonates with that kind of generation and they’ll want a piece of it.”
In the past, getting access to early rounds of technology stock, which can generate triple digit returns, has been notoriously difficult for private investors. The best opportunities were taken by a small number of clued-up venture capitalists (VCs).
Malcolm Burne, co-founder of Star Tech NG, told CampdenFB the only way for family offices to try and get a foothold into these opportunities, would be by tapping into the growing secondary market—where intermediaries help founders and seed funders offload their stock and where his fund can buy them.
He formed Star Tech NG with Wallis after realising London did not have a proper secondary market for private company shareholders looking to exit and monetise their positions. Now investors outside the VC circle can get access to pre-IPO stock in the likes of Airbnb and SpaceX.
“There are literally thousands of private companies and shareholders who are desperately looking for liquidity solutions,” he said.
“I looked at what secondary market there was in the USA and discovered there was an amazing grey market maturing in iconic pre-IPO and scale up stage tech disruptors— now commonly called Unicorns.
“We then thought it was a good idea to bring a managed fund to the UK and invest in a portfolio of Unicorns and ‘Soonicons’—companies that are likely to become unicorns—with [secondary market focused merchant bank] Manhattan Venture Partners.”
Wallis said Star Tech’s acquisitions offer shareholders access to a diversified portfolio of Silicon Valley stocks, and for the next generation, these new economy investments will bring the best returns.
“You’ve got to be in it to win it and if you sit on the side-lines, I think people can get frustrated,” he said.
“Obviously there are asset allocation models that families use and wealth managers use—we’re not saying you should put everything on number zero at the Roulette table—but this is an exciting asset class and it’s delivered an amazing performance.”