Sovereign Wealth Funds (SWFs) are increasingly seeking opportunities as early investors within venture capital, according to a report released by IE University and ICEX (you can download a copy of the report at the end of the post).
The stats: In 2018, there were 77 VC rounds by SWFs, and a combined of 220 VC rounds from 2013 – 2018. If you compare it to the five years before 2013, there were only 14 VC rounds by SWFs (From 2008 – 2013).
The Why: In an interview to Reuters, Javier Capapé, Director of sovereign wealth research at IE University, said there were two main factors underlying the trend.
“We have more companies staying private for longer and raising money in the process,” he said. “Venture capital is also a reasonable way to hedge your portfolio to hedge against the future risk of the incumbent being disrupted.”Javier Capapé, Director – IE University
Biggest verticals: 20% of the the rounds in the past 5 years went to Biotech and healthcare.
The Players: Singapore’s is the quickest among all the SWFs to get into deals as first movers, where they represented 60% of all deals. There are also a growing number of funds from other countries moving up, as Reuters indicates: Australia’s Future Fund, Malaysia’s Khazanah Nasional and Abu Dhabi’s Mubadala Investment and the Ireland Strategic Investment Fund.