Venture capital and private wealth investing in the future

A report published by research firm GlobalData in 2020 found that more than a quarter of high-net-worth (HNW) individuals’ children cut ties with the wealth manager used by their parents when they inherit.

The idea that all investment strategies will be adopted by incoming generations is not one to hold on to. The investment landscape has always evolved. We have already seen in the last decade a change from a relatively straightforward mix of equites, bonds and property to one that encompasses new asset classes and products.

Whatever happens, it is inevitable that as the new generations take charge of family wealth, with different ideas and values to their parents’ generation, Family Offices, investment managers and other private wealth practitioners must ensure they adapt to meet the needs and expectations of tomorrow’s tech-savvy and ESG-minded investors.

Guernsey-based 1818 Venture Capital has recognised this trend, as it fully focuses on investing in early stage (typically up to and including pre-Series A) technology companies particularly prioritising funding under-represented founders and businesses with a positive societal and environmental purpose.

1818 led RideTandem’s seed round last year. RideTandem alleviates transport poverty by creating sustainable commuting services for people who live or work outside big cities where public transport is broken. RideTandem partners with local coach, minibus and taxi companies to provide smart, shared shuttles to make commuting cheaper and more accessible for major corporate clients. Their tech platform creates and manages the routes providing real time data for a client roster that includes Primark, Royal Mail and the University of Cambridge. Most of its passengers are lower income blue collar workers. RideTandem enables its passengers to earn over £2m in wages every month in jobs these workers would have no easy option to get to.

Sustainability should be a consideration in all investments and RideTandem reports the vehicles it deploys operate at over 70% capacity and vehicles are deployed on demand ensuring maximum efficiency. They also offer B2B clients options for carbon offsetting their routes, as well as the usage of electric vehicles evidencing RideTandem’s sustainability credentials.

RideTandem had 10x year-on-year revenue growth rates in 2020 and 2021, and it’s on course to be included in the FT 1000 list as one of the top ten fastest growing companies in Europe in 2023. This is calculated on a three year basis from 2020 and demonstrates an absolute growth rate in that time of 11,900% on current performance. The top ten threshold criteria for the FT 10000 of 2022 is circa 6,000%. This highlights that investments that do good are making significant returns. It is now looking at international expansion, raising an investment round of £6m+ in Q4 this year.

As well as looking at sustainability and the “E” of “ESG”, investments that focus on the “S” are rising in prominence. One example of this is Lifted. Its mission is to fix the crisis in care for older and vulnerable people through the use of an intuitive and interactive app and dashboard.

It was founded by Rachael Crook, a former Senior Advisor in the Prime Minister’s Implementation Unit and consultant at McKinsey & Company. She had the idea for Lifted when caring for her mother remotely after she was diagnosed with dementia aged 56.

With the support of 1818 Venture Capital, in the last three years Lifted has delivered over 150,000 hours of care; been crowned the best home care company in the country; and Ms Crook was named an Obama Leader, one of 36 leaders in Europe recognised by the Obama Foundation contributing to social change.

And while interest in ESG investing continues to grow, technology often makes up a significant portion of ESG strategies and investment portfolios.

Not only is this important to incoming generations, it can generate significant returns. 1818 recently announced their portfolio company, CapDesk, which provides software solutions to private companies to manage their cap tables, employee share schemes and secondary trading was acquired for a substantial multiple by the US FinTech unicorn, Carta (a US$7.4 billion company). CapDesk’s exit highlights how investing in early-stage digital technology companies with experienced asset managers can generate success.

Guernsey is a major conduit of capital flow, and this is reflected in 1818’s work with approximately 60% of 1818’s investable funds coming from Channel Island based investors, 30% are from the UK and 10% from the rest of the world. These funds are invested in almost exclusively UK-based early-stage digital technology companies.

Research by Frontier Economics released in 2020 International Capital Flows throught Guernsey (gov.gg) showed that Guernsey facilitated £41.6 bn of investments made into the UK, supporting global investment into sustainability and future looking investments.