Crossinvest Private Access

Successful investing in today’s markets requires both private and listed company investing. Which wealth advisers offer you access to global private dealflow?

$1 million invested in Amazon in 1997 would be worth $72 million today. Alibaba, Google and Facebook were even better, with Facebook the best of these at $1.2 billion value for $1 million invested in its Series A round in 2004. The big difference between these investments is that Amazon came to the market at less than two years old, so even if you waited for its IPO, your $1 million would be worth $54m today, representing 75% of the gain made by earlier investors. If you waited for Facebook’s IPO in 2012, however, $1 million invested would only be worth $8.5 million today. 

Quite simply, by waiting until the IPO, you would have missed out on 96% of the gain. Whilst it is true that the risks were much lower by the time it listed, for high conviction investors waiting for the IPO was clearly not the best strategy. Unlike the earlier technology companies that listed within 2-3 years, technology companies today are able to raise capital from investors without having to list, so they are waiting an average of eight years before listing. This means that on average 92% of the profits have been made by investors by pre-IPO investors and only 8% post investment (based on the largest 38 technology IPOs since 2004). In fact valuations at IPO have gotten so high that for many high profile IPOs such as Square, Snapchat or Twitter, their post-IPO share price falls for the first few months before eventually recovering.

Investing in private companies, before they list, is exactly the same as investing in the listed shares, with two major exceptions. The first exception is liquidity – there is no real market for trading shares in private companies. The second exception relates to the first – because there is no liquid market for the shares, most fund managers, institutional investors and even private investors can’t or won’t invest. The lack of crowds investing in these shares means that you can buy into these companies for much better value. 

For that reason, high net worth families in the US and Asia have tripled their investments in private companies since the GFC. They haven’t reduced listed company investments in this time, but instead have taken the money away from hedge funds and private equity funds. (private equity funds are not early stage or pre-IPO investments, but rather they tend to be leveraged buyouts of listed companies)

See Crossinvest's White Papers on this subject – https://crossinvest.com.sg/leadership-series/

Crossinvest strongly believes in the power of high conviction investing. We have always applied this philosophy to our overall asset allocation and to our equities portfolios. Typically our clients share this view which, in combination with the trusted relationship they have with their relationship manager, is why they choose Crossinvest over their other choices. 

The world around us, particularly the world of investing, is changing rapidly. Private company investing, from startups to pre-IPO investments, is now a critical part of any successful investment portfolio. Once listed financial markets provided enough access to the global economy to create a suitable investment portfolio for most high net worth clients. But increasingly this is not the case. The challenge is access to deal flow. Finding a small number of investments in your own jurisdiction is usually achievable through your own networks, but building a genuinely global portfolio, covering all of the major digital technologies driving new wealth globally, is challenging. 

Crossinvest is now offering access to a global platform of deal flow from startups to pre-IPO in individually tailored mandates

Crossinvest has expanded its proposition to now provide a service offering clients a constant flow of high quality deal flow from startup to pre-IPO stage private companies, and from across the world. Clients choose what they want to invest in and how much to invest. We will guide portfolio construction and provide due diligence on each deal, and our relationship managers will work with each client to help them make decisions on where to invest. And unlike Venture Capital or Private Equity funds, our service can be tailored by our clients to suit their desire to focus on certain sectors, certain geographies or just to have a global diversified portfolio of the leaders of tomorrow’s economy.

Current deals on offer include a unique technology platform in the field of cybersecurity, one of the world’s fastest growing critical pieces of infrastructure for the digital economy, and an automated vehicles technology provider to some of the world’s largest car manufacturers and digital companies such as Amazon, Google and Ford. Both of these companies are in their early stages with valuations between US$20m and US$40m with market potential well in excess of $1 billion if they can execute their global plans. 

These two investments are just examples of the global transactions our clients will be invited to participate in as they build their own private company portfolio. If you are interested to talk to us about how to build a portfolio of the leaders of tomorrow’s global economy, contact Crossinvest.

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