Venture Funds Embrace Technology While Retaining The Human Touch

Author:Mr Stacey Palker
Profession:TMF Group

Relentless technological advancement is the new normal of our times - no sector remains immune. Technology is responsible for upending long-standing business models and digitalising sectors ranging from accountancy to aviation. The world of investing is no exception.

The ongoing digital revolution in the world of finance is enabling Limited Partners (LPs) and General Partners (GPs) to explore new investment opportunities, enhancing their business practices by equipping them with smarter tools for better decision-making. This trend was highlighted by a panel of experts in a recent webinar co-hosted by TMF Group and SuperReturn, titled 'Raising Funds in an Era of Digitalisation - What do LPs and GPs Really Think?'

The ubiquity of digitalisation

The forces of digitalisation extend well beyond the technology industry, the panelists pointed out, percolating across sectors to improve existing processes, be it for delivering services, streamlining supply chains or strengthening customer feedback mechanisms.

"Digitalisation transforms industries in myriad ways," observed Jie Gong, Partner, Pantheon Ventures.

While its reach is extensive, the adoption and impact of digitalisation is seen to vary. The healthcare sector has been at the vanguard of digitalisation, noted Eric Marchand, Principal, Private Equity, Unigestion. Fintech and proptech companies, meanwhile, are "embracing technological change and changing the paradigm in typically archaic sectors" such as financial services and real estate, he added.

Gong agreed, citing the development of telemedicine and 3D bioprinting and the progress made by fintechs in upcoming fields such as mobile payments, instant loans and robot asset management. "It's a fast-moving space to watch," she said, predicting that the use of digital-enabled services in healthcare, e-commerce and real estate will continue to grow.

Marchand struck a note of caution, specifically about the growth potential of e-commerce companies and their ability to generate profits, especially under increasing regulatory scrutiny. "That might really change the paradigm for these companies ... Yes, it's a growing industry ... but, ultimately, it comes down to: 'When the going gets tough, are you actually generating profits?'"

The risk-return equation

Because investments in the rapidly evolving tech industry are inherently risky, investors should ideally have a good understanding of the business, although there are ample generalist funds...

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