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Robin Lauber B. G., Opalesque Geneva for New Managers: Kilian Graulich and his partners, co-founders of Prediction Capital Ltd., are working on some interesting deals for their VC fund at the moment while actively raising awareness about early-stage venture capital investing. Here he gives us some examples of what is trending in VC's "New Normal" era.
Part 1 of the article can be accessed here.
Kilian Graulich and partner Robin Lauber, both experienced VC investors, will present our next webinar Hacking VC: How private investors can strategically access early-stage VC on March 2nd (details below).
Democratisation of VC
Prediction Capital's partners are trying to further the democratisation of VC, not by making it available to retail investors - which is what the democratisation of the private equity asset class is partially about, but by issuing smaller tickets.
"We have some private investors, such as founders or entrepreneurs, that we have let into the fund for comparatively lower ticket sizes, such as €50,000 or €100,000," says Graulich.
Exit-driven investments
Another example of the "New Normal" trends in VC investing can be found in their focus on exit-driven investments. Indeed, assessing the opportunities to exit an investment takes a very large stake in the diligence process. For example, when they look at a start-up, aside from assessing the viability of its business model, unit economics, founders' team, product-market fit, competition and so on, they also analyse scenarios around how and when they would be able to exit that investment. The team will question whether any strategic incumbents will be willing to acquire the start-up, if there is a possibility of a private equity sponsor buying out investors at some point and/or if there is a possibility to exit the investment earlier through the secondary market, "which is quite up and coming at the moment and also part of the New Normal in venture capital."
"The discipline with which we assess the exit potential during our due diligence and during the lifetime of the investment is quite unique," he says. "Private investors like that because if we are able to exit earlier, this means earlier liquidation events, which means they get their money back earlier. Long fund maturities are part of the reason why a lot of investors typically struggle when investing in VC funds, where maturity periods typically take ten to twelve years, so we try to interpret VC investing in a more exit-driven and opportunistic manner, as PE investors have been doing for decades."
Raising awareness
Prediction Capital's current focus, apart from screening the market, talking with start-ups, and onboarding new investors, is about engaging in the community of start-ups by showcasing their expertise in the field. For example, they have been doing workshops at universities, taking part in conferences, and doing educational workshops and webinars. "This is to position ourselves correctly and raise awareness for our particular fund strategy and support to founders," Graulich says.
"At the same time, we are all about educating private investors and family offices that would usually be more traditional in their way of investing by focusing on the likes of fixed-income, bonds, public markets or real estate, about the benefits of venture capital into their portfolio," he adds.
Next Webinar
In this interactive webinar, Robin Lauber and Kilian Graulich will discuss how private investors can strategically access early-stage VC, become more autonomous, and integrate ESG.
When: Thursday, March 2nd, 2023, at 11am ET
Free registration: www.opalesque.com/webinar/
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