Three private equity specialists share how they identify companies with breakout potential and back their growth
Three private equity specialists share how they identify companies with breakout potential and back their growth
Asia-Pacific-focused private equity & venture capital assets under management surged to a record-high $1.29tn in 2019, a 34% increase from 2018. Strategies targeting more innovative and faster-growth sectors hold the bulk of dry powder, but how do you pick a winner?
At Preqin’s Private Equity & Venture Capital Driving Innovation in Asia-Pacific webinar on 29 September, we heard from Permira Principal Shane Lauf, Vickers Venture Partners Founder Dr Finian Tan, and VI Ventures Founding Partner Dr Tianhong Xu.
Here are three tips they shared:
- Stake out the right hunting ground
Dr Tan, who invests in deep tech, positions his team where the action is. “Deep tech needs heavy R&D expenditure and generally the emerging markets of Myanmar, Cambodia, or Laos wouldn’t be at the cutting edge of deep tech,” he said. “It would be the countries of the developed nations in East Asia. It would be China, Japan, Korea, Singapore.”
- Have a framework to think about risk, and manage it
A pharma company working on a cure for cancer, for example, would face high development risk and low market risk, whereas firms making me-too drugs or follow-on medical device products have lower development risk but will face fierce competition. “So it’s a matter of what stage of risk we want to face,” Dr Xu explained. “In the Chinese market, we think we need a balance of some high-risk, some low-risk me-too products. We [invest in] companies with a balanced pipeline, which makes it easier for us to raise money from LPs.”
- People matter, and COVID-19 has changed the market for talent
Mr Lauf said: “The value of transformation and, particularly, technology-enabled talent in Asia is probably not as deep as it is in North America and Europe, so the incremental value of being able to secure the right leadership out of your CIO, or out of your CTO, is multiple times more valuable now than I think it would have looked even 24 months ago.”
To hear more about the investments that our speakers have made, and how COVID-19 has pressure-tested their digital and innovation capabilities, watch our webinar.
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