Capital raising processes will be re-invented over the next five years as the result of the adoption of new technologies, according to venture fund founder Victor Jiang.
Jiang, who launched Sapien Ventures last year, was speaking at Australian Private Equity Technology Conference last month (October). He said Australian investors and technology companies were well placed to take advantage of the globalisation of capital markets.
Fundraising in the venture capital space had already moved outside conventional channels, Jiang said. A fund could now be effectively raised from anywhere within days simply by forming a syndicate through the AngelList website. The credentials of potential investors would still need to be verified but the practicality of a fund could be quickly tested by mandate and size and what investors could contribute in skills and networks.
Jiang said he believed in future it would be increasingly important for venture capital funds to narrow their focus to specific technology areas. Many Silicon Valley venture firms were already doing this. There was, for example, at least one firm which invested only in blockchain-based ventures.
Principal of private equity firm Potentia Capital, Andrew Gray, said sector specialisation was also a trend in private equity overseas, although not yet in Australia. This had been a factor in the large number of Australian businesses which had been acquired by overseas private equity firms over recent years.
Sector specialists had the ability to quickly establish the value of a business in their sector wherever it was located.
Gray said Potentia had been set up to focus on technology-based businesses. He expected its ability to execute quickly on deals in this sector would often give it an advantage over generalist firms.
Potentia’s first investment was in payroll outsourcing company Ascender (formerly Talent2 Human Resources Managed Services, part of recruitment business Talent2) late last year.
Jiang said Australian venture firms could increase their returns by focusing on areas in which local technology firms were strong. He nominated the fintech sector and specifically blockchain, an area in which he believed Australian developers might have an international edge.
There were also attractive opportunities for Australian venture capital firms to invest in the deployment of local technologies into Chinese markets.