Endowment Wealth Management has launched its EWM Unicorn Technology Fund.
The private fund is seeking to raise up to USD25 million to capitalise on what its management team sees as opportunities in the secondary market for private, late-stage venture capital technology companies. Such firms are often referred to as unicorns due to their rarity and size. The fund manager will seek to build a diversified portfolio of companies that it believes may experience a liquidity event in the next 2-4 years. The Unicorn Technology Fund is currently fully invested across six such companies and the manager intends to add additional investments as the Fund grows.
“Several important factors have converged to create what we believe to be an optimal window for investors to consider investing in late-stage private tech companies,” says Prateek Mehrotra, Chief Investment Officer of Endowment Wealth Management. “Our lives are increasingly being impacted by disruptive technologies. Thus, there is a stable of high-growth companies with innovative ideas providing investors with unique opportunities.
“There has also been a change in the tech investing landscape. An increasing percentage of value is being created while companies remain private longer. Thus, investors waiting for an IPO may be missing out on a significant portion of the growth phase of these companies. Unfavourable market conditions in recent years have limited IPO activity, and a backlog of companies waiting to go public has increased. Current conditions, such as rising equity markets, relatively low interest rates, and a growing economy create an improved environment which we believe will facilitate more companies to debut in the public markets. From a supply standpoint, the extended time companies remain private are creating a need or desire to obtain some level of liquidity. Thus, a secondary market where we can access supply has expanded.”
“The Unicorn Technology Fund was created to leverage the experience of the management team and knowledge in the venture capital and secondary market space. Late-stage venture capital investing is not about seeking home runs- it’s about capturing a bump in valuation that can often occur when a firm is acquired or goes public. Such investing is not without risk. We think that some of this risk can be mitigated by buying a diversified portfolio of established companies, being selective, and by seeking to acquire shares at prices discounted from the respective companies’ last round of financing,” says Mehrotra.
