Venture capital has come into vogue as the successes of unlisted businesses and investors’ hunger for scalability creates a ‘perfect storm’, according to Cyan Investment Management’s Dean Fergie.

In the past few years, several unlisted tech businesses like Canva have achieved great success and gone on to become household names.

And KPMG data shows venture capital funding in Australia hit a record US$2.5 billion in the 2021 financial year, up from US$1.95 billion the year before. 

“This momentum has attracted the eye of investors,” Mr Fergie said, “and many are looking for a way they, too, can get a finger in these pies.”

“Investors are now looking to that kind of venture capital space and thinking that’s the next frontier for investment opportunities,” he told Reach Markets ahead of his next The Insider: Meet the Fund Manager appearance.

In addition to these obvious successes, Mr Fergie noted that many of the businesses being snapped up by venture capitalists at present operate in the IT space – a field that offers the potential for “extreme” scalability.

“I think that’s where the interest is coming from,” he said.

“It’s potentially been a perfect storm where you’ve had a lot of businesses do very well. Even the unlisted ones have become household names and so the broader market is asking how they can get a piece of this.”

“This presents a conundrum for some. In Australia, gaining exposure to these opportunities is immensely difficult without backing unlisted venture capital players,” Mr Fergie said.

Within his own portfolio, Mr Fergie has sought to buy these sorts of companies through listed investment companies, allowing him to invest alongside bigger names and into businesses that he believes have good prospects for growth.

Join Dean Fergie this Friday, 22nd October at 12pm (AEDT) on our weekly The Insider: Meet the Fund Manager webcast to hear him talk about his favourite stocks, investment strategy, market insights and more. There will also be an opportunity to ask questions during the session. To book yourself in, click here.

Sources:

• KPMG, Australian startup investment up 28 percent in 2020-21