Future Fund seeks Australia venture capital exposure

Raphael Arndt, CIO of Future Fund, told the AVCJ Australia & New Zealand Forum that Greenspring Associates – the group’s partner for venture capital in the US market – was helping them identify a GP within Australia. “We think this is a good investment opportunity,” he said, expressing confidence that an allocation would be made.

Venture capital and high growth small businesses already account for a significant portion of Future Fund’s portfolio by the standards of most large institutional LPs. The sovereign wealth fund has A$139 billion in assets, of which A$17 billion is allocated to private equity and across fund-of-funds, direct GP commitments, and co-investment. Within this, A$8 billion is in VC and small business.

“Businesses have to reinvent themselves – the world is changing, and you cannot just ignore that,” Arndt said. “The successful businesses of the past will not be the successful businesses of the future unless they respond to this changing environment.”

The Future Fund response to technological disruption is threefold: offense, which involves investing in these technologies, with the VC portfolio now amounting to A$2.5-3 billion; defense, or backing companies that are less subject to disruption; and applying technology to its own portfolio.

Ardnt offered an electricity distribution network – the sort of asset it has backed through its infrastructure program – as an example. Future Fund considers the potential impact of renewable energy technology on such an investment and looks at the industry from the perspective of managers in its VC program for signs of future disruption.

Whether it is electricity networks and cleantech, driverless cars and car parking, or financial technology and banks, the aim is to accumulate intelligence and share it with portfolio companies, as well as using it to make investment decisions.

As for introducing technology internally, Future Fund is investing in systems that offer more insight into its portfolio in real time, across currencies, geographies, and industries. It expects portfolio GPs to do the same.

“Our best PE managers are investing in their own businesses, hiring people with an operational background to go into investee companies and drive real operational improvement,” Arndt said, citing a GP that bought a luxury goods retailer and then brought in people with an e-commerce background to update the company’s online offering with real time analytics.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Australasia
• LPs
• Venture
• Technology
• Australia
• Future Fund
• AVCJ Events