Industry Insights

 
 

 

August 2022
Nicolas Sauvage, Claudia Zeisberger and Monisha Varadan
INSEAD Knowledge
 

CVCs offer funding, access to resources such as experienced business unit leaders, marketing and development support, and the halo-effect of an established brand. But interested startups should be aware of the potential drawbacks. This paper represents the findings of an in-depth survey of the CVC landscape, explains the types of CVCs and their objectives and provides a step by step guide to determine whether a specific CVC matches the start-ups' needs.

 
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July 2022
Nicolas Sauvage, Claudia Zeisberger and Monisha Varadan
Harvard Business Review
 

In the first half of 2021 alone, Corporate Venture Capital funds (CVCs) around the world inked more than 2,000 deals worth more than $70 billion. It’s an increasingly prevalent alternative to traditional funding options such as VCs and angel investors — but how can entrepreneurs determine whether a CVC is the right fit for their startup? In this paper the authors discuss the results of a series of quantitative analyses and qualitative interviews exploring the CVC landscape, identifying four common types of CVCs and three recommendations for founders considering a CVC investment.

 
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January 2021
Mark Florman
 

The use of private capital in investor portfolios has grown tremendously over the last 20 years, aided by the public success of U.S. endowments like Yale and Harvard, who were early adopters of venture capital and private equity. In this paper, the aspects of private capital’s history, its long-term growth prospects, and why an increasing number and range of investors are utilising the private markets globally are reviewed.

 
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November 2020
Alexandra von Stauffenberg
INSEAD Knowledge
 

The overall private capital industry has grown significantly over the last 20 years. Assets under management (AUM) have grown more than tenfold, from US$647 billion in 2000 to $4.8 trillion in 2019. This growth is driven to some extent by the strong performance of some primary PE funds. The PE secondaries market has also grown in line with the primary market. The key reasons are that secondaries allow investors to achieve liquidity early, rebalance their portfolios, modify exposures due to regulatory changes ‒ as we saw after the last global financial crisis ‒ and also lock in returns on their private equity investments.

 
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September 2020
Kamal Hassan, Monisha Varadan and Claudia Zeisberger
Institutional Investor
 

Is venture capital a risky asset class? Most VC funds choose to act in a risky manner by not diversifying, but that does not make the asset class risky. To de-risk venture capital, CIOs simply need to acknowledge that VC math is different from public markets math. The importance of low-probability, excess-return-generating investments means that proper diversification requires a portfolio of at least 500 start-ups.

 
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August 2020
Avi Turetsky, Matthew Pyrz, Barry Griffiths, Joaquin Lujan and Isaac Beckel
INSEAD Knowledge
 

The gains from private market investing are best understood relative to public benchmarks. But there has been no way to compare the two in currency terms – until now. "Excess Value" method enables investors to measure the performance of their private market portfolios relative to a public benchmark in currency terms.

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July 2020
Daniel Gospodinov and Claudia Zeisberger
INSEAD Knowledge
 

Globally, climate change has dominated the public space in the past couple of years. This has propped up a strong investor demand. To wit, 84 percent of millennials invest with a focus on environmental, social and governance (ESG) impact as their central goal as compared to less than 50 percent for baby boomers. Given that an estimated US$68 trillion will be passed down from baby boomers over the next 30 years, with up to 80 percent of investment goals being reconsidered in the process, a significant flow of investment towards impact – specifically, climate change – is expected. Similarly, the supply side has also seen growth, although still mainly in ‘pockets’ and with limited regulation around it. There has been an emergence of green bonds, green-project finance and ESG-agnostic investments in public assets. Large PE/VC funds have also come to the forefront.

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July 2020
Monisha Varadan, Kamal Hassan and Claudia Zeisberger
INSEAD Knowledge
 

Has the time come for us to rethink VC in today’s world? Perhaps take a step back in time to observe how Georges Doriot – the founder of both VC and INSEAD – in 1946, set up a machine to fuel and fund innovation and development. A system that aligns incentives with founders and not funders. Doriot’s philosophy was steeped in a sense of integrity that perhaps deserves a comeback. Business, if treated as a force for good, can only create a system that generates returns in an ethical, balanced way.

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June 2020
Alexandra von Stauffenberg
INSEAD Knowledge
 

The term “impact investing” has only been around for about 20 years. However, the concepts of good business practice and social responsibility have been with us for centuries. The Covid-19 pandemic represents one of the greatest challenges yet faced by this new-old sector.

 

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May 2020
Benjamin Kessler
INSEAD Knowledge
 

COVID-19 has accelerated many long-brewing developments in the business world, such as the ascent into respectability of working from home. Private equity (PE) has not been immune to this trend. By chilling the deal-making process for the time being, the pandemic has brought greater focus to PE's involvement in active ownership of portfolio companies, and an emphasis on operational improvements and other forms of long-term value creation. For the moment, PE firms have no choice but to concentrate on keeping their investees afloat, no easy task given the churning waters ahead.

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January 2020

Kamal Hassan, Monisha Varadan, Claudia Zeisberger

Bias within the VC industry is preventing funds from being allocated to the best investment opportunities. This Harvard Business Review article provides insights into the systematic imbalance and institutionalized gender bias in the VC pitch process.

 
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November 2019
Claudia Zeisberger, Caroline Decker-Lange and Knut Lange
 

The article elaborates a study on the Europe focused FOs dynamics and how they have been subject to the influence of local institutional environments affected by tumultuous economic and political events, from the global financial crisis to ascendant nationalism and conflictual politics within the European Union. There was surprisingly little information available about cross-national comparisons and the co-evolution of contexts and FOs over time, despite the fact that FOs are often central advisors to families and their businesses in many countries. The dynamics across the three dimensions were examined which comprise institutional environments, according to academic research: Regulative (formal rules and laws), Normative (cultural standards that determine the behaviours and goals that are considered desirable), Cognitive (shaped by prevailing symbolic perceptions and attitudes). The importance of family offices differs across these countries. The UK is the leading centre for financial services in Europe, especially the country’s capital London. In Switzerland (not an EU member), private banking and financial services for international investors are well-established. It has the highest number of family offices in Europe. Europe’s largest economy, Germany, is shaped by traditional, medium-sized family-owned businesses and driven by the expectation of the transfer of wealth from one generation to the next. In France, many families sell their business after its founder’s death and invest the money resulting from the sale via a system of holding companies and family offices because French legislation hampers the transfer of wealth and ownership from one generation to the next.

 
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August 2019
Monisha Varadan (INSEAD MBA ‘10D), Kamal Hassan (INSEAD MBA ‘93D) and Claudia Zeisberger
 

Women-led businesses are nearly twice as prevalent in earlier funding rounds than in later rounds – almost 12 percent at accelerator and incubator stages, dropping to 8 percent at seed stage. By early-stage VC funding, women represent only 4 percent of investments. Do women find it harder to ask for money or is unconscious bias seeping in? Once women entrepreneurs have mustered the courage to put themselves through a ‘shark tank’-like experience in front of the VC, the numbers are not always encouraging. Women who pitch their venture successfully get less than half the average investment that men receive and the valuations for women-led businesses are far lower than that of men-led ones. To build their businesses with smart capital, women have to work much harder than men.

 
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July 2019
Claudia Zeisberger
 

Last summer, Y Combinator (YC), the original start-up accelerator that has invested in more than 2,000 fledgling firms with a combined value of US$150 billion, sent acceptance emails to 11,000 of 15,000 applicants to its Startup School instead of the estimated 4,000 originally intended. Rather than jettisoning the surplus applicants, the company that nurtured the likes of Airbnb, Dropbox, Reddit and Quora decided to keep everyone on board. This year, YC will likewise accept all applicants to Startup School, a 10-week, free-of-charge massive open online course (MOOC), supplemented with virtual office hours and access to 15,000 founders worldwide. An unannounced number of those who complete the programme will be given a US$15,000 grant. As YC President Geoff Ralston, an INSEAD alumnus, told in a recent interview, “It's part of our goal to maximise the amount of entrepreneurship and innovation there is in the world.”

 
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March 2019
Mark Florman
 
This article highlights the practical issues and implications of a limited partner in a private equity fund, suggests factors to consider for investor when setting up a PE fund, focuses on the behavioural elements of being a limited partner, discusses the balance of GP & LP relationship.
 
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July 2018
Kamal Hassan, Claudia Zeisberger
INSEAD Knowledge
 
No matter your level of experience, early-stage investments are considered high-risk gambles. Why not treat them as such?
 
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April 2018
Claudia Zeisberger, Kevin Lu
INSEAD Knowledge
 
In the past couple of years, a number of the biggest and best-known GPs announced impact strategies. To understand this recent trend of responsible investing from a GP’s point of view, we had a conversation with Kevin Lu, one of the GPEI’s Distinguished Fellows, and the Chairman for Asia at Partners Group.
 
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March 2018
Ian Potter, Claudia Zeisberger
South China Morning Post
 
Overseas and Chinese personnel both have their merits, but one thing is clear – it is time to take stock of the development in home-grown talent
 
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March 2018
Britta Pfister, Claudia Zeisberger
The Business Times
 
Business families should consider segregating private assets early, think through after-sale scenarios, and how to create a joint platform.
 
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November 2017
Ian Potter, Claudia Zeisberger
South China Morning Post
 
Wealth generation, internet use and returning overseas talent will determine the pace of investment
 
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September 2017
INSEAD Knowledge
 
Governments have been unable to address infrastructure shortfalls. Private investors can help fill the gap.
 
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July 2017
 
A venture's board of directors is highly consequential for its most important strategic and personnel outcomes. This paper reviews the organizational and strategy research on venture boards, clarifying how venture boards differ from venture investors and from public firm boards.
 
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April 2017
Gautam Seshadr
INSEAD Knowledge
 
Tech companies want to stay private for longer, driving interest and liquidity in secondary markets.
 
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March 2017
Ian Potter
INSEAD Knowledge
 
Calls for a more inclusive style of capitalism are boosting a budding industry.
 
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September 2016
Avi Turetsky
INSEAD Knowledge
A small number of people account for the vast majority of value creation in private equity.
 
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September 2016

Graham Oldroyd
INSEAD Knowledge

The private equity approach to operational improvement is selective and takes place in phases.
 
 
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June 2016
Graham Oldroyd, Claudia Zeisberger
INSEAD Knowledge
 
Corporate acquirers can benefit from asking the same questions private equity firms ask themselves before pursuing acquisitions.
 
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August 2015
Ian Potter
INSEAD Knowledge
 
Institutional investors are increasingly interested in putting their money into social impact, but a gap remains between them and the people on the ground.
 
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May 2015
Britta Pfister
INSEAD Knowledge
 
Asian family offices are at a nascent stage of development; while they are keen to progress, there are clear philosophies they don't see the need to change.
 
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