Investors see placing capital with venture capital firms as an alternative form of socially responsible investing that avoids socially irresponsible assets such as coal and gambling.
Stoic Venture Capital Partner Geoff Waring said many investors were thinking harder about asset allocation in an era of heightened social consciousness amidst COVID-19 and bushfires.
“Investors are becoming increasingly shrewd about the companies they put money into and are turning to venture capital as an alternative to avoid socially irresponsible investments,” Dr Waring said.
“Investing in smaller, faster growing companies that are innovative in solving society’s bigger problems is becoming a preferred option in comparison to managed funds that focus on more established companies in traditional industries.
“Investments in the top performing venture capital funds provide investors both very high returns and the comfort that your funds are working towards a more sustainable society.”
Dr Waring said it was important to seek out venture capital firms that focused on companies that were genuinely working to solve large social problems.
“Bigger social problems including health and environment are attracting more attention amidst the pandemic and likely to be the more profitable in the long run,” he said.
“Investments in the top performing venture capital funds offer the potential for outsized capital gains. But you have to be very selective when choosing the fund as most will not generate capital gains after fees”