As the sun sets on a roller coaster year, many family offices are reviewing their investment strategies with a view to safeguarding their portfolios for the future. Covid-19 has thrown all the chips in the air and, while the arrival of a vaccine gives hope that the end of the pandemic is in sight, nobody knows where the pieces will eventually land, for the public markets, property and other mainstream investment classes.
As they review their exposure to risk and their options for the future, family offices must think laterally, to diversify their portfolios across alternative and traditional investments, ensuring both security and high returns in the coming years. And with digital innovation and entrepreneurship set to lead the recovery out of the current downturn, investing in startups through venture capital (VC), should be central to these considerations.
As with most areas of the economy, the outlook was ominous for VC in Q2 of 2020, as the world shut down, and numerous deals were put on hold. However, the sector has experienced a remarkable turnaround in the months since, with a report by Pitchbook showing that Q3 of 2020 was one of the strongest quarters on record, and another survey predicting that investment in European technology startups is poised to reach $41 billion by the end of the year, a slight increase on 2019.