LPEA Insight 2021: Navigating disruption

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By Luis Galveias & Johann Herz, LPEA

Technology disruption has been at the heart of the LPEA Insights conference, which aimed to shine a light on the ground-breaking potential of digitalisation. The conference took place on the 28th of October and gathered more than 300 participants to assess industry trends.

The big disruptor

Setting the tone for the tech deep dive to come, David Wright from the Systematic Active Equity Team at BlackRock stated that private companies increasingly interact with the digital world, generating huge amount of information from their customers and their activity. This process brings forward significant opportunities to blend a systematic data driven approach alongside an in depth analysis of growth opportunities. EQT GP Director Antoine Servais then took the floor showcasing Motherbrain, a system using Big Data and Machine Learning to browse the extensive startup ecosystem in search of new potential unicorns. On the subject of data governance, Pierre Marie Nowaczyk, Strategic Relationship Manager at Blackrock emphasised that digitalization is not yet complete but the market is clearly evolving towards data transformation. Tomorrow’s leader will be the one embracing datification, establishing data standards with their partners – be it as an asset owner or an asset manager – and working on common and collaborative platforms. Beyond operation, the finance industry should also look at other sectors for inspiration. According to Theresa Condor, COO at Spire – a global data analytics company leveraging its proprietary satellite tools – technologies coming out of the space industry are going to start being used by organisation across an entire range of areas. Just about every company, going into the future will use space. It is therefore important to keep an eye out for sector trends and appreciate how they are going to shape everyone’s life.

Tomorrow’s leader will be the one embracing datification, establishing data standards with their partners, and working on common and collaborative platforms.
Pierre Marie Nowaczyk

Test cases and assessments

The decentralised finance (DeFi) & Blockchain panel provided insights on how LPs and GPs will be impacted by emerging technologies. Kicking off the discussion, Maya Zehavi, crypto investor at Daneel capital said “we have seen the crypto-market react to the current macroeconomic situation, characterised by Covid and a low yield environment. We have therefore seen a lot of crypto players develop DeFi into more mature products offering very competitive annual yields (12%) on the dollar and other tokens – rendering them more attractive to conservative investors that until now, looked at crypto from the side line”. According to Pascal Bouvier Managing Partner & Co-Founder at MiddleGame Ventures, the most promising innovation emerging from these new asset classes might allow the financial service industry to become a little more decentralised. Adoption of blockchain, cryptography and public and private keys will optimise transaction throughput and reduce costs – a promising factor for the future of financial services. Humouring the attendees, Michael Jackson, a prominent venture capitalist stated “to not worry if you do not understand the complexity of the ecosystem. It is complex for a reason. It has been developed during the past ten years by a 24h/day work force of computer scientists, working in an open source fashion. One simply cannot keep up with the evolution and it is nothing to be embarrassed about.”

Industry trends

Former PE Investments Director at the EIF, John Holloway showcased the rising exposure of LPs to Venture Capital with an Invest Europe figure: 18% of all the funding raised for Venture Capital came from family offices in 2020. A few years ago, the figure was zero. The entrance of family offices’ fund into this business has had a substantial effects on fundraising. Olaf Kordes, Managing Director at Luxempart added “entrepreneurs tend to seek guidance and find family office investments attractive. Those families are themselves entrepreneurs and keen to share their know-how”. Another emerging trend has been the democratisation or private assets. Gorka Gonzalez, Responsible for Retail Activity at Bpifrance said that in the coming 10 years access to this asset class will be facilitated through on line platforms and, at a later stage, through banking/insurance channels inviting individuals to invest smaller tickets in PE. For Zoe Peden Principal at Ananda Impact Ventures, impact investment is now mainstream. The volume of money coming in and returns are both at an all-time high. Now is the time to invest in impact. Nicolai Wadstrom, CEO and Founder of BootstrapLabs, concluded the conference by stating that “AI is the engine of the 4th industrial revolution. We are just in the beginning of one of the biggest disruptions and wealth creation opportunities – by many estimated to amount to USD 30 trillion by 2037. It is not a matter of which industry will be impacted, it is a question of when.”

Watch the photo coverage here