Make Way for Sovereign Venture Funds

Agile does not typically describe sovereign wealth funds. In many cases, these government-backed institutions allocate cash with hippopotamus-like grace. But that stereotype is changing as they become more comfortable with technology investments. Think late-stage venture capital, not seed investing, at least for now. CB Insights estimates that about $13 billion was allocated by sovereign wealth funds to technology in 2016. The actual number is likely much larger, given institutional opacity. Among the transparent sovereign wealth funds, Bpifrance appears to be the most aggressive in technology, followed by Singapore’s GIC and Temasek and Malaysia’s Khazanah. Why the allocation shift favoring risk-prone investments? Many are realigning capital that was earmarked for hedge funds; others argue that cyclical issues, such as protectionist sentiment, demand aggressive long-term strategies.

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