Integra Digest: Intergenerational Investment and Venture Capital    

Intergenerational Investment and Venture Capital

Integra Digest

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Generational wealth planning encounters three key questions: how to sustain wealth, how to engage the younger generation and how to maintain family unity. The answer to all three? Venture capital.  

Venture capital presents a unique opportunity for intergenerational wealth management, and it does so by resolving the pain points outlined above. Venture capital investment provides a higher return when compared to public markets, consequently offering portfolio security for continuing both the accumulation and the preservation of wealth. Returns are sizeably higher in venture capital because it is at the root of innovation and change, moreover it offers niche entry points for investing in emerging trends and disruptive technologies of the future. A diverse, forward-thinking portfolio is never a loser.  

Venture capital also promotes healthy integration of younger generations into wealth planning and management. Tastes vary generationally for investment and, as the Bank of America’s 2022 study shows, the younger generation values sustainability above all else, moreover, the younger generation of investors (those under the age of 42) no longer believe that traditional holdings will be profitable in the long run, so they aim to halve their investment in public markets. Venture capital is the product of entrepreneurship, and this is further part of the appeal for intergenerational discussion: merging ideas, “expertise, insights and interests,” as Cambridge Associates’ Venture Capital Positively Disrupts Intergenerational Investing puts it, will have a positive impact on decision making when approaching the subject of private market allocation of wealth for current and future generations. A new age of generational wealth management is abound, alongside a prioritisation of private equity investment. It is a continuous phenomenon – the old is always replaced by the new: the young take over from the old, newer companies disrupt existing mammoths, and private equity overtakes public markets. To be ahead of the cycle intergenerational wealth planning needs to include venture capital allocation and further include the younger family members in this discussion.

“By accessing specific opportunities aligned with individual interests, each family member’s distinct perspective, passion, and personal values can be incorporated in the family’s investment choices,” when deciding to invest in venture capital (Cambridge Associates 2020). The younger generation, for instance, is much more socially conscious – they seek to make a positive change with nearly all of their investments. Profit and impact need not be separate for wealth planning, and venture capital provides an early entrance point to companies who achieve both in the long-term. Although every family is unique, the wealth accumulated likely trails back to some sort of entrepreneurship. Investing in venture capital is a chance to reconnect with initial family values and to show, teach, reminisce with younger generations about the importance of the entrepreneurial spirit and how far it can take one in life.  

“At Integra Groupe we are long-term investors, and we generate exponential returns by investing in the companies of the future. But in addition to this, we want to build a sense of belonging and true ownership between our investors and the companies in our portfolio. Each investment is a story, a solution to a problem and above all an opportunity to generate value. That is why it is important to understand and align the interests and values of our investors with our investments.”

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