As companies stay private for longer, a growing share of value creation takes place before investors can access them through listed markets, Thomas explains. Investors who rely mainly on listed equities may therefore enter important innovation cycles only after much of the upside has already been realized. Venture capital can help close this gap.

According to Thomas, the asset class should not be regarded simply as “high-risk equity”. Instead, it can be viewed as a strategic building block for institutional investors’ portfolios because it increases diversification, helps hedge disruption risk and provides access to increasingly institutionalized manager capabilities.

Read the full article in the Business Times, FS Private Wealth or Agefi Finance (PDF).