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Survey: high-net-worth individuals are looking to invest in private companies

July 2, 2009 | By Paul Ryan

With business and consumer confidence languishing, it would be logical to think that investor confidence would be similarly depressed. However, according to a recent survey of 4,169 Australian investors conducted by Wholesale Investor, investor sentiment is buoyant.

The statistics revealed:

  • 76% of investors are seeking investment into private companies
  • 53% have $500k or more to invest
  • 72% believe now is a great time to invest
  • 79% of investors have over 50% of their funds in cash, ready to invest
  • 91% would invest in an early-stage/start-up if a strong Board / Management was in place and in the preferred sector
  • 55% said their biggest challenge was finding suitable deals
  • 63% were looking to invest directly into companies
  • 61% sought an equity stake of less than 20%

In addition, the survey revealed several positive factors influencing the private company market. These include:

  • Former MDs and CEOs are now actively pursuing high-growth businesses.
  • Many smaller venture capital and private equity firms are forming and looking to gain exposure to high quality companies.
  • Larger private firms are taking advantage of market conditions and looking to make strategic acquisitions.

Contrary to the prevailing attitude of doom and gloom, these figures reveal that this is a golden period for business – for those investors and entrepreneurs who are prepared to see the bigger picture, take a calculated risk and back themselves. A crisis for some is a blessing for others.

Read the survey results here (PDF).

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  • Rocco Ni

    The next wave of emerging technology is Medical technology. The best bet for high networth individuals is to invest in cutting edge medical technology targeting current problems. Alzhiemers, Obesity, Diabetes, heart disease and vision problems. High net worth individuals can look at early provate companies, invest early so you can spread out your risk by creating a portfolio.
    2 out of 5 companies may succeed and you can make a lot of money.
    Typically these companies sell for $200 to $700 mil by a bigger medical technology company like J&J or Medtronic or Boston Scientific or Abbott lab just to mention a few.
    Even if I have 1% of an early start up medical technolgy company for $150,000 or $200,000 I am making close to 10x of my investment even after the dilution. 0.5% of avg of $400mil aquisation results in $2million ROI for a initial investment of $200,000. ROI is after 3-5 yrs. That’s great.
    In the worst case scenario the compoany sells for $200 mil, I make 5times.
    look at early medical device start up companies in: Silicon valley, Irvine, Boston area. Web search: look into linked in and see Scientific entrepreneurs.
    Another area is clean tech.
    But my fav is medical device tech.

    [Reply]

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