Should pension & investment funds invest in tech startups?
The idea of achieving financial freedom is in everyone’s minds. It’s getting there that is an issue we all face. The dream is always to make enough money to retire comfortably after working for most of our younger years.
That is why it’s imperative to pay attention to your pension and investment funds. We put our money in investment funds and leave it up to the experts to invest in a basket of stocks or companies that they believe is best for us. Recently, with the number of tech startups out there heading for IPOs, it is inevitable that some of these companies will end up part of our funds. But could this be good for our returns in the long run?
The problem with investing in startups
In the US, Uber, Pinterest and Airbnb are giants that have become very much part of everyone’s daily lives. This has gained them enough attention to also attract pension and mutual funds to invest in them. But there have been some worries from observers as deals like these are exposing funds to seemingly unknown waters.
The International Business Times has reported that the US tech startup giants may not be as transparent when it comes to their financial statements. Some have not filed any reports with market regulators.
Temasek invests in a diversified range of startups
Back home in Singapore, Temasek and UOB's venture debt firm InnoVen Capital India has almost doubled its investments for Indian startups. It was at US$12mil in at the end of June, but the amount has risen to US$20mil as at 30 September.
Since June, the firm has also sealed deals with two food tech startups – Faaso’s and Holachef. It has also invested in Oyo – an online hotel aggregator and a cashback app called Crownit.
Historically, Temasek has also invested in PayPal, a personal loan platform called SoFi as well as Univar, a commodities and specialty chemicals distributor.
ACIMB economist, Song Seng Wun told Reuters that investing in startups would assist Temasek in spawning long-term returns, which is welcomed as the growth of equities is slowing down.
Bloomberg has also reported that Temasek has invested in pureLiFi, a telco from Edinburgh which deals with wireless connectivity using light-emitted diodes.
Richard Swart, who’s an alternative finance researcher with the University of California, said it best in his interview with Wired. Venture capitalists and angel investors have the means to rake up millions of dollars in smart investments, but they don’t commit to just one or two startups. They dive right in and invest in many, and are aware that some might falter but one or even two might hit the jackpot.