
The Venture Builder Strategy for Principal Investors
For sovereign wealth funds and pension plans, fostering a portfolio of innovative new ventures is a powerful opportunity. You might even create your own unicorn along the way.
Facing unprecedented uncertainty and change, principal investors and private equity firms are exploring new ways to drive growth and performance. BCG helps them navigate the shifting landscape.
Principal investors and private equity firms face multiple challenges: disruption caused by the pandemic, structural changes in global macroeconomic systems and trade flows, geopolitical uncertainty, and an unprecedented level of undrawn capital in the industry. Competition for high-quality assets has never been greater, with funds increasingly looking for an edge.
Investment funds, irrespective of scale or scope, must uncover innovative ways to grow and differentiate themselves while ensuring that their underlying operating models are continually fit for purpose. Funds are increasingly expanding into new sectors, geographies, and asset classes; investing in digital and analytics capabilities; optimizing around people and organizational topics; doubling down on ESG investments; and rethinking their engagement models with portfolio companies. Fund strategy, operating model, and people and governance topics are now core C-suite agenda items.
Over the last six years, we have served as a key adviser to 9 of the top 10 global PE funds, as well as 9 of the top 15 global sovereign wealth funds (SWFs), representing almost $1 trillion in assets under management.
Our consultants work closely with private equity firms and principal investors to optimize five core capabilities:
We are thought leaders in the field of fund strategy and private equity fund operations, helping leading firms anticipate future trends in the industry, envision the next iteration of their business and operating models, and embed digital and analytics across their value chains.
To prepare for new and exciting opportunities that the post-COVID new reality will bring, principal investors and private equity firms need to reconfigure their underlying operating models and related technology infrastructure.
The pandemic has impacted funds in different ways: some are maintaining or improving their profitability, while others have failed to adapt quickly and are in difficulty. What does it take to win? Companies must move toward a modern technology platform based on modular architecture, unlock insights by formalizing data strategy and governance, and create an organization and culture that embrace new ways of working.
For sovereign wealth funds and pension plans, fostering a portfolio of innovative new ventures is a powerful opportunity. You might even create your own unicorn along the way.
Investors must put the technology, data management, and organizational practices in place to support sustainable growth.
With an eye to the recovery, fund leaders should reexamine who they want to be in the post-COVID world.
If the last decade was a golden age for PE, the next one could be more gilded. Funds have the potential to deliver exponential growth—provided firms make the needed strategic and operational changes.
To prepare their funds and portfolio companies for the opportunities and demands that lie ahead, principal investors need to plan in layers and across multiple time horizons.
BCG’s fund strategy and operations consulting has driven significant impact for leading principal investors and private equity firms globally, on a number of topics related to fund strategy and operations. Examples include: