Adveq’s key philosophy is to be anti-cyclical. With investors often heavily influenced by fashions and fears, the firm’s business development is driven by the opportunities it sees in the market rather than necessarily by investor demand. Rainer Ender, managing director and co-head of investment management, describes Adveq as “a bit missionary”.
“We are promoting what we believe in and what we see and what we want to pursue,” he says. “We often are in a position where we push our investors to increase their allocation outside US-Europe because we feel what they have currently is the old world and not the next 10 years.”
This includes encouraging investments into geographies and sectors that may be unfamiliar to some investors. “We are obviously going where the clients can’t go on their own, because you only need a mountain guide if you feel that it’s dangerous,” Sven Lidén, chief executive and head of investor relations and marketing, says. “If you feel that you can walk yourself you would not hire one.”
This is not without its challenges.
“To be contrarian is a dilemma on the fundraising side,” Ender says.
When Lidén joined Adveq from Man Investments in 2011, Asia was the market du jour. “Now Asia is probably the hardest to sell because everybody’s afraid of emerging markets,” he says.
Venture, on the other hand, still struck terror into the minds of those who had their fingers badly burnt following the dotcom collapse.
“When I joined nobody wanted to touch venture, it was seen as something really ugly from the year 2000,” Lidén says.
When the industry fled, Adveq continued to deploy capital into the sector, raising its third and fourth tech funds in 2002 and 2004 respectively.
“Performances have been strong, if not recently clearly stronger than on the buyout side,” Ender says. “The cyclicality was different, the financial crash with Lehman’s was hardly visible on the venture side because the companies continued their growth independently.”
Adveq’s funds have underlying investments in more than 100 unicorns – private, venture-backed companies valued at more than $1 billion. Ender describes venture capital as a “rejuvenating element” in an investor’s portfolio.
“You’re with the companies of the future not with the current performing companies or companies that are currently dominating or leading a market.
“I cannot tell you in which year the best start-up will be formed, this is more or less a coincidence, which one it will be and when. But the innovation is a constant flow and has a very steady pattern, and therefore the steadiness of venture investing is crucial.”
For Lidén this advice holds true across the whole private equity landscape.
“Don’t try to time the market,” he says. “You don’t know how the economy will look five years down the line in any geography or any industry.”