Future Planet Capital was founded with the vision of connecting the world’s biggest investors to the brightest minds to address global challenges profitably. In our early years this meant targeting sovereign investors and governments, pension plans, corporates and, in partnership with Barclays Private Bank, ultra-high net worth individuals. But there is one “biggest investor” group that until now we have not and covered and that is the “Crowd”. In this blog, I explore the importance of democratising access to venture and what that means in terms of economic efficiency and financial inclusion.

How Big is the Crowd?

According to Bloomberg and the Securities and Exchange Commission, throughout much of 2021 the share of total equity volume traded by individual investors in America has been well above 20%. In a market worth well over $30trillion, that makes individual or retail investors very big indeed. In the US, the poster child for retail investors is Robin Hood who have over 22m clients or 8.5% of the adult population. In Britain, CrowdCube and Seedrs have financed some of the country’s biggest success stories most notably Revolut, the next-generation bank whose stock market value now exceeds that of all but one of Britain’s traditional banks.

In short, the Crowd is big, very big.

Why Democratise Venture?

From a Future Planet Capital perspective, with our eyes on the world’s biggest investors then it makes absolute sense to find channels to market to this Crowd, to find ways to democratise venture.

For the industry as a whole, it also makes sense. As The Economist’s lead article this week makes clear, 7 of the world’s top 10 companies were venture capital backed. This is great but the traditional investor base for venture capital is geographically centred on Silicon Valley and driven largely by ultra-high net worth individuals and endowments. In more recent years, Chinese-led corporations, such as Alibaba or Tencent, have overtaken Californian investors. This makes the industry highly dependent on a small number of names and their enthusiasm will be driven by fashion, feast and famine depending not only on their own financial well-being but political and tax considerations too.

For individuals, the fact that so much of the world’s increase in wealth has come from private markets has further accelerated income and wealth equality.

It’s not good for the industry to be dependent on a handful of billionaires and their companies and even less so for the ordinary individual who has no access to this deal-flow. For both diversified, more stable economic growth and for fairness, it would make sense for venture to be democratised.

Democratisation in Practice

From 2022, Future Planet Capital will be making 10% of its deal flow available to individuals via crowdfunding platforms. For sophisticated individuals this can be on a deal-by-deal basis. For purely retail investors with limited wealth it will be via long-term diversified investment products. For the first time, individuals will have the same privileged access to impact and innovation companies emerging from the world’s top universities and research centres. Our launching partner, Seedrs, with whom we’ve raised our own Series A, has just been acquired by Republic, the US based private investment platform. With these partners and others, we expect over time to provide fair access to top deals.

Over the long-term, however, our ambition is to link venture capital products to long-term individual savings plans. For those saving for a pension with a multi-decade time-horizon and no need for liquidity, diversified-venture portfolio’s are surely an effective way to fund individuals’ long-term liabilities.

Groups such as MakeMyMoney matter are also advocating for individuals to take control of the ethical implications of their investments and the impact of their financial commitments. Indeed for many this is the biggest way that they can make a difference to the challenges of climate change, education, health, security and sustainable developments.

So, perhaps paradoxically, for venture capitalists, for the industry as a whole, for individuals and for the planet, democratisation of venture is a key stage in the institutionalism and scaling-up of an important asset class.

By Douglas Hansen-Luke, Executive Chairman