03 May As interest rates rise and investors retreat, PE focus shifts to portfolio construction
The implications of global interest rates rise and a retreat in funding have been felt by startups, with worsening business conditions and the end of ultra-low yields now shifting investor priorities from high returns to one that can breed sustainable growth and longevity. Reece Tomlinson, investment expert and CEO and founder of Saône Capital, the UK’s first trans-led investment advisory firm, is available to comment on the changing indicators of investor and startup success amidst market volatility, why the focus for backers has shifted towards risk management, cost efficiency, strategic and tactical asset allocation, and what this means for businesses looking to scale up in the world of ‘modern investment’.
In light of the events from the last few years, experts are now suggesting that the end of a 60/40 (60% equities/ 40% bonds) portfolio could be in sight after 2022 marked the worst period in 50 years for equity and bond performance. Largely driven by inflationary pressures and tumbling valuations, this downturn has made space for a new, dynamic and equity-heavy approach to investment. Tomlinson explains that allocations to commodities including ESG-focused products are less likely to fluctuate in line with inflationary factors and are likely to be driven more by supply and demand.
As a result, startups will be forced to follow investor lead when considering funding opportunities. Tomlinson explains that by improving profitability and providing a concise measure of results, backers will be able to gain a clearer view on how the product could benefit their portfolio and how it could generate sustainable and long-term growth.
With this in mind, Saône Capital is a newly launched impact investment advisory created to provide underrepresented founders and businesses – from Seed to Series A stage – with a platform to scale with zero boundaries. Underpinned by four main pillars – investment, corporate finance, ESG and leadership advisory – Saône has a directed investment focus that primarily supports businesses who have a transformative impact on sustainability and social betterment.
Saône Capital has directed objectives to reach $1bn in assets under management (AUM) by 2027 – with the founding team already having experience of scaling a collective deal flow of $4bn – expanding upon the portfolio managed by Saône which currently includes nine companies.
