VENTURE CAPITAL: ITS ROLE IN INVESTOR PORTFOLIOS

For private markets in Italy these are times of turbulent change. For many investors, allocating shares to private markets is no longer a residual choice, but has in fact become a pillar of their strategy. The shift has been aided by the 2015 changes to regulatory constraints on investments and by the huge capital flows from the Recovery Fund and the Horizon Europe programme, which are generating notable innovation in the Italian economy.
What these markets are appreciated for is their potential ability to achieve on average higher returns than those offered by public markets – as a result of a higher level of risk -, and their decorrelation from these markets: this means that asset prices are less volatile, less sensitive to sentiment and more closely linked to corporate fundamentals. On the other hand, these are illiquid markets which, in fact, are characterised by a low volume of trading.

 

HELPING UNLISTED COMPANIES GROW

Kairos has therefore decided to expand its offering in the illiquid investment segment with the introduction of Kairos Ventures ESG One. This is a reserved closed-end fund under Italian law that invests in innovative start-ups and SMEs in early and late stages.
Our goal in creating this type of product is to raise capital from investors and to employ it in unlisted companies with high development potential. Innovation is indeed an indispensable driver for the growth of industrial countries because it allows them to stay competitive and stimulates new investment and new consumption.
Kairos Ventures ESG One supports entrepreneurs committed to growing and consolidating their companies. The Fund concentrates on four areas:

  • Blockchain
  • Software
  • Artificial Intelligence
  • 5G
  • Microchip
  • Internet of Things
  • Data Center
  • Big Data Analytics

KEY SUCCESS FACTORS

Covid-19 accelerated the digitalization of all industries, one of Horizon Europe top priorities.

More than € 149 billion1 will be devoted to innovation and digital investment through Recovery Fund.

  • Lab Services
  • Diagnostics
  • MedTech
  • Telemedicine
  • Animal Health
  • Medical Devices

KEY SUCCESS FACTORS

More than € 5.3 billion dedicated to European Health through EU4Health2.
The pandemic improved the need for home care devices and services and telemedicine.

  • Satellite Launch
  • Ground Station
  • Space Research
  • Manufacturing
  • Drones
  • Space Debris
  • Earth Observation

KEY SUCCESS FACTORS

New space economy has been identified as a major driver for innovation to boost European industrial competitiveness3.

The global new space economy is expected to reach more than $ 1.1 trillion4 by 2040(1)

  • Renewables Technologies
  • Energy Storage
  • Electrification
  • Smart Cities
  • Hydrogen
  • CleanTech

KEY SUCCESS FACTORS

The sector pushes the new next: sustainable agriculture, renewable energy, hydrogen, energy efficiency and ecosystems protection.

Approx. 30%5 of the Recovery Fund in Italy will be dedicated to green revolution and ecological transition.

Sources:
(1) European Commission, Recovery Plan for Europe.
(2) European Commission, EU4Health 2021-2027 – a vision for a healthier European Union.
(3) ASI, Strategic Vision Document 2016-2025.
(4) Italian Industry – the space economy takes flight: within ten years it will be worth a thousand billion dollars. And in Italy…, by Laura Magna, 18 October 2021.
(5) Italian Government, Presidency of the Council of Ministers, National Recovery and Resilience Plan, 5 May 2021.

 

 

The investments

THE FUND’S APPROACH TO ESG

Kairos Ventures ESG One is one of the first venture capital funds on the Italian market to promote the principles of sustainability. This is also what makes it a distinctive product in the illiquid investment landscape.

Kairos integrates ESG criteria into its investment process and is committed to monitoring risks and safeguarding sustainability opportunities, in line with the company strategy and philosophy it applies throughout the investment and divestment processes. Further information on sustainability aspects is available at the following link: https://www.kairospartners.com/esg/informativa-sfdr/.

Among other things, the Fund also promotes environmental and social characteristics – provided that the investee companies comply with good governance practices – with partial use being made of sustainable investments. This product is categorised as SFDR Article 8.

 

THE UNIQUENESS OF THE KAIROS OFFER

Kairos Ventures ESG One is mainly focused on Italy and can thus grasp the opportunities offered by the country’s current climate of development and growth. The product’s funding target is €100 million: this will make it one of the largest venture capital funds in Italy and will consequently allow for risk dilution, with investment in around 40 companies.
Kairos Ventures ESG One is aimed at professional investors (by right and on demand) and also at non-professionals with a subscription of no less than €500,000. Investing in the Fund is suitable for experienced investors with a long-term investment horizon, for whom this investment is not the only investment program and who are able to fully understand the characteristics of the Fund, the investment strategies adopted by the company and the associated risks. Finally, individuals and legal persons can benefit from the 30% tax incentive of the invested amount
Finally, venture capital funds are a way of diversifying the asset allocation of an investment portfolio because they are decorrelated to market trends.

The Fund’s return may vary significantly from year to year depending on the performance of the single assets in which the Fund’s assets are invested. The partial or total loss of the invested capital in the Fund is inherent in this type of investment, so investors must be aware of this eventuality. Past performance does not predict future returns. The Kairos Ventures ESG One summary risk indicator is 6 out of 7.

 

 

THE MANAGEMENT TEAM

Incisive knowledge of the Italian market and tech start-ups, coupled with an extensive network of relationships gradually and consistently built up with an array of outside advisors and technology experts, make the Kairos venture capital team a group of professionals offering unmatched support to entrepreneurs as they grow, guiding them to their goal of stock exchange listing and the performance of M&A operations.

Roberto Zanco
Roberto Zanco
Head of Alternative
Illiquid Investments
Elisa Schembari
Elisa Schembari
Kairos Ventures ESG One
Key Partner
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The Kairos Group is a signatory of the PRI, the United Nations initiative which contributes to developing a more sustainable global financial system.

ensign’ is the iconic emblem of the responsible commitment of Kairos towards a better world and its conviction that sustainable development is the business model of the future which must be implemented now.

Disclaimer

This is a marketing communication for advertising purposes for Kairos Ventures ESG One, a closed-end alternative investment fund (AIF) intended for professional investors and the other investors specified in the Offering Document (“Fund”). Please refer to the Offering Document and the Key Information Document (KID) before making any final investment decision. These documents are available in Italian on the website www.kairospartners.com and at the registered office of Kairos Partners SGR S.p.A. (“Kairos”) and placement agents, also in a paper copy. A summary of investor rights is available in Italian and English at https://www.kairospartners.com/sintesi-dei-diritti-dei-partecipanti-al-fondo-it-en/. Past performance are shown net of expenses borne by the Fund and before taxes. Past performance does not predict future returns. The investment implies a risk component, consequently, some or all of the originally invested capital may not be recovered. Exchange rates movements may affect the value of the investment and costs when expressed in a currency other than the investor’s reference currency. Information on the features of the Fund and general sustainability aspects (ESG) can be found at www.kairospartners.com/esg/, in compliance with Regulation (EU) 2019/2088. If the Fund is marketed in countries other than the country of origin, Kairos has the right to terminate the marketing agreements based on the withdrawal of notification process provided for by Directive 2011/61/EU.
The information and opinions provided herein do not constitute a public offer, nor a personalised recommendation. They do not represent a contract and are not prepared in accordance with a legislative provision, nor are they sufficient to make an investment decision and are not intended for persons residing in the United States of America or other countries in which the Fund is not authorized for marketing. The information and data are deemed correct, complete and accurate. However, Kairos does not provide any express or implied representation or warranty as to the accuracy, comprehensiveness or fairness of the data and information and, when they have been drafted by or derive from third parties, assumes no liability for the accuracy, comprehensiveness, fairness or adequacy of such data and information, although the sources used are considered to be reliable. When not specified otherwise, the data, information and opinions are to be deemed updated at the report date and may be subject to changes with no prior notice or subsequent communication. Any citations, summaries or reproductions of the information, data or opinions provided herein by Kairos must not alter the original meaning, nor can they be used for commercial purposes and must cite the source (Kairos Partners SGR S.p.A.) and the website www.kairospartners.com. Citation, reproduction and, in any case, use of the data and information of third parties it must occur, when allowed, in full compliance with the rights of the relative owners.

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