In the latest episode of Conversations on the Couch, our Managing Director Raymond Pecotic sat down with Phil Cummins, Senior Managing Director in the Venture Capital team at StepStone Group, to explore the evolving role of venture capital in modern portfolios.
The conversation highlights several structural shifts that are reshaping how investors access innovation and growth.
Venture capital is a “power law” asset class
Unlike many traditional asset classes, venture capital returns are highly concentrated.
According to Cummins, roughly 90% of returns are driven by just 10% of companies. This phenomenon, often referred to as power law dynamics, means that a small number of breakout companies generate the majority of value.
As a result, access to the right venture managers and the right opportunities becomes critical.
The rise of private markets
One of the most significant trends in the investment landscape is the lengthening lifecycle of private companies.
Two decades ago, technology companies typically remained private for only three to four years before listing on public markets.
Today, companies can remain private for eight to ten years or more, raising substantial capital from private investors and scaling into multi-billion-dollar businesses before ever considering an IPO.
This shift means that much of the value creation that once occurred in public markets now happens within private markets.
For sophisticated investors relying solely on public equities, this can mean missing out on a large portion of the growth journey.
A different approach to venture exposure
The StepStone Spring portfolio focuses on companies that have already reached a meaningful scale.
Rather than investing in early-stage startups, the strategy targets businesses that have:
- Established product-market fit
- Demonstrated revenue growth
- Begun scaling operations
Many of these companies generate more than US$100 million in annual revenue.
A key tool used to access these opportunities is the venture secondary market, which allows investors to acquire stakes in established private companies or venture funds.
Innovation beyond the AI headlines
Artificial intelligence continues to dominate technology discussions, but Cummins emphasised that AI is only one part of a broader transformation.
The shift toward AI is enabling innovation across multiple industries, including robotics, advanced manufacturing, healthcare, defence technology and space.
According to Cummins, the industry may still be in the early stages of this technological cycle.
Accessing private market opportunities
The discussion also explored how strategies such as the StepStone Spring Fund form part of EmpireBLACK, a portfolio solution developed for our sophisticated and ultra-high-net-worth investors seeking exposure to private markets.
As private markets continue to expand and innovation increasingly occurs outside public exchanges, venture capital is becoming an important tool for investors seeking long-term growth and access to emerging technologies.
