Six Key Venture Capital Trends to Watch in 2025

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With 2025 activity well under-way, the venture capital landscape is poised for a dynamic resurgence, teeming with opportunities despite lingering economic uncertainties. The global venture capital investment market is projected to reach approximately $764.78 billion by 2029, with it growing from $301.78billion in 2024 to $364.19 billion in 2025[1].

On top of that, VC fundraising activity is also expected to surpass 2024 levels in 2025 with capital to be raised for this year projected at approximately $90 billion, compared with $71 billion in 2024 through mid-November[2].

In 2025, the biggest opportunities for venture capital are in transformative technologies like artificial intelligence (AI), which is dominating investment activity. While healthcare and sustainability are also attracting attention, the expansion of AI applications into these areas is further driving investment growth. Green technologies, spurred by ESG mandates and climate-conscious investors, are gaining momentum as governments prioritise sustainability goals. Meanwhile, healthcare innovation continues to attract substantial funding, with startups focusing on digital health, personalised medicine, and biotech breakthroughs leading the charge.

For VC investors, 2025 presents a year of recalibration and opportunity, where strategic investments in high-growth sectors could yield significant returns. Here we layout the six key trends that highlights how the industry is evolving and where the focus is shifting.

1. AI investment surge

At the end of 2024, venture capital investment in artificial intelligence (AI) reached unprecedented levels. VC activity in generative AI has grown exponentially since the release of OpenAI’s ChatGPT in late 2022. In 2024, this trend reached new heights with global venture capital investment in GenAI reaching around $45 billion in 2024, up from $24 billion in 2023[3]. This momentum is fuelled by the transformative potential of GenAI across various sectors, from healthcare to finance. As AI continues to innovate and find commercial applications, venture capital is increasingly pouring into the sector, marking 2024 as a milestone year in AI investment. Read more on this trend in EY’s article here.

2. The rise of mega-deals and emerging unicorns

The proliferation of unicorns—private startups valued at over $1 billion—continues to be a focal point of venture capital activity. Globally, the number of unicorns surpassed 1,200 by May 2024[4], with some hectocorns valued at over $100 billion, such as ByteDance (the Chinese company behind TikTok)[5]. However, Europe’s unicorn herd experienced limited growth in 2024. According to PitchBook, only 14 startups in Europe reached unicorn status last year, the same as in 2023 and down nearly 70% from the peak in 2022[6].

This stagnation reflects tighter market conditions and cautious investment strategies. Nevertheless, venture capitalists are optimistic about a rebound in dealmaking and valuations in 2025, particularly driven by the thriving AI sector. Many anticipate a renewed surge of European startups crossing the €1 billion valuation threshold this year, with AI companies leading the way.

3. Healthcare innovation continues to thrive

Venture capital is pouring into healthcare innovation, with startups focused on digital health, personalised medicine, and biotech breakthroughs leading the charge. These advancements are not only improving patient care but also reshaping the future of healthcare systems globally. As the sector evolves, the intersection of AI and healthcare is expected to attract further investment, offering huge growth potential for innovative startups in 2025.

4. Momentum in green technologies

Green technologies are gaining increasing momentum, driven by ESG mandates and a wave of climate-conscious investors. With governments prioritising sustainability goals, the demand for clean energy, carbon capture, and sustainable infrastructure solutions is expected to rise sharply. As the market matures, startups in these sectors are attracting substantial venture capital, offering huge potential for growth in 2025.

5. Private wealth fuelling emerging VC firms

Private wealth is becoming an increasingly vital source of capital for emerging venture capital firms. Family offices and high-net-worth individuals are allocating significant portions of their portfolios to private markets, providing a lifeline for up-and-coming VCs. This trend is expected to continue, with private wealth set to deploy approximately $7 trillion to private markets by 2033[7]. These trends underscore the evolving nature of the VC landscape, highlighting areas where innovation and investment are converging to shape the future.

6. Channel Islands offering speed to market for VC funds

The choice of fund domicile is playing an increasingly critical role in VC fund establishment, with the Channel Islands and Luxembourg leading the way. For emerging managers, jurisdictions like Guernsey and Jersey are appealing due to their simplicity, investor familiarity, and speed to market. These jurisdictions offer a lower-cost and less administratively burdensome alternative to some European domiciles while maintaining high regulatory standards.

Guernsey, in particular, remains a premier jurisdiction for European venture capital funds. Twice as many VC funds were raised in Guernsey during 2022-2023 as compared to the next most popular jurisdiction. Its appeal lies in a responsive regulatory environment, a deep talent pool, and an ecosystem that fosters innovation.

A year of renewed optimism

This year venture capital is primed for a year of renewed optimism, with transformative technologies, healthcare innovation, and green technologies leading the way. As AI continues to dominate, sectors like biotech and sustainable solutions are seeing increasing investments, driven by both global demand and evolving market dynamics. With this backdrop, 2025 could very well be the tipping point for a new era of investment-driven transformation.

As a leading fund administrator, Belasko have deep experience supporting VC managers. Our partnership-driven approach, under-pinned by leading technology, offers end-to-end fund administration solutions tailored to support your optimal operating model. Get in touch if you’d like to discuss how Belasko can support your journey: [email protected].

[1] https://www.thebusinessresearchcompany.com/report/venture-capital-investment-global-market-report

[2] https://pitchbook.com/news/articles/vc-outlook-fund-distributions-will-rebound-in-2025

[3] https://www.ey.com/en_ie/newsroom/2024/12/venture-capital-investment-in-generative-ai-almost-doubles-globally-in-2024-as-momentum-accelerates-in-transformative-sector

[4] https://www.cbinsights.com/research-unicorn-companies

[5] https://www.forbes.com/councils/forbesfinancecouncil/2024/11/19/five-critical-venture-capital-trends-to-watch-in-2025/

[6] https://pitchbook.com/news/articles/europes-soonicorns-who-will-reach-a-1b-valuation-in-2025

[7] https://pitchbook.com/news/articles/private-wealth-offers-lifeline-for-emerging-vcs

Belasko Appoints Paul Nayar as Chief Financial & Operations Officer

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[Jersey, Channel Islands – 20 January, 2025] – Belasko is pleased to announce the appointment of Paul Nayar as Chief Financial & Operations Officer (CFOO), effective 2 January, 2025. Based in the Jersey office, Paul will play a pivotal role in driving Belasko’s strategic objectives and operational excellence.

Paul brings over 30 years’ experience in the international finance industry, with an extensive track record in senior leadership roles. Most recently, he served as Group Chief Financial Officer at Crestbridge Group, where he led the financial strategy that underpinned significant organic growth. His career also includes leadership positions at Zedra, Santander, and RBS International.

With a deep understanding of multi-jurisdictional businesses operating in dynamic global markets, Paul excels in shaping strategic agendas and delivering impactful results through a collaborative, client-focused approach.

Belasko’s CEO, Edward Green, expressed his enthusiasm for Paul’s appointment:
“We are thrilled to welcome Paul to Belasko. His wealth of experience, strategic insight, and leadership capabilities make him an invaluable addition to our team. As we pursue ambitious financial, commercial, and operational goals for 2025 and beyond, Paul’s expertise will be instrumental in elevating our platform and delivering exceptional client service through our talented people.”

Paul Nayar also shared his excitement about joining Belasko:
“I am delighted to join Belasko at such an exciting time in its journey. I look forward to collaborating with the team to build on the firm’s strong foundation and help drive its strategic vision.”

Paul’s appointment marks an exciting chapter for Belasko as the company continues to expand its footprint and innovate across its service offerings.

About Belasko

Belasko is a leading fund and fiduciary firm specialising in fund administration, corporate services, and private wealth solutions. Operating across multiple jurisdictions, Belasko delivers tailored, tech driven, high-quality services to global fund managers, high-net-worth individuals, families, and entrepreneurs.

For media inquiries, please contact:
Alice Heald
Group Head of Marketing, Belasko
[email protected]

Belasko 2024: Year in Review

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Belasko 2024: Year in Review

As the year draws to a close, our CEO Ed Green, takes a moment to reflect on Belasko’s performance and achievements in 2024.

I am pleased to report on a period of growth, innovation, and dedication across all areas of Belasko. Despite a challenging global environment, our achievements underscore the strength of our strategy, the commitment of our team, and the trust placed in us by our clients.

Strong financial performance

2024 has been another strong year for the business. We are finishing the year with significant revenue growth, reflecting a consistent double-digit compound annual growth rate (+25% over the past five years), supported by a robust operational presence across our four strategic European locations in the UK, Luxembourg, Jersey, and Guernsey. With growth being a key focus this year, we’re proud to have secured a number of significant new mandates joining the Belasko family.

As a business, we administer over $12 billion in assets reinforcing our position as a trusted partner for a global client base, backed by a dedicated workforce of over 120 talented professionals.

Continuing to build our technology and people platform

Belasko’s commitment to innovation and excellence remains at the forefront as we strengthen both our technological capabilities and our people-first approach.

This year, we launched our Belasko Client Portal, marking a transformative step in how clients access and manage their investments. The portal offers a seamless and secure digital experience, reaffirming our dedication to delivering cutting-edge solutions that simplify and enhance client interactions.

We’ve also made strategic investments in strengthening our team with notable hires in extending our fund accounting, technological innovation and marketing capabilities, bringing fresh perspectives and expertise to support our growth. These additions underline our focus on cultivating talent and ensuring that our workforce remains a driving force behind our success.

Moreover, we are proud to be advancing towards ISAE 3402 accreditation, a testament to our unwavering commitment to operational excellence, governance, and trust.

A people-first approach

At the heart of Belasko’s success is our people. This year, we’ve achieved a high retention rate of 84% highlighting that we continue to be a workplace where employees feel valued and supported.

The launch of our People & Culture Taskforce has further strengthened our internal community and has helped foster engagement, encourage collaboration across offices, and champion work-life balance initiatives. Among these was the STEPtember challenge where our teams logged an impressive 10.7 million steps – the equivalent of walking from London to Hong Kong! Beyond the numbers, it reinforced a spirit of camaraderie and promoted physical and mental well-being.

We’ve strived to continually support our team, enhancing employee benefits and introducing some additional initiatives aimed at improving work-life balance such as Flexi-Fridays and birthday holiday allowance.

Through our Belasko in Society initiative, we also focused on giving back. Partnering with Magic Breakfast, we raised funds equivalent to providing 285 weeks of breakfasts to a child or meals for 65 children for one month, supporting young learners in need.

Together, these efforts underscore Belasko’s dedication to being a people-first organisation.

Reaching new milestones

This year saw the opening of our London office, a significant step forward in our growth journey and a reflection of our ambition to grow alongside our clients.

Commitment to sustainability

Belasko’s commitment to sustainability remains a cornerstone of our operations. Our 2023 Sustainability Report, developed with Terra Instinct, highlighted key achievements, including maintaining low carbon emissions as part of our efforts to reduce our impact on the planet. With a workforce that is 49% female, we continue to champion diversity and inclusion while striving to minimise our environmental footprint.

Enhancing visibility in the market

Belasko’s presence and influence in the industry have grown significantly this year, thanks to strategic partnerships and active participation in key events and associations.

Our partnership with the BVCA has been a cornerstone of this strategy. By sponsoring three of their flagship events, including the Annual Summit and the Tax Policy Conference, we’ve positioned ourselves alongside leading voices in the private equity and venture capital space. This collaboration has provided invaluable opportunities to connect with industry leaders, showcase our expertise, and contribute to shaping discussions on critical topics impacting the sector.

We have actively engaged with local industry associations in Jersey, Guernsey, and Luxembourg, staying ahead of market trends and regulatory changes while strengthening our networks and sharing insights.

Belasko are also proud to have recently been awarded the Channel Islands Wealth Briefing Award for Client Lifecycle Management. This recognition reflects the success of our innovative approach to supporting clients through every stage of wealth creation, preservation, and transition.

Looking ahead to 2025

As we look to the future, I am excited about the opportunities that lie ahead. Our growth trajectory is hugely promising, and we are eager to expand our reach and capabilities while maintaining the high standards of service that define Belasko. Together, we will continue to build on our success, delivering exceptional value to our clients and stakeholders in 2025 and beyond.

Navigating the future: end of year reflections and expectations for the private capital markets in 2025

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As 2024 comes to a close, the private capital fund industry stands as a cornerstone of the global economy, having grown exponentially over the past decade. Today, private markets account for a significant portion of global financial activity, and in 2025, their AUM is projected to reach up to $15 trillion[1].

This growth trajectory underscores the critical role private markets play in financing businesses, driving innovation, and generating returns for investors across the globe. The sector’s ability to raise and deploy capital efficiently, even amidst volatile market conditions, demonstrates its resilience. In 2024, despite macroeconomic challenges and geopolitical uncertainties, private capital provided essential liquidity and investment across a spectrum of opportunities, including secondary markets, private credit, and venture-backed start-ups.

However, regulatory reforms, ESG priorities, liquidity pressures, and geopolitical developments have redefined the operating environment. As we reflect on 2024, we see a year of transformation that has set the stage for private markets to adapt, innovate, and remain a vital force in the global economy heading into 2025.

A year of political turbulence

Leadership transitions

The political environment in 2024 was defined by seismic changes. In the UK, the Labour government’s ascent marked a shift toward fiscal tightening and tax reforms aimed at addressing public sector deficits. Across the Atlantic, Donald Trump’s re-election as U.S. President introduced uncertainties around trade and foreign policy. These leadership transitions underscore the interplay between politics and private markets, as fund managers and investors brace for policy decisions with global implications.

Goldman Sachs predicts that the U.S. administration’s proposed tariffs will weigh heavily on Eurozone growth, particularly as trade policy uncertainty disrupts cross-border flows[2]. Combined with the Labour government’s reformist agenda in the UK, private markets must remain vigilant and flexible as they navigate a time of change.

Carried interest: A new taxation era in the UK

Under the Labour government, the carried interest regime will transition from being taxed as capital gains to trading income, a move designed to align taxation norms with global benchmarks. The capital gains tax hike to 32% adds another layer of complexity, particularly for non-UK residents providing services to UK-based funds. The regime change will place the UK with one of the highest tax rates in respect of carried interest across the global and will require careful consideration by private capital managers.

Liquidity and fundraising: evolving strategies in challenging conditions

Challenges in fundraising

The fundraising environment remained difficult throughout 2024. The number of new funds dropped by 24% to 189 form the second quarter to the third quarter – but deals and exits are starting to show some stability[3] as we point toward 2025. Demand for credit funds, particularly those offering evergreen structures with predictable cash yield, have continued to grow, driven by investors seeking safe havens amid volatile equity markets.

Secondary markets and liquidity tools

Secondary markets gained unprecedented traction, supported by an expanding suite of liquidity platforms. The market now boasts over 25 platforms, enabling fund managers to provide enhanced liquidity options to investors. These tools are particularly valuable in navigating constrained capital conditions, offering fund managers greater flexibility while aligning with investors’ liquidity needs.

In the first half of 2024, GP-led transactions accounted for $31 billion, making up 43% of the total secondary market volume[4]. This reflects a 94% increase compared to the same period in 2023, driven by strong demand for continuation funds and the adoption of GP-led structures by sponsors seeking liquidity for LPs and extended holding periods for valuable assets​.

Unlocking pension fund capital

Pension fund reforms remain a hot topic, particularly in the UK. Defined contribution (DC) schemes face structural barriers in allocating to private capital due to liquidity constraints and valuation complexities. However, innovative managers aligning their strategies with these requirements stand to unlock significant capital flows and solving these issues may be critical to maintaining the UK’s competitiveness in private markets.

Geopolitical spotlight: regional dynamics in private capital

All of the key European fund domiciles offers excellent coverage across all investment strategies however we have highlighted some of the key themes specific to each jurisdiction that we have observed this year.

Jersey: a gateway for global investment

Jersey’s reputation as a strategic hub for cross-border fund structuring continues to grow. The island has positioned itself as a key conduit for Asian investment into Europe, supported by strong regulatory frameworks and a global connectivity strategy. Jersey continues to apply a focus towards U.S. managers for launching funds aimed at European markets, underscoring its importance as a gateway jurisdiction.

In addition, investor demand for tokenisation is increasing as investors seek more control and transparency over their assets. Tokenisation allows for the fractionalisation of assets, enabling investors to access opportunities traditionally reserved for larger institutional players. In 2021, the sector stood at around US$1.9bn, growing to US$2.8bn in 2023 and US$3.45in 2024 so far. Aggregated, assets currently stand at around US$13bn with the expectation that the sector will rise into the trillions (USD) by 2030[5].

Guernsey: innovation for venture and buyouts strategies

Guernsey remains the premier jurisdiction for European venture capital (VC) funds, with twice as many funds raised in Guernsey during 2022-2023 as compared to the next most-popular jurisdiction[6]. Leveraging its broad diversity of experience and skills, whilst offering familiarity to managers and investors, Guernsey is an ideal jurisdiction for new managers looking to launch a first-time, spin-out or buyout venture fund. Its appeal lies in a responsive regulatory environment, a deep talent pool, and an ecosystem that fosters innovation. Similarly to Jersey, Guernsey recognises the role that tokenisation could play in improving efficiency with capital markets[7].

Luxembourg: growth through private debt

Luxembourg solidified its role as a hub for private debt funds in 2024, with credit sublines playing a pivotal role in optimising IRRs and portfolio management flexibility. As borrowing costs rise, fund managers are leveraging these facilities to balance NAV growth with capital efficiency. Looking ahead, private debt strategies remain critical, offering resilience in a high-rate environment.

ESG: A rebounding priority

Despite a cooling in ESG fundraising during 2023, 2024 has seen a resurgence globally, with $55 billion raised by April alone[8], signalling renewed investor interest. ESG strategies are increasingly viewed as a means of balancing returns with risk mitigation, given their lower performance variance compared to non-ESG funds.

With ESG AUM projected to reach $33.9 trillion globally by 2026[9], fund managers must continue integrating sustainable practices to attract investor capital and align with regulatory expectations.

Operational excellence: scaling for success

Fund managers face increasing pressure to scale their operations without sacrificing efficiency. Collaboration with third-party fund administrators has become essential, allowing managers to streamline compliance, reporting, and deal execution processes. This approach enables fund managers to focus on value creation while mitigating operational bottlenecks—a critical consideration for scaling venture and private equity funds.

This year, we released a whitepaper which addressed how outsourced models are changing.  Whilst managers face increasing pressures to enhance performance, reduce costs and manage risks effectively, we share how partnering with expert providers, like us, you can simplify administration solutions for your business. Read the whitepaper here.

A bearish outlook for 2025

While modest growth is expected for the private capital industry in 2025, the path ahead isn’t expected to be without challenge despite interest rate cuts, particularly in the U.K. and U.S., could provide much-needed relief to fund managers and investors. According to Goldman Sachs[10], the U.S. economy is expected to see a 2.5% growth in GDP, beating expectations. However, this positive growth is likely to be offset by geopolitical tensions, such as the ongoing effects of trade policy uncertainty linked to U.S.

Changes in tax regimes are likely to influence investor behaviour and could impact deal flow and fund strategies. This combined with global economic uncertainties, will require private capital fund managers to adjust quickly and embrace a more agile operational model.

For fund managers, adaptability will be key. Embracing technology, integrating ESG considerations, and refining operational models will position firms for success in an environment that demands innovation and resilience. As private capital markets evolve, opportunities will emerge for those who can navigate the complexities of 2025 with flexibility and foresight.

As a leading fund administrator, Belasko remains committed to supporting our clients in navigating any change or uncertainty that 2025 may bring, as well as offer tailored solutions to help fund managers thrive and avail of new opportunities on the horizon. To discuss in more detail, please reach out to Nick McHardy, our head of funds, at: [email protected].

[1] https://www.spglobal.com/en/research-insights/market-insights/private-markets

[2] https://www.goldmansachs.com/insights/goldman-sachs-research/macro-outlook-2025–tailwinds–probably–trump-tariffs

[3] https://www.preqin.com/insights/research/quarterly-updates/q3-2024-private-equity#:~:text=Q3%20proves%20we%20are%20in,and%20exits%20are%20showing%20stability.&text=Download%20PDF-,Q3%20proves%20we%20are%20in%20a%20more%20challenging%20fundraising%20environment,and%20exits%20are%20showing%20stability.

[4] https://www.blackrock.com/institutions/en-us/insights/market-update-h2-2024

[5] https://www.jerseyfinance.je/news/investor-demand-for-control-will-drive-tokenisation-agenda-but-education-and-collaboration-are-key/

[6] https://www.guernseyfinance.com/industry-resources/news/2024/venture-capital-trends-guernsey-takes-the-lead/

[7] https://www.guernseyfinance.com/industry-resources/news/2024/gfsc-policy-statement-approach-to-fund-tokenisation/

[8] https://www.preqin.com/esg/esg-in-alternatives

[9] https://www.pwc.com/gx/en/news-room/press-releases/2022/awm-revolution-2022-report.html

[10] https://www.goldmansachs.com/insights/goldman-sachs-research/2025-us-economic-outlook-new-policies-similar-path

Resilience and innovation in private markets amid economic shifts

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What are the pressing issues and emerging trends across the private markets as we fast approach the end of the year?

At an event last week, Greg McKenzie, our Luxembourg Country Head, shares insights into the latest trends shaping the Luxembourg funds market and his observations of the sector’s strong resilience and its ability to innovate amid ongoing economic changes and uncertainty.

The Luxembourg market continues to lead in responding to challenges such as rising borrowing costs, real estate pressures, and evolving LP demands. In this article, he reveals how fund managers and investors are leveraging new strategies to navigate these hurdles while positioning themselves for growth in 2025.

Credit sublines: adapting to rising costs with strategic value

Credit sublines have cemented their role as a critical tool for fund managers, even as borrowing costs rise. These facilities help funds grow net asset value (NAV) without frequent capital calls, optimising internal rate of return (IRR) and providing greater flexibility in portfolio management.

Looking ahead, there is cautious optimism for 2025 as credit strategies remain vital despite rising borrowing costs. Fund managers are adapting by renegotiating terms, exploring alternative structures, and leveraging data to optimise cash flow and returns.

Credit lines continue to provide liquidity and flexibility, allowing managers to focus on long-term goals while delaying capital calls to enhance IRR metrics. Anticipated interest rate easing further bolsters confidence, positioning credit strategies for growth in a shifting market.

Fundraising and LP engagement: still tough times

The fundraising environment remains challenging, with institutional investors favouring established relationships over new partnerships. LPs are consolidating commitments with known GPs, reflecting a cautious approach in the face of ongoing economic uncertainty.

Another dynamic impacting the market is the retention of assets post-COVID. Many assets remain held within portfolios, delaying returns of capital to LPs and reducing their ability to redeploy into new opportunities.

Despite these challenges, LPs are shifting toward more global mandates, seeking to diversify their portfolios across broader geographies rather than sticking to regional allocations. This pivot is creating new opportunities for GPs to align their strategies with a more global investment thesis.

Real estate: navigating change and seizing opportunities

The real estate sector continues to face disruption, with letting issues in commercial real estate weighing on valuations and investor confidence. However, some challenges are also creating opportunities:

  • Fixed-term maturities: Assets with maturing fixed-term debt may push reluctant sellers into the market, creating potential for opportunistic buyers.
  • Closing the buyer-seller gap: The valuation mismatches seen post-COVID are narrowing, paving the way for increased transaction activity and exits.
  • Impact of rate drops: Anticipated reductions in interest rates could drive value increases across certain real estate assets, boosting market momentum.

Notably, credit within real estate is gaining clarity as a distinct allocation bucket for LPs, separating it from traditional real estate or equity classifications. This evolution is helping investors make more informed decisions about their portfolios.

Innovations in NAV lending

The NAV lending market is evolving rapidly, with new structures and strategies enhancing its appeal. Traditional SPV lines remain prevalent, offering mechanisms for funds and lenders to manage default events effectively.

Segmentation is also becoming more pronounced, with lenders aligning their expertise to specific asset classes, such as buyouts, private equity, infrastructure, and credit. This targeted approach is improving due diligence and aligning financing strategies with sector-specific risks.

In addition, a more entrepreneurial attitude is emerging in fund lending. High-net-worth individuals (HNWIs) are increasingly being engaged as part of broader investor pools, signalling a shift toward diversification in funding sources.

Looking ahead: optimism for 2025

Despite a tough fundraising environment and ongoing pressures in real estate, there is cautious optimism for 2025. Anticipated rate reductions, narrowing valuation gaps, and the ongoing evolution of credit strategies are likely to drive momentum across private markets.

With approximately 90% of funds now using call facilities, the Luxembourg market is maturing and adapting to a more complex environment. The industry is seeing increased competition and participation, underscoring the importance of robust due diligence and innovative approaches to capital deployment.

As private markets continue to evolve, collaboration between fund managers, LPs, and lenders will be key to navigating the challenges and seizing the opportunities that lie ahead.

For more insights or to discuss these topics further, please get in touch with Greg McKenzie ([email protected]).

Strategic philanthropy: enhancing impact through private wealth providers

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In today’s complex financial landscape, philanthropy is becoming an essential component of wealth management for high-net-worth individuals (HNWIs). By integrating philanthropic goals with financial planning, individuals can make a significant social impact while strategically managing their wealth. However, navigating the intricacies of charitable giving requires expertise and guidance, making the role of a private wealth provider increasingly vital.

The growing importance of philanthropy in wealth management

Philanthropy is not just about donating money; it’s about creating a sustainable impact that aligns with personal values and long-term financial goals. According to a 2023 report by the Charitable Giving Foundation, charitable contributions from HNWIs have increased by 12% over the past five years, indicating a growing trend towards philanthropic engagement among the wealthy. A 2022 study by UBS found that 72% of HNWIs consider philanthropy an integral part of their wealth management strategy, reflecting a shift in mindset toward more purposeful giving. As the desire to give back grows, so does the need for professional support in navigating the complexities of charitable activities.

Additionally, the Global Wealth Report highlights that the number of family foundations has increased by 60% over the past decade, underscoring a trend towards structured philanthropic giving. These statistics show that more individuals are not only looking to donate but are also interested in creating long-lasting, impactful legacies through their wealth. This growing importance of philanthropy in private wealth management necessitates the expertise of a third-party private wealth provider to ensure that charitable goals are achieved effectively and strategically.

Integrating charitable goals into wealth management

While the benefits of philanthropy are clear, HNWIs often face several challenges in integrating charitable giving into their wealth management plans:

Complexity in aligning philanthropic goals with financial strategies

Crafting a philanthropic strategy that aligns with personal values and financial goals requires careful planning and expertise. Many high net worths struggle to balance their desire to give back with the need to maintain financial stability and growth. Partnering with an expert provider can provide expertise in crafting bespoke giving plans that maximise impact while optimising tax benefits.

Regulatory and compliance challenges

Different jurisdictions have varying rules on charitable giving, making it difficult to ensure compliance across borders. This complexity can deter HNWIs from engaging in philanthropic activities or lead to unintentional non-compliance. A private wealth provider ensures that all philanthropic activities comply with relevant laws and regulations, minimising risks and enhancing the efficiency of charitable contributions.

Effective impact measurement

Determining the effectiveness of charitable contributions is often challenging. HNWIs need to ensure that their donations are making a meaningful difference and align with their philanthropic goals. Expert providers like Belasko can offer robust tools for impact measurement and reporting, allowing clients to assess the effectiveness of their philanthropy and adjust strategies as needed.

Family involvement and governance

Engaging multiple family members in philanthropic activities can be both rewarding and challenging. Clear communication and governance structures are needed to ensure alignment and avoid conflicts.

The role of a private wealth provider in philanthropy

A structured approach to philanthropy is crucial when integrating charitable goals into your wealth management. This can be effectively managed with the support of an expert, reputable private wealth provider. From establishing charitable foundations to ensuring compliance with tax regulations, they can offer tailored solutions that address the unique challenges faced by ultra and high net worth individuals in their philanthropic endeavours.

Working with a partner like Belasko

At Belasko, we offer a comprehensive suite of private wealth services tailored to the unique needs of HNWIs, from strategic planning to compliance support and impact measurement.

We help ensure that your philanthropic efforts are impactful, sustainable, and aligned with your broader wealth management strategy.

For more insights on how to incorporate philanthropy into your wealth management plan, get in touch with Andy Bailey ([email protected]) and find out how we can help you maximise the impact of your charitable giving and achieve your philanthropic goals with confidence.

Private markets in transition: Fundraising, ESG, and tech trends from ALFI 2024

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The ALFI Private Assets Conference in Luxembourg brought together industry experts to discuss the latest trends and challenges in private assets. Greg McKenzie, Country Head of Luxembourg, and John Russell, Director, share some of their key takeaways from the event.

  1. Market trends:

The fundraising environment remains challenging, with asset managers tightening strategies as they navigate market uncertainty. Whether launching their seventh or first fund, asset managers are dealing with a more concentrated market and a global decline in IPO activity.

Europe remains cautious, particularly due to the potential impact of the upcoming U.S. elections. Despite these challenges, the CSSF continues to support a pro-business and pragmatic approach, modernising regulations to adapt to market needs. Luxembourg’s clear regulatory framework, combined with its strong interconnected funds ecosystem, continues to cement its position as a favoured jurisdiction, with practical tax structures like no VAT on management fees.

  1. NAV financing:

NAV (Net Asset Value) financing is gaining traction in the private equity space, providing flexibility for managers with the capacity to underwrite credit and assess underlying performance. NAV financing enables quicker access to liquidity at the fund level and is a useful tool for deleveraging portfolio companies and freeing up liquidity for operational and capital expenditures.

  1. Fundraising insights:

The fundraising landscape is undergoing several shifts:

  • Secondaries and private debt are becoming more prominent, fuelled by rising interest rates and changing investor preferences.
  • A shift toward retail investors is evident, albeit still quite slow, with products like ELTIFs and UCI Part IIs becoming more popular, though UCI Part II is restricted to semi-professional investors. Family offices are also very active in this space.
  • Listings are increasingly important, enabling asset managers to target a broader investor base. This supports the movement toward “deretailisation,” focusing on high-net-worth individuals and institutional capital over retail investors.

Preqin’s “Alternative 2029” report predicts a slowdown in the growth of alternative assets under management (AUM) until 2029, but private equity, infrastructure, and private debt are expected to grow significantly. European private capital fundraising is also expected to rise by 2026.

  1. ESG and greenwashing:

The discussion around ESG evolved from greenwashing (overstating sustainability claims) to greenhushing (downplaying ESG initiatives to avoid scrutiny). This shift reflects a growing focus on delivering real accountability rather than ticking boxes.  According to a 2022 report by PwC, nearly 90% of investors believe that corporate sustainability reports contain greenwashing.

Greenwashing concerns have been a focus of regulatory action, with firms like Deutsche Bank’s DWS agreeing to pay the SEC $19million to settle charges of greenwashing. As a result, sustainable assessments need to be embedded from the outset, capturing the right data to meet material risk requirements.

The biggest challenge lies in collecting and integrating reliable, complete data to support ESG initiatives. Private markets have a key advantage over public markets in this area, as private investors can directly influence data requirements by sitting on boards and defining the parameters for sustainability reporting.

  1. The role of technology and data in private assets:

Technology is playing an ever-larger role in asset management. The rise of Artificial Intelligence (AI) in analysing data, alongside the global push for regulatory convergence, is expected to shape future developments. There is growing pressure on fund administrators to meet investor demands for transparency and scalability, with fund of funds investors particularly focused on look-through reporting.

  1. Digital assets and Luxembourg’s regulatory flexibility:

Luxembourg’s regulator has demonstrated flexibility and bravery in supporting digital assets, providing clear regulatory frameworks that allow this asset class to flourish. This proactiveness aligns with Luxembourg’s interconnected funds ecosystem, ensuring that digital assets can integrate into traditional financial structures with ease.

  1. Future outlook:

As the private markets sector continues to evolve, we can expect significant advancements in AI-driven data analysis and regulatory alignment on a global scale. Product innovations are likely to follow in the coming years, with enhanced tools for capturing and managing sustainable investments.

This year’s conference underscored the importance of adaptability, particularly in navigating a challenging fundraising landscape, leveraging technology for growth, and integrating ESG considerations into long-term strategies. Asset managers will need to embrace innovation and remain proactive in meeting evolving investor demands.

Belasko in Luxembourg provides tailored, personalised fund services and our team has extensive experience in servicing global private capital firms. We excel in managing complex AIFs and holding structures, offering comprehensive end-to-end fund administration and corporate services.

With a deep understanding of the Luxembourg regulatory landscape, we offer a reliable and proactive service, underpinned by leading technology, to help clients navigate the complexities of private capital investments with confidence.

Get in touch with Greg McKenzie ([email protected]) or John Russell ([email protected]) to discuss how we can support setting up your next fund in Luxembourg.

     

Transferring a trust to a new trustee: A strategic option for HNWIs

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An essential wealth transfer tool for any high net worth family is ensuring the effective management of a family trust, preserving your legacy, and ensuring that future generations benefit from your foresight. However, there may come a time when the trustee originally appointed is no longer the best fit for your evolving wealth management needs. Transferring a trust to a new trustee can be an efficient and strategic move to ensure that your assets are managed in line with your objectives.

In this article, Andy Bailey, Head of Private Wealth, explores why and how to transfer a trust to a new trustee, the benefits it offers, and what high net worth individuals (HNWIs) should consider throughout the process.

Why transfer a trust to a new trustee?

Trusteeship is an integral part of managing complex wealth, and while trustees are bound by a fiduciary duty to act in the best interests of the beneficiaries, circumstances often change. Whether due to shifting financial goals, personal relationships, or the evolving complexity of wealth management, HNWIs may find it beneficial to appoint a new trustee. Here are some common reasons:

  • Sophistication and expertise in asset management

HNWIs often have diverse portfolios that include not only liquid assets like stocks and bonds but also real estate, private equity, art collections, or even family businesses. The expertise required to manage these assets effectively can be highly specialised. If the current trustee lacks the necessary skills or experience, especially in global investments or niche assets, it may be time to seek out a trustee with more appropriate expertise.

  • Better personal service and engagement

Trustees are not just financial managers; they play a significant role in stewarding wealth for future generations. For HNWIs, having a trustee who understands their unique financial goals and family dynamics is critical. If the current trustee lacks responsiveness moving to a trustee who provides a more personalised, high-touch service can lead to greater satisfaction and trust in the management of the assets.

  • Jurisdictional and regulatory advantages

With the global mobility of HNWIs, you or your beneficiaries may have moved to a new country with different tax laws and regulatory frameworks. Transferring your trust to a trustee who understands jurisdictional obligations when it comes to tax and regulation and can help simplify compliance with local laws can be hugely advantageous.

  • Changing family or business circumstances

As families grow and their financial needs evolve, trustees must adapt to new circumstances. If your family has expanded or there are new business ventures to consider, the existing trustee may no longer be the best fit. A trustee with experience in intergenerational wealth transfer or managing family-owned businesses might offer better solutions for your family’s evolving financial landscape.

  • Market consolidation and continuity concerns

The trust market is seeing significant consolidation, with many trustees being acquired by larger firms, leading to disruptions in service quality and a loss of personal relationships. For HNWIs seeking stability and consistent service, moving to a trustee that is independently/family-owned can provide long-term continuity and a more personalised relationship management approach. These trustees often have a vested interest in maintaining strong, lasting client relationships.

The process of transferring a trust is easier than expected

For HNWIs, the prospect of transferring a trust may seem like a complex endeavour, but the process can be straightforward, especially with the right advisors. Here’s how it generally works:

  1. Review the trust deed and legal requirements: Consult the trust deed to understand the terms governing trustee replacement. Most trust deeds include provisions that outline the process for appointing a new trustee. Some may require the consent of beneficiaries or a protector, while others may provide broad discretion to the settlor.
  2. Consult advisors and stakeholders: Before making any decisions, it is essential to consult with your legal, tax, and financial advisors. They will help assess any potential legal or tax implications of moving the trust to a new trustee, particularly if the transfer involves cross-border assets or multi-jurisdictional considerations.
  3. Appointing the new trustee: Choosing a new trustee is arguably the most important step. For HNWIs, the decision should be based on a trustee’s ability to manage complex asset structures, their understanding of global markets, and their approach to family governance and succession planning. Boutique trust companies are often preferred by wealthy individuals because they offer a higher level of service and a bespoke approach.
  4. Prepare the legal documentation: Once the new trustee has been selected, a Deed of Retirement and Appointment will need to be drafted to formalise the transition. This document specifies the outgoing trustee’s resignation and the appointment of the new trustee. Your legal advisors will ensure that all documentation is in order and compliant with the trust deed and local laws.
  5. Transferring assets: Transferring the trust’s assets to the new trustee may require coordination with financial institutions, asset managers, or other parties to ensure a seamless transfer. Additional steps may be required if assets are in different jurisdictions to comply with local laws or regulations.

Key considerations for High Net Worth Individuals

As with any significant financial decision, there are several important factors to keep in mind when considering a transfer of trusteeship:

  • Legal and tax implications: A transfer can trigger tax liabilities, especially in cross-border cases, so consult tax professionals to plan accordingly.
  • Trustee reputation: Ensure the new trustee has the expertise and reliability to manage large estates as well as a consistent and responsive approach to relationship management.
  • Long-term flexibility and stability: You want a trustee who can evolve with your financial and family circumstances over time. Choose a trustee who can adapt to changing circumstances and family dynamics and have a solid ownership structure behind them.
  • Costs of the transfer: Weigh legal fees and transfer costs against the long-term benefits of appointing a more capable trustee. At Belasko, we can make the transition seamless, fill any gaps you’re experiencing with your existing trustee, at a competitive cost.

A strategic move for wealth preservation

For high-net-worth individuals, transferring a trust to a new trustee can be a strategic decision that enhances the management and protection of wealth. Whether you are seeking better expertise, more personalised service, or a trustee with jurisdictional reach, the process of transferring trusteeship is easier than many might think.

As an independently owned business, our private wealth team are reliable, experienced and provide continuity and longevity in building relationships. Our bespoke private wealth solutions draw on the many years’ experience of managing the needs of HNWIs. We collaborate with your advisors, act as professional trustees, and ensure effective management and administration of the trust. We can ensure a seamless and smooth transition of your trust, at a minimal cost, which will also be a valuable step toward safeguarding your legacy for generations to come.

If you’d like to discuss transferring your trust, get in touch with Andy Bailey ([email protected]).

Sustainable Finance: How ESG is Shaping the Future of Investment

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ESG has fast become one of the better-known acronyms in financial services, continuing to dominate news headlines. As a result of this, buyers of goods and services are now differentiating where they allocate capital and prioritising businesses pushing to make a difference. This has shifted ESG and sustainable finance from just buzzwords to critical components of the financial landscape.

Despite a cooling in ESG fundraising to $91 billion globally in 2023, there has been a notable resurgence in 2024, with $55 billion raised by April alone[1]. This rebound highlights the sustained interest and commitment to ESG principles among investors and fund managers. And, according to PwC, analysts expect ESG AUM to reach c20% of Global AUM or $33.9trn by 2026 ($18.4trn 2021).

Interestingly, while the performance difference between ESG funds (13.5% IRR) and non-ESG funds (15% IRR) is not significant, ESG funds tend to exhibit lower variance. This lower risk profile can be appealing to investors seeking stability. Moreover, six out of ten investors have either rejected an attractive investment opportunity or would do so based on ESG concerns, underscoring the growing importance of these factors in investment decisions[2].

Ross Youngs, Chief Commercial Officer at Belasko, identifies how ESG is shaping the future of investment, the impact on our clients and the business’ proactive approach to lead the way.  

How are our clients impacted? 

Our fund clients experience varying degrees of impact from ESG, largely influenced by their size and marketing strategies. Many clients share our proactive stance and have generally adopted two distinct approaches based on the level of regulation required:

  1. The Sustainable Finance Disclosure Regulation (SFDR): A key regulatory framework in the EU that governs the transparency and reporting of sustainability-related information by financial market participants.
  2. The Principles for Responsible Investing (PRI): Where SFDR has not been relevant, our clients have chosen voluntary compliance with the PRI which provides a set of ESG principles designed to foster a positive, sustainable impact within the global financial system.

Unpacking the SFDR 

There are three levels of regulation applicable to funds marketed in Europe under the SFDR:

  • Article 9: These funds are dedicated to achieving specific sustainable objectives. They have strict requirements on how they achieve their goals. There has been a great deal of focus on this category of fund with rigorous evidential reporting. Due to these high standards, about 40% of Article 9 funds, representing $175 billion, have reclassified to Article 8.
  • Article 8: These funds promote positive environmental, social, and governance characteristics without necessarily having them as their primary objectives.
  • Article 6: This category includes funds that do not integrate sustainability considerations into their investment strategies.

These three levels of regulation serve as stepping stones depending on where the business or fund is on its ESG journey.

How has ESG impacted Belasko?  

At Belasko, we recognise the significant benefits of incorporating ESG into our business strategy. Although we’re not legally required to report on sustainability, we’ve taken a proactive approach in doing so by partnering with Terra Instinct to develop a Responsible Business Policy. This initiative includes forming a group-wide committee, defining relevant sustainable metrics relevant to our business, setting targets, and publishing an annual report on our ESG journey for clients and investors.

We anticipate that mandatory ESG reporting will become a reality for businesses like ours in the coming years. To stay ahead, we’re committed to being leaders in this space, continuously taking proactive steps to lead the way.

How can we help you?  

No matter the complexity of compliance with the PRI or SFDR, there are common challenges that we can support you with.

  1. Defining a policy of responsible investment: The policy must consider the fund’s impact on ESG factors and establishing data points to measure and track positive impact according to the goals set.
  2. Data collection: While it may seem straightforward, data collection is not standardised across markets and countries so the sophistication and resource availability of portfolio companies to stream up the data sets can vary considerably.
  3. Regulation and investor demand: With both evolving rapidly, our clients often lack the internal ESG resources to stay compliant therefore relying on Belasko to keep them informed.

We have developed an end-to-end solution in partnership with Terra Instinct to power auditable data collection. Terra Instinct are specialists when it comes to defining policy and collecting and validating data, as well as providing reasonable industry estimates where data is not available. The expertise of advisory specialists is crucial in ensuring data quality, which, in turn, ensures accurate and reliable reporting for investors.

Moving forward

It’s evident that ESG is here to stay, with a growing market expectation for sustainability considerations in both our personal and business lives. Adopting positive-impact principles is essential for future success.

If you’re looking to prepare for the future of ESG, get in touch with Ross Youngs at [email protected].

[1] Preqin, “ESG in Alternatives 2024” [Source: https://www.preqin.com/insights/research/reports/esg-in-alternatives-2024?chapter=sample]

[2] Preqin, “ESG in Alternatives 2024” [Source: https://www.preqin.com/insights/research/reports/esg-in-alternatives-2024?chapter=sample]

Outsourced Models are Changing: Executive Summary

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Nick McHardy, our Head of Funds, recently shared his insights on enhancing performance by developing and improving operating models in our ‘Outsourced Models are Changing’ series. As a refresh, you can read back over those articles here:

  1. A response to marketing conditions
  2. Four value drivers that underpin an operating model review
  3. Considerations when changing your operating model
  4. Same scope of services, different outcome

Across the four articles, we covered the evolving nature of outsourced models in the private capital fund industry, emphasising the current need for fund managers and general partners (GPs) to reassess their outsourcing arrangements due to market conditions, technological advancements, and changing investor expectations.

Historically, significant adjustments to outsourcing models have coincided with market downturns, such as the post-Global Financial Crisis era. Today, challenging fundraising conditions and the emergence of alternative service providers with advanced technology and tailored services are prompting another wave of operating model reviews.

Key value drivers for reviewing and potentially changing operating models include cost reduction, operational effectiveness, risk management, and enhancing the investor experience. Fund managers have two main routes: insourcing activities previously outsourced or increasing their existing level of outsourcing.

Critical considerations in this process include regulatory permissions, expertise and resourcing, opportunity costs, systems and data strategy, risk management, relationship dynamics with service providers, contractual obligations, and the timeframe for onboarding additional services.

As we conclude the series, it’s clear that even without changing the scope of outsourced services, fund managers can achieve improved outcomes through tender processes, feedback mechanisms, and technology solutions. Ultimately, adapting outsourced models can enhance performance, reduce costs, and improve service quality, making it potentially beneficial to switch to a new fund administrator in order to achieve long-term growth.

Belasko offer tailored, full scope fund administration, focused on delivering the highest quality solutions across the entire fund lifecycle and across multiple asset classes. We’ve worked closely with our clients on developing and improving their operating models to enhance their performance. If you’d like to discuss further, get in touch with Nick McHardy, Group Head of Funds at [email protected].