Exploring the Venture Growth Asset Class
1/31/2025
Venture Growth is a private market asset class that targets companies in the later stages of development. These businesses have transitioned beyond the high-risk early phases and are now demonstrating strong, consistent growth. Typically, they generate annual revenues of $50 million or more, grow at rates exceeding 50% per year, and are valued at over $250 million. Many are profitable or on the verge of profitability, positioning them for potential exits such as initial public offerings (IPOs) or acquisitions.
In the past, companies at this stage of their lifecycle were more likely to have already gone public. However, the maturation of private markets has encouraged businesses to remain private longer, enabling them to capture additional growth before entering public markets. This evolution presents a unique opportunity for investors to gain access to high-growth companies earlier in their lifecycle.
Benefits of Investing in Venture Growth
Venture Growth investments offer a range of benefits for investors looking to diversify their portfolios, tap into growth potential, and gain exposure to innovation. Over the past few decades, the number of publicly traded companies has decreased, while the private market has expanded significantly. This shift has created a gap for investors who focus primarily on public equities —leaving untapped opportunities in private companies operating in transformative sectors such as Technology, Industrials, and Consumer.
From a portfolio perspective, Venture Growth can enhance diversification by complementing traditional asset classes like public equities and fixed income. These investments also provide an illiquidity premium — additional returns earned by committing capital to private markets for longer periods. Historically, private markets have outperformed public markets over time, making venture growth an appealing choice for investors with a long-term outlook.
Why Current Market Conditions Favor Venture Growth
Current market conditions make venture growth an appealing asset class. Economic shifts and changes in the funding landscape have reset valuations for many private companies, creating opportunities to invest in high-growth businesses at attractive entry points. Additionally, the venture growth stage typically carries less risk than early-stage venture investing, as these companies have already demonstrated product-market fit, established revenue streams, and are often nearing profitability.
GoalVest’s Approach to Venture Growth Investing
At GoalVest Advisory, we approach venture growth investments with a focus on identifying high-quality opportunities and managing risk. Our philosophy centers on:
Thorough Due Diligence: We carefully evaluate each potential investment, analyzing factors such as market dynamics, competitive positioning, and financial health.
Fundamentals-driven Investing Approach: We are highly-disciplined investors relying heavily on a strict set of fundamental analysis-based parameters to select investments targeting a 3x return over a 2-4 year hold period
Diversification: Spreading investments across sectors like Technology, Industrials, and Consumer to reduce exposure to any single industry or market trend.
Not all venture growth investment vehicles are the same in terms of their specific characteristics and what they seek to offer investors. A venture growth fund targeted to high-net-worth investors, may offer the following benefits:
A shorter timeline: a single-digit lifespan target, with capital returned within two to four years after it is called (providing greater liquidity)
Fee efficiency: fees below the industry-standard “2 and 20”
Multi-channel sourcing: investments in traditional venture rounds and secondary shares, enabling faster deployment of capital
Diversified industry exposure: access to “blue-chip” venture-backed companies across sectors like Technology, Industrials, and Consumer, typically backed by top-tier VCs
Characteristics of Venture Growth Companies
To illustrate the kinds of businesses that define the venture growth stage, consider the following examples from previous GoalVest Venture Growth investments:
CoreWeave: A leader in GPU cloud infrastructure, CoreWeave provides scalable, high-performance solutions for artificial intelligence (AI), machine learning, and other compute-intensive industries. The company’s valuation has grown to approximately $23 billion.
Shield AI: This company develops autonomous defense systems, including AI-powered drones designed for complex military operations in GPS-denied environments. Shield AI is currently valued at around $3 billion.
OLIPOP: A beverage innovator, OLIPOP produces functional, prebiotic sodas that promote digestive health while offering a low-sugar alternative to traditional soft drinks. The company generates approximately $500 million in annual revenue.
Venture Growth investments can be a valuable addition to a high-net-worth individual’s portfolio, offering a blend of innovation, growth potential, and diversification. While these opportunities require a longer time horizon and tolerance for illiquidity, they also have the potential to deliver significant returns over time. Understanding this asset class is critical to navigating the evolving investment landscape and potentially expanding your portfolio beyond public markets.
Disclaimer
GoalVest Advisory is a SEC registered investment adviser. Information presented is for educational purposes only intended for a broad audience. The information does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. GoalVest Advisory has reasonable belief that this marketing does not include any false or material misleading statements or omissions of facts regarding services, investment, or client experience. GoalVest Advisory has reasonable belief that the content as a whole will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to Form ADV Part 2A the adviser’s ADV Part 2A for material risks disclosures. Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, nature and timing of the investments and relevant constraints of the investment. GoalVest Advisory has presented information in a fair and balanced manner. GoalVest Advisory is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed.