The Hunt for Unicorns: How Sovereign Funds Are Reshaping Investment in the Digital Economy - Paperback

by Winston Ma (Author), Paul Downs (Author), Margaret Franklin (Foreword by)

Who holds the power in financial markets? For many, the answer would probably be the large investment banks, big asset managers, and hedge funds that are often in the media's spotlight. But more and more a new group of sovereign investors, which includes some of the world's largest sovereign wealth funds, government pension funds, central bank reserve funds, state-owned enterprises, and other sovereign capital-enabled entities, have emerged to become the most influential capital markets players and investment firms, with $30 trillion in assets under management ("super asset owners").

Their ample resources, preference for lower profile, passive investing, their long-time horizon and adherence to sustainability as well as their need to diversify globally and by sector have helped to transform the investment world and, in particular, private markets for digital companies. They have helped create and sustain an environment that has fostered the rise of the likes of Uber, Alibaba, Spotify and other transformative players in the digital economy, while providing their founders and business models the benefit of long-term capital.

Despite this increasingly important impact, sovereign investors remain mostly unknown, often maintaining a low profile in global markets. For the same reason, they're also among the most widely misunderstood, as many view investments made by sovereign investors as purely driven by political aims. The general perception is that most sovereign investors lack transparency and have questionable governance controls, causing an investee nation to fear exposure to risks of unfair competition, data security, corruption, and non-financially or non-economically motivated investments.

The current global tensions around the AI race and tech competition - and now the corona virus pandemic - have exacerbated such misperceptions, spawning controversies around sovereign investors and capital markets, governments, new technologies, cross-border investments, and related laws and regulations. As such, sovereign capital and the global digital economy are undergoing an unprecedented, contentious moment.

In short, the emergence of sovereign funds symbolizes a major shift of the world's economic power. For the first time, investment funds from developing countries are playing with OECD financial giants as equals. Furthermore, their investments into high tech enable them to participate at the cutting-edge of the fourth industrial revolution, challenging traditional innovation powerhouses like the US and Germany. For all stakeholders, from tech unicorns, VC funds, asset managers, financial firms, to policymakers, law firms, academics, and the general public, this is the must-have book to get to know these new venture capitalists and "super asset owners".

Front Jacket

Forewords by Margaret Franklin (President and CEO, CFA Institute), Russell Read (former CIO, CalPERS, GIC-Kuwait, and APFC) and Ajay Royan (Co-founder with Peter Thiel of Mithril VC Funds)

Look Inside the Trillion Dollar Club of Frontier Investors

State-owned investment funds are the new frontier investors, larger in size, influence, and power than the traditional Wall Street of investment banks, asset managers, and hedge funds. They are the 'unicorn-makers' behind the scene. Offering a series of in-depth case studies that combine broad perspectives on the tech investment world with specific national examples, this highly original book examines a vital and increasingly important relationship between governments and globalizing VC tech markets.

--Anthony Scaramucci, Founder & Managing Partner of SkyBridge

"Ma and Downs' clear and expansive insights into these disproportionately important and yet little-known institutions will prove critical, both to practitioners in the field of investing as well as to the general public seeking answers to the big picture questions of why the new unicorns transforming their lives arose from the modern financial system."

--Russell Read, CFA, Ph.D, former CIO for CalPERS, GIC-Kuwait, and APFC

The private sector doesn't have the answers to a growing list of the world's problems. It is the State, working through powerful institutions such as sovereign wealth funds, that has taken a key economic and investment role. Investors need to understand these state-controlled wealth funds - what they do and how they do it - and this book provides a timely update that fills a gap in the literature on global finance.

--Dato' Seri Cheah Cheng Hye, Co-Founder and Co-Chairman, Value Partners; Non-executive Director, Hong Kong Exchanges and Clearing Ltd

Sovereign Wealth Funds (SWFs) lie at the intersection of finance, politics, macroeconomics, and international relations. This book not only constitutes perhaps the most in-depth and insightful investigation of sovereign investors to date, but it starts a broader debate over globalization and state economic intervention in the context of world digital revolution. Invaluable to European governments and businesses, in particular, as the EU strives to become the third tech pillar of the world next to the US and China.

--Pierre-Yves Lucas, Head of Cooperation Mongolia, European Union; former Adviser to the CEO of the SWF of Kazakhstan

"A book that, against the backdrop of the world-altering coronavirus epidemic, provides a thoughtful guide to the role sovereign investors play in the world-changing digital transformation - and how one accelerates the other."

--Margaret Franklin, CFA, President and CEO, CFA Institute

This is a story about Time Machines.
--Ajay Royan, Co-founder with Peter Thiel of Mithril VC Funds

Back Jacket

Forewords by Margaret Franklin (President and CEO, CFA Institute), Russell Read (former CIO, CalPERS, GIC-Kuwait, and APFC) and Ajay Royan (Co-founder with Peter Thiel of Mithril VC Funds)

Look Inside the Trillion Dollar Club of Frontier Investors

"State-owned investment funds are the new frontier investors, larger in size, influence, and power than the traditional Wall Street of investment banks, asset managers, and hedge funds. They are the 'unicorn-makers' behind the scene. Offering a series of in-depth case studies that combine broad perspectives on the tech investment world with specific national examples, this highly original book examines a vital and increasingly important relationship between governments and globalizing VC tech markets."
--Anthony Scaramucci, Founder & Managing Partner of SkyBridge

"Ma and Downs" clear and expansive insights into these disproportionately important and yet little-known institutions will prove critical, both to practitioners in the field of investing as well as to the general public seeking answers to the big picture questions of why the new unicorns transforming their lives arose from the modern financial system."
--Russell Read, CFA, Ph.D, former CIO for CalPERS, GIC-Kuwait, and APFC

"The private sector doesn't have the answers to a growing list of the world's problems. It is the State, working through powerful institutions such as sovereign wealth funds, that has taken a key economic and investment role. Investors need to understand these state-controlled wealth funds - what they do and how they do it - and this book provides a timely update that fills a gap in the literature on global finance."
--Dato' Seri Cheah Cheng Hye, Co-Founder and Co-Chairman, Value Partners; Non-executive Director, Hong Kong Exchanges and Clearing Ltd

"Sovereign Wealth Funds (SWFs) lie at the intersection of finance, politics, macroeconomics, and international relations. This book not only constitutes perhaps the most in-depth and insightful investigation of sovereign investors to date, but it starts a broader debate over globalization and state economic intervention in the context of world digital revolution. Invaluable to European governments and businesses, in particular, as the EU strives to become the third tech pillar of the world next to the US and China."
--Pierre-Yves Lucas, Head of Cooperation Mongolia, European Union; former Adviser to the CEO of the SWF of Kazakhstan

"A book that, against the backdrop of the world-altering coronavirus epidemic, provides a thoughtful guide to the role sovereign investors play in the world-changing digital transformation - and how one accelerates the other."
--Margaret Franklin, CFA, President and CEO, CFA Institute

"This is a story about Time Machines."
--Ajay Royan, Co-founder with Peter Thiel of Mithril VC Funds

Author Biography

WINSTON MA is an investor, attorney, author, and adjunct professor in the global digital economy. Most recently for 10 years, he was Managing Director and Head of North America Office for China Investment Corporation (CIC), China's sovereign wealth fund. Prior to that, Mr. Ma served as the deputy head of equity capital markets at Barclays Capital, a vice president at J.P. Morgan investment banking, and a corporate lawyer at Davis Polk & Wardwell LLP. He is the author of the best-selling books including Investing in China (2006) and China's Mobile Economy (2016). Winston was selected as a 2013 Young Global Leader at the World Economic Forum and in 2014 he received the NYU Distinguished Alumni Award.

PAUL DOWNS practiced international law for more than four decades, most recently as a partner at Hogan Lovells in New York, where he co-founded the Sovereign Investor Practice and initiated its annual Sovereign Investor Conference. He has represented sovereign investors transacting in assets globally, has spoken and published on the topic and guest lectured at Columbia and New York University law schools. Mr. Downs served as President of the American Foreign Law Association.