US is the ‘great tragedy of our lifetime’, says Paul Bassat
Seek co-founder and millionaire venture capitalist Paul Bassat raises the possibility of the US becoming a ‘dictatorship’ by the end of the year.
Square Peg Capital co-founder Paul Bassat has raised the possibility of the US becoming a dictatorship by the end of the year if COVID-19 prompts President Donald Trump to defer the November presidential election.
Mr Bassat, who is also a commissioner of the Australian Football League and a former director of Wesfarmers, said America had gone through other difficult periods in its history and may “hopefully work this one out (but) they may not”.
“I don’t think there is a guarantee we will have an election in November. There is a possibility the US could become a dictatorship by the end of this year. It is low possibility, but I think it is definitely a possibility. It is unprecedented even to be thinking it,” Mr Bassat told a Thought Leader Series forum with the clients of boutique wealth management firm Hamilton Wealth Partners.
While he said such a prospect had less than a 5 per cent chance, he described the state of the US as “the great tragedy of our lifetime”.
“There are so many signs that the US is a country with very deep issues,” he said, pointing to the chronic levels of obesity and gun violence in the world’s biggest economy. “It says something about the culture.”
But he also described America as an “extraordinary contrast of a country”.
“It is the home of most of the great innovation in the world and most culture in the world comes from the US,” he said.
“Even the way it is dealing with COVID, it is a mess. It will work through it, but America always does things differently.”
Despite America’s challenges, Mr Bassat said the next three to four years would be “the best era for venture capital investing since the dot.com boom in the late 90s”.
“We are seeing this real move to online which is the thesis us and others invest behind. But along with that we expect to see an incredible burst of innovation,’’ he said, singling out health tech as one of the next boom sectors as artificial intelligence is applied to drug discovery.
“Time to market has also been a massive issue.
“Clearly one of the things that will come out of COVID-19 is people will stop and think and ask ‘Why does it have to take 10-15 years and several billion dollars to take a drug to market?’ We have accepted that for so long but we are saying now ‘Guess what, we can do things differently’.”
Earlier this year Square Peg, which counts James Packer and the billionaire Liberman family among its investors, embarked on the biggest capital raising in its history $US500m ($766m) for two new funds — to back technology companies in Australia, Israel and Asia.
Mr Bassat said the raising was still proceeding and that there would be an update on its progress in the next month.
But he also revealed the returns of the existing portfolio of Square Peg funds — 0, 1 and 2.
He said Fund 0 had delivered a “low 20 per cent” IRR (internal rate of return), Fund 1 was “high teens” and Fund 2 — the youngest in the portfolio — was 44 per cent since inception.
The latter includes Square Peg’s investment in listed Israeli freelance marketplace FiveRR, which Mr Bassat said was worth over $200m and would have its value written up in Square Peg’s June 30 accounts. Some other assets, he said, would be impaired “in one form or another”.
“But at June 30, We expect the NTA (net tangible assets) to be much higher than at December 31,” he said.
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