Insights From a Billionaire: Robert Smith Says There Are More Opportunities In Private Markets

Billionaire Robert Smith, Vista Equity Partners chairman and CEO, told CNBC there’s a marked disparity in investment opportunities between public and private markets.

Smith spoke with CNBC’s David Faber from the Delivering Alpha Conference Wednesday and said his firm has been looking at high-growth investment in enterprise software instead of other areas of technology that public markets are pushing.

“There’s actually a bit of dislocation of opportunity because 98% of enterprise software companies are private,” Smith told CNBC.

“One of the keys is understanding what businesses are the right businesses to invest in as a private equity firm,” Smith added. “From our perspective, it’s really interesting: The public markets continue to focus on what we call hardware and consumer technology.”

Vista, which finished at #1 on Black Enterprise’s Private Equity Firms list, has built a reputation on Wall Street by investing in young software companies and restructuring them to maximize profit and revenue. Vista also works with software companies close to folding on its efficiency until its ready for public markets.

With more people using the internet everyday, especially for work as a result of the coronavirus, Smith told Faber the potential for more investment is accelerating fast.

“In our sector, enterprise software, we continue to see companies with very strong revenue growth. If they’re run well, and with our work, they’re actually accelerating in this time period,” he said. “And the fact is that there is just a massive demand for digitization globally.”

“There has also been a distribution of computing power over the last 20 years, there’s actually a large number of software companies that are actually getting to a state of maturity,” he added.

Smith also discussed the future of autonomous vehicles and how commercial trucking and transportation could be the first to use the big innovation before it hits consumers.

Innovation goes through stages or "surges", @Vista_Equity's Robert F. Smith shares. He reveals which sectors we'll see big breakthroughs that will change mobility in his #DeliveringAlpha conversation with @davidfaber & is looking to the convergence of autonomous driving. pic.twitter.com/zjTiFUHR4L

— CNBC Events (@cnbcevents) September 30, 2020

“I think autonomous vehicles is likely going to move first in the trucking and transportation space before we get to the consumer space en masse, because there’s massive benefits that can be captured and monetized in that space,” Smith told Faber. “So I think we’ll see the surging across those sectors in different ways and that development and innovation dynamic happening simultaneously from different angles and we’ll see the breakthrough in the coming years.”