… and when to move outside your sector comfort zone
Our first statement of sector interests included security, environmental sustainability / cleantech and instrumentation. Apart from anything else, it’s only fair to provide guidance to people about the sectors in which we’re keen to invest, and by implication, the areas in which we’re less keen.
My industrial career provides a backdrop to my investment interests, a set of overlapping comfort zones within which I understand market dynamics, technologies and have contacts that may be valuable to investees. I’m keen to develop a portfolio of risks, whilst maintaining an explicable intellectual coherence.
But this tidy approach has always troubled me and it’s coming to life with some specific opportunities in our pipeline. The issues are:
- Great teams: We recently saw a presentation in a business somewhat outside our declared sector interests. But there were three passionate and experienced individuals each contributing to a coherent team. How could we dismiss this opportunity given the primacy of team credibility in our investment criteria?
- Mates: We have seen over a dozen pitches from people we’ve known, in some cases over many years. Surely that personal knowledge must count for something, regardless of sector?
- Stonking opportunities: Whilst we love whacky early stage technologies, it’s far less risky and more financially justifiable to invest in propositions that seek acceleration for growth and offer significant, short to medium term returns.
In summary, ‘comfort zone’ is important, and it affects the degree to which one’s personal experience and contacts can be brought to the aid of an investee. But good people and great investment prospects are ultimately what this game’s all about. I won’t be having sleepless nights over a diversified portfolio of superb businesses.