- The COVID-19 pandemic has created unique opportunities for private growth investing, but investors should still focus on their investments' long-term durability and sustainability rather than short-term gains.
- The VC industry needs to rediscover its craft and return to the basics of investing in sustainable businesses rather than investing in hundreds of companies with a high-velocity profit-making approach.
- Venture building is becoming increasingly popular and can provide a solid foundation for startups, allowing them to have the right people in place and connect with investors.
- Supply chain tech and agritech are two industries at an inflection point and are expected to look completely different in the near future. Emerging markets, like the UAE, are expected to disrupt these industries.
- In times of economic uncertainty, efficiency-based growth is healthier for businesses than capital-based growth. This market correction allows investors to refocus their attention on building sustainable businesses.
- Annex Investments' Founder and CEO, Ahmed Al Nowais, announced the launch of their new venture builder, focusing on MENA region startups and representing multinational companies and startups.
In a session at Investopia 2023, a panel of prominent venture capitalists discussed the challenges and opportunities facing private growth investing. Moderated by Mayank Singhal, Executive Director and Head of Private Investments at ADG in the United Arab Emirates, the panel featured Arjun Sethi, Co-Founder and CEO of Tribe Capital; Noor Sweid, General Partner at Global Ventures in the UAE; Ahmed Al Nowais, Founder and CEO of Annex Investments in the UAE; Ron Daniel, Founder and CEO of Liquidity Group in the United States; and Ravi Viswanathan, Founder and Managing Partner of NewView Capital in the United States.
The panelists reflected on the past few years and discussed how investors could navigate the current environment, which many believe is a unique window of opportunity for private growth investing. They discussed companies’ need for long-term thinking and durability rather than focusing on short-term gains. Arjun Sethi, with a portfolio of around 250 companies from various markets, warned that investing solely based on high gross margins is wrong, especially in regions like the Middle East, where liquidity is nonexistent.
The panelists also discussed the bloat issue in portfolios and the need to prioritize quality over quantity. Ravi Viswanathan, who has witnessed three downturns in venture capital, emphasized the importance of avoiding waste and high-velocity profit-making. He encouraged firms to prepare for an extended period of difficulty, as many companies may need help to survive. Ahmed Al Nowais, who is launching a venture builder soon, shared his experience as a founder and stressed the need for a team that can help advise and connect startups to investors, as well as do NPV calculations.
The panelists also discussed which industries they are excited about and believe will be completely different in the next five years. Noor Sweid identified supply chain tech and agritech as industries at an inflection point, with emerging markets as disruptors. Ron Daniel discussed his firm’s focus on lending to late-stage companies struggling with profitability and finding equity dollars. He stressed the need for proper decision-making processes and methodology.
Overall, the panel provided valuable insights into the challenges and opportunities facing private growth investing, particularly in the current environment. Key themes emerged as the need for long-term thinking, quality over quantity, and a focus on durability and efficiency-based growth. As the venture capital industry evolves, investors must navigate changing landscapes and industries to stay ahead of the curve.