Consumer: In the early days of 2001 to 2005, we were sector-agnostic but tended to invest in export-oriented manufacturing, which didn’t go well. We were the only PE firm investing in Vietnam at the time, but by making stupid investments we totally blew any first mover advantage that we might have had. In 2006, with our investment in ICP (the personal care products company with the X-Men brand), we started to dip our toes into consumer investments, but were also experimenting with other sectors such as real estate, software, etc. By around 2009, it became clear that all of our best performing investments were in consumer sectors and we decided to focus exclusively on sectors that are consumer-driven. For example: retail, restaurants, education, health care, pharmaceuticals, FMCG, consumer finance and service providers to those.
Focused: Some of our past investments were in groups that had more than one related business unit. Over time we saw that companies focused on a single business tend to execute better and grow faster, so we prefer to invest in companies that are focused rather than diversified.
Entrepreneurial: Many of our early investments were in family businesses until 2007. Generally, we struggled to get these family companies to create a performance-based culture and build up their management teams, whereas our investments in companies founded by entrepreneurs tended to be much more open to this. For example, our two most successful investments in our second fund, MEF II, were MobileWorld and Golden Gate, both companies founded by teams of entrepreneurs. Hence, we typically invest into companies founded by entrepreneurs, rather than family-businesses or former state-owned companies.
Openness: After years of both mistakes and breakthroughs, we’ve discovered that we don’t really know anything useful, and our big breakthroughs have always emerged from a space of open-mindedness and a willingness to transform who we are being. So this is also a characteristic we look for when selecting investee companies. We’re not interested to invest into companies that think they already have all of the answers – if so, there will be no room for them to discover anything new and transform. Rather we are looking for companies that are committed to a big vision for their future, are open minded about how to achieve that vision and are willing to build their team and transform whatever needs to be transformed for the fulfillment of that vision.