How To Conduct Due Diligence Part One
S&P Ventures is an emerging fund distinguished by its expertise in identifying diverse asset types that, when combined, generate synergies greater than the sum of their parts without compromising the risk profile. We call this the "Flywheel Effect". We define the flywheel effect as a compounding return on effort where the logical sequence of events creates inherent and self sustaining momentum.
Our core strategy involves sourcing opportunities that create a flywheel effect and partnering with best-in-class operators to acquire and maximize our investment. We aim to deliver asymmetric, risk-adjusted returns to our investors. We are different from other firms in that we play an active role in our investments, collaborating closely with operators to strategically maximize shareholder value. This hands-on approach reflects our commitment to navigating markets with precision, ultimately driving success for our investors.
This will be part one in a series of blog posts that will detail out how we identify, vet and ultimately decide which opportunities to invest in. We aim to deliver high quality and actionable insights for all types of investors on how to maximize the probability of success while mitigating the downside risk.
When assessing an investment the first thing we look at are the people we will be investing in. In our experience, the success of an investment is largely driven by the people who we are partnering with. The first step we take is to assess their background to ensure alignment between our values and investment thesis.
S&P Ventures conducts a comprehensive evaluation of the sponsor, founder or operating partner, delving into aspects such as their upbringing, educational background, interests, hobbies, and notable accomplishments. Our objective is to gain a holistic understanding of the individual and firm. It is imperative to note that there is no singular criterion guiding this assessment; rather, our aim is to foster a personal connection and ascertain alignment between their values and our investment thesis. We have found that when people share our values of integrity, focus and execution we can engineer and increase our probability of success.
Our team meticulously scrutinizes the professional trajectory of the sponsor, founder or operating partner, examining their current role as well as past professional engagements. This scrutiny serves a dual purpose: firstly, to gauge their proficiency within the specific industry vertical in which they operate, and secondly, to assess the breadth of their comprehension across broader subject matter. Our intention is to ensure a thorough evaluation of their professional experience and expertise. All information provided by sponsors or operating partners is obtained with their voluntary consent for due diligence purposes. S&P Ventures is committed to maintaining strict confidentiality and adhering to applicable data protection laws governing the collection, storage, and processing of such information.
Business Track Record
Our team systematically evaluates the track record of the sponsor, founder or operating partner in their business endeavors. This entails a thorough examination of their past and current business ventures or activities. By scrutinizing their involvement in various enterprises, we aim to gain a nuanced understanding of their background and ascertain a robust track record of success across diverse business initiatives.
S&P Ventures acknowledges that while evaluating the business track record of sponsors or operating partners, past performance should not be solely relied upon as an indicator of future success. Past success does not guarantee future performance, and investment decisions should consider multiple factors beyond historical performance. Therefore, the assessment of past business track records is one of the several criteria used in the due diligence process, and it should not be considered a definitive predictor of future outcomes.
Until Next Time
In our next post we will further explore the nuances of underwriting and vetting founders, sponsors and operating partners. We will cover the importance of understanding outside activities, the risk they carry and how they can impact the overall risk profile of the investment.
S&P Ventures operates within the bounds of legal frameworks and regulatory guidelines. This document serves solely as a guide for informational purposes and should not be construed as providing legal, financial, or investment advice. All investments inherently carry risks, and it's important to note that past performance of any investment or strategy is not indicative of future results. Prospective partners, sponsors, or investors are strongly advised to conduct their independent due diligence, seek professional advice, and assess risks before making any investment decisions. S&P Ventures does not guarantee specific outcomes, returns, or investment performance. The information presented herein is subject to change without notice and should not be regarded as a solicitation or recommendation for any particular investment or strategy. Readers should exercise their discretion and assume their own risks when relying on the information provided in this document. S&P Ventures shall not be held liable for any direct or indirect losses, damages, or expenses arising from the use of or reliance on the information contained herein. By accessing or utilizing this document, individuals acknowledge and agree that S&P Ventures assumes no responsibility for any consequences resulting from the use of the information provided herein.