In my most recent post, I shared about my fundraising journey for Fairbridge Park. Since our first close, we have invested in six companies. This is the first in a series of posts where I will provide insight on where I see opportunity today. In the future, I will discuss characteristics of a good investment for the fund, and why I picked the companies we invested in.
Where I See Opportunity – Fund I Investment Thesis
Fairbridge Park’s mission is to be the partner of choice for teams that are tackling important socioeconomic problems with effectiveness, profitability, and scale. I developed a passion for this mission at a young age and I now firmly believe that commercial enterprise is the model with the best structure of rigor, incentives, and accountability. When I completed business school 10 years ago, I actively sought a role to partner with purpose-driven teams building “better-for-you” consumer products. My goal was to investigate the business case for purpose-driven investing and to deeply understand company operations. At Fairbridge Park, I am bringing lessons I have learned on how good businesses operate. I am also building on the “better-for-you” thesis by focusing on a narrower set of important problems and by clearly defining and measuring the impact our companies achieve. There are two fundamental inputs driving our thesis:
- Digital acceleration – Rapid technological innovation is driving the creation of new business models that are more capital efficient, with unprecedented economic potential, and ability to scale faster. This increasingly allows for commercial solutions to be applied to problems where sustainable economics (unit economics, contribution margin and profit volume) and commercial return capital were previously difficult to achieve.
- Impact – While the pandemic accelerated the conversation, there already was growing evidence that a new “Risk –> Impact –> Reward” model for investing is superior to the traditional “Risk –> Reward” framework. ESG is an initial attempt at guiding a transition, but it’s not sufficient. My main point is that adding impact to the risk -> reward framework produces a more efficient frontier. On the revenue side, customers increasingly patronize businesses whose values and actions resonate authentically. CSR models no longer cut it. Impact must be embedded in the business model. On the cost side, capital providers, regulators, suppliers, the “internet” etc., are making it impossible (economically and morally) for businesses to operate without taking responsibility for the environment, local communities, employees, and public goods.
Fairbridge Park Fund I Investment Thesis
I believe we are in the early innings of both trends. Technological innovation and its rate of distribution globally are accelerating at breakneck speed. A growing awareness and the severity of socioeconomic challenges is attracting the most brilliant entrepreneurs and capital in search of solutions. We have a unique opportunity to solve pressing problems with a superior model. At Fairbridge Park, we actively pursue partnerships with purpose-driven teams building companies that fall at the intersection of these two trends. We also enjoy partnering with like-minded Limited Partners.