ACP invests in early stage Fintech firms and aims to make follow-on investments where these are attractive.
Beyond that, we have few absolute rules. However, we do have an investment philosophy and some strong general principles:
- We invest in people as well as the business model. Our assessment of the key individuals and the relationship we are able to build with them is critical.
- We expect to make a significant non-financial contribution. Our best references come from our portfolio CEOs. If we can’t do more than invest money, we shouldn’t invest. The place for passive investments is the stock market. If we are going to sacrifice liquidity and see ACP’s funds locked up for years, we want to have a significant influence on the business. We don’t expect to have that unless we are confident we can make a real positive non-financial contribution exploiting our experience, knowledge and networks. If we think a startup is strong but recognize that we have little to add, we’ll pass. Writing a cheque is only the start.
- We’re committed – if we’re in, we’re in. At some point something will go wrong, even in the best venture investment. When it does, everyone had better be able to work together – grace under pressure, as Hemingway said. We don’t invest unless we are individually whole-hearted and unanimous – within the Firm – about the investment.
- B2B over B2C. Without being dogmatic, we have a preference (seen in every investment so far) for B2B over B2C. That’s based on our perception of the relative risk / reward but also on our own recognition of what we as individuals are good at.
- Leveraging (enabling) incumbents. One of our themes is that some huge firms are being built today that are relatively anonymous compared to the more glamorous B2C FinTech names. These utility-type firms enable the largest financial services incumbents to do something that they can’t today or to do something they are doing much more efficiently. In all the chatter about ‘disruption’ this is sometimes lost.
Given all of the above, what can our LPs and portfolio companies expect?
ACP is probably slower to invest than most; we’re very committed when we do invest, and, at a portfolio level, we are likely to run a fairly concentrated portfolio with fewer, larger investments.