Corporate Direct Investment: to Diversify or to Guide & Develop?

Chinese executive summary

综述:企业直接投资:资产多元化,抑或引领式发展?

这篇博文概述了投资者在企业投资管理领域面临的挑战。

一方面,日益增长的投资需要导致对“优质资产”的竞争日益激烈;另一方面,在数据化、工业4.0、人工智能等因素的冲击下,传统的“旧经济”正在急剧向创新的经济模式转型,导致“优质资产”的定义不断变化。因此,投资管理者应当不再仅仅依靠投资组合多样化、季度财政报表来做出决策,而应该采用一套投资管理系统,密切、积极地引领所投资产的发展。

投资管理系统的关键是业务模式监控,并辅助以其它监控和控制工具以综合涵盖财政、技术、团队和竞争等领域。

具体的挑战和解决方案,请详见博文。如果有问题,请联系作者。


Corporate direct investment is playing an increasingly important role in numerous investor groups - including business angels and HNIs, family offices and PE funds, as well as pension funds and insurance companies. The reasons are manifold: the personal financial commitment of the first group has often emotional reasons. Many HNIs are looking for 'tangible investments', in order to help building and developing a specific asset. Some wish to live up to their role as co-entrepreneur. For all investors, objective reasons also play a role: low-interest-rate level, the swept-clean real estate market, or the shift away from financial products after the 2008 crisis.

However, corporate direct investment requires a different mindset than investing in shares, bonds or various financial instruments. Its entirely different momentum calls for more than just diversification or quarterly financial reports. In addition, there is an undergoing shift from the traditional 'old-economy' to innovative business models based on agile customer focus, the natural (almost native) use of new technologies (digitization, Industry 4.0, artificial intelligence, etc.) and modern digital marketing methods. Startups are very successful in attacking established companies using exactly these methods. Guiding principles of the past, such as "Advantage through Technology” or "Big Fish Eats Small Fish", guarantee less and less market leadership. The new guiding principles are "Fast Fish Eats Slow Fish" and "Maximization of the Customer Convenience".

The well-known techniques of the financial market, such as diversification and portfolio theory, only help to dress the window: it is true that one should build a ‘diversified’ investment portfolio following a deliberated investment strategy. However, it is difficult to undertake a swift act of rebalancing in such a portfolio, due to a time-consuming exit process. It is more of an act of desperation, than of proactive management, to base the own investment strategy on a particular ‘write-off’ expectation for a part of the portfolio. Unfortunately, this mindset is more prevalent than one would expect and it clearly shows the limits of the instruments of the financial market.

The solution is the close and active guidance of the investment in terms of a lean but efficient investment control system. An investment control system that takes into account the current, dynamic market environment must not rely solely on the quarterly financial reporting values. Greater insights and a higher-degree of transparency are required!

The main component of a successful investment control system should be a business model monitor. The objective is to continuously monitor and develop the business model in terms of customer focus and market relevance. At any moment it should be perfectly clear where the revenue stream is coming from and what is the cost structure of the investment.

The strategic level of business model monitoring is accompanied by rigorous financial controlling to ensure a strong und realistic bottom line for any business strategy in place or intended.

The management team is the backbone of the company. Without the right crew on the professional as well as personal level, a company is unable to perform. However, it is not enough to establish an organizational chart – there are also soft, psychological factors that make us act human. These factors need to be considered as a part of an investment control system as well.

The technology in place is the instrument allowing the execution of the business purpose and not an end in itself. From this point of view, the current craze over buzz words such as digitization, industry 4.0 and artificial intelligence has confused the purpose with the end. The technology in place enables first and foremost the efficient execution of the business model, hence must serve business purposes. Digitization as an end in itself does not bring any company forward - but only costs money and time.

The constant monitoring of the competitors, especially the young, fast, but supposedly ‘yet meaningless' competitors, is of central importance. Only through a constant monitoring can one counter an attack from novel, innovative business models or technologies. The intelligence gained through this method needs to bear an impact on the company's own strategy.

Private corporate investments - in one form or another - enjoy increasing popularity. A recent Goldman Sachs AM survey among insurance companies showed that 36% of respondents intend to increase their private equity exposure, being the largest increase among all asset classes (please find a summary here). A similar picture is shown by a survey among the leading German family offices performed by Online-Zeitung on the topic of entrepreneurial investments: Family offices and their wealthy clients are increasingly interested in entrepreneurial investments and are increasingly considering the chances as well as the challenges involved in corporate direct investments (please find details here).

Corporate direct investments are an asset class that may and must be actively developed. The increasing demand for this type of investment on the one hand and the higher agility in the business world on the other, are putting investors under pressure. At the end of the day, those who pursue an active, entrepreneurial approach to their investments will succeed. The passive direct financial investor is probably a dying species in the investment universe.

Über den Autor

  • Michal Dallos

    Michal Dallos

    Geschäftsführer von Liamont Ventures & Strategy

    Dr. Michal Dallos, MBA, ist Geschäftsführer der Liamont GmbH, einem auf innovative Geschäftsmodelle fokussierten Unternehmen aus Frankfurt am Main. Vor Liamont war Dr. Dallos neben weiteren Berufsstationen als Geschäftsführer von mehreren Fonds-Gesellschaften einer namhaften Versicherung im Bereich Direkt-Investments tätig.

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