Caribbean Leapfrog Fund, Investing in Societal Transformation

 

“World inequality today exists because during the 19th and 20th centuries some nations were able to take advantage of the Industrial Revolution and technologies and methods of organisation that it brought while others are unable to do so. Technological change is only one of the engines of prosperity, but it is perhaps the most critical one”   

(Why Nations Fail)  

 

The greatest shortcoming of the human race is bias; bias is learned behaviour, an inclination of the mind or a preconceived opinion about something or someone.  Bias is illogical and it makes one form favourable or unfavourable views of things that are not based on fact, but feelings.  So, bias will always lead to suboptimal results when decisions are made based purely on emotional intuition.  From an investment perspective, the inability to analyze investment opportunities based on factual data, instead of our personal and societal bias holds humanity back and prevents us from understanding the exponential return function of investing in markets not covered by the investment “establishment”.

 

The single most powerful pattern for identifying successful venture and private equity is the fund manager's ability to find extraordinary value in unexpected places.  Caribbean markets are typically overlooked because they are considered too small, unsophisticated and inefficient, due to biases and misperceptions build through historic attitudes and events. This lack of understanding by the investment ‘establishment’ is also rooted in the enduring legacy of colonialism.  However, it is the very examination of historical evidence of the colonial past, that can demonstrate how exponential value can be created by transforming the region at this critical juncture. 

 

 

 

 

 

 

Looking for the J Value Curve (JVC)

 

When you invest via the method of picking companies, investing often results in highly skewed power law distributions where non-linear relationships amplify results.  In short, only a small handful of opportunities ever become “hyper high performers,” most opportunities are “low performers.”  And the probability of finding many “hyper high performers,” is extremely low.

 

Therefore, in the current technological and knowledge-based environment, identifying major long-term transcending investment trends in the extant macro environment is critical to developing long-term profitable enterprises.  

 

The phrase “a rising tide lifts all boats” holds relevance; the Caribbean Leapfrog Fund (CLF) looks to find those rising tides that eventually turn into roaring waves, which can lift all boats—entire enterprises, industries and countries to prosperity. 

Successful entrepreneur Peter Thiel has highlighted that the power law implies two rules for venture capitalists (VCs);  “First, only invest in companies that have the potential to return the value of the entire fund…this leads to rule number two: because rule number one is so restrictive, there can’t be any other rules”.  However, the problem with that approach is that one is still trying to pick winners as a strategy.  Like most VC, Thiel believes in his abilities greatly, managers need to quiet the ego and get away from ‘picking winners’ altogether.  Yes, Theil is a billionaire; however, it is also important to note that he made his primary billions by being the founder of a single company.  Like most billionaires turned VC’s their wealth is usually derived from being founders; not from being fund managers.   Thiel’s record as a fund manager is no better than the next VC guy according to the data, there is no evidence that billionaire founders can transition to become spectacular at picking the winners.  

The highest unicorn-spotting rate (the ability to find that hyper-performing opportunity) in the industry is 8.06% vs. a 2.5% average for the other top VC firms.  It’s impossible to know which fledgling start-ups or existing operations will become the big winners.  Even the very top VCs who swing for the fences every time get it right less than 1 out of 30 times.  As Marc Andreessen of Andreessen Horowitz points out, each year, of the 4,000 technology start-ups seeking VC funding, only 200 (or 5%) are seriously fundable, with “15 of those generating 95% of all economic returns…even the top VCs write off half their deals.”  No one yet has proven they’ve cornered the market with a picking the winners' strategy.  Historical data also confirms that most investments will return very little or even lose money, prototypical ‘successful’ venture fund…many investments just go to zero. 

The Caribbean Leapfrog Fund (CLF) puts ego aside and looks to a more time-tested, scientific approach and invests in opportunities that can produce not only extraordinary returns but can also contribute to great societal change.  Those types of opportunities have proven, historically, to produce optimal sustainable long-term results; the investments that succeed do so by demonstrating an exponential growth curve over time.  They take time to develop, but at maturity, the return is exponential and sustainable over the long term.  The power law JVC reflects the idea where we wish for all of our picks to become quick hyper-performers.  However, investing, especially with the underlying goal of the CLF, is not for wishful thinkers.  Investing, in the main, is a long-term affair that requires applied intelligence, vision, constant attention and work, with technology knowledge ecosystems being the core enterprise operational builder.

 

CLF pays close attention to history, investment patterns, factual information, particularly local knowledge.  Developing promising enterprises and industries that has the highest potential to capitalise on trends, and that can eventually come to dominate entire regions, requires getting early footholds, the application of advanced technologies and erecting high barriers (of constant innovation and quality) to entry behind you.

 

The digital age through the application of applied intelligence is making it increasingly possible to identify the undercurrents of moving or evolving megatrends and applying technology ecosystems to extract value.  In certain sectors - agriculture being the prime one for the Caribbean - undercurrents exist now where advanced technology investments can be the catalyst for disruption and transformation.  To transform Caribbean economies from low-income producers to a high-value manufacturing and export economy, significant technology investment is required. 

Agri-tech represents the single most exponential profit opportunity for the region in the last 100 years, and finding the enterprises that can focus on the final stage, these value added products can better overcome the challenge of scale.

 

CLF investing is based on spotting undercurrents of economic disruption and change, mega trending opportunity spotting.  CLS investing occurs by using innovation backed by local knowledge to spot and evaluate the true long-term intergenerational wealth creation opportunities.

 

The Investment Process

 

For the future success of a business, it is imperative to recognize technologies extraordinary enterprise worth and apply them to the right value advancing tasks and processes.  With its ability to deliver tremendous value to the enterprise, Artificial Intelligence (AI), for example, will span across many domains, driving effectiveness and providing specialized algorithmic solutions throughout the process. 

 

CLF applies scientific methods to build fact-based investment solutions to solve complex business problems.  Solving problems has always been the path to creating value historically, for consumers through entrepreneurship, which is proven as the optimal way to solving society's biggest and most complex problems.

 

From developing new Intellectual Property (IP) to generating new business, we funnel opportunities and use data science to confirm and separate the real market opportunities, from the many distractions or mirages in the universe.  These opportunities are developed by the fund for the single purpose of creating extraordinary long-term value for our investors, fledgeling entrepreneurs, and the attendant positive societal impacts for communities.  

 

CLF approach provides broad strategic value, technology, and knowledge expertise to dedicated and visionary entrepreneurs, established business owners.  We build strategic plans with operational vigour, that addresses enterprise value creation and equally challenges the ‘norms’ of how we think about development and growth.

 

§  By understanding what an enterprise’s future objectives are, we can develop a roadmap to achieve goals, specifically by utilizing companies, industry and public data.

 

§  We use data science and advance techniques to discover new insights by focusing on their core business; we apply data science that projects how the invested firms can operate more effectively.  By offering data science as a managed service in our investment process it means that the team can handle the data which allows entrepreneurs to realise its value.

 

§  A clear playbook is emerging for how to integrate and capitalize on advanced technologies—across an entire company, and in any industry.  With a strong dedication to helping real people, CLF brings an owner’s mindset and a scientific approach to exist on the precipice of business and technology.

 

Using artificial intelligence, we have constructed a series of processes to identify the white space of evolving megatrends, industries, that can offer opportunities to generate $100M+ market opportunities.  We build full picture views of the target market or industry by establishing signals of early opportunities detection and potential risk.  We rely on operational improvements, innovation, and tailored growth strategies to develop and build companies of lasting value.   

 

There has never been a better time to develop and launch new products and services in the global marketplace.  Our difference is through Transcending Investing; our themes involve looking at the big trends, using the history of civilization and entrepreneurship as a guide.  We leverage innovation and collaborate with multiple stakeholders in the ecosystem, including local governments, to design growth solutions that can bring products and services to global markets, relevant to the new economy. We also plan to create long-term sustainable returns for our investors in CLF, and wealth for local entrepreneurs, which inherently leads to prosperity for local communities, and changes lives.