For example, when growth equity companies buy stakes in up and coming popular consumer products like Oatly, Hippeas, Van Leeuwen, all birds etc. aren’t they priced at such high valuations that it’s difficult to see such high returns hence the later stage investment.
What are the typical return profiles of investing in trendy brands where every firm is competing to get ownership in them?
A few of the firms that come to mind are Strand Equties, Lerer Hippeau, Silas
Anyone have any insight on their IRR/EM targets
Anyone from SoftBank on WSO wanna take a crack at this?
I’d honestly love for someone who actually works at SoftBank to inform us all on the nuanced investment decisions the firm makes and the process. AMA anyone!?
If by “sexy” you mean SEX DUNGEON, absolutely
Sexy companies is one thing. Sexy, fast growing industries are much more interesting and easier to make money on.
Why so? Paying a higher multiple no?
Yes, but a rising tide lifts all boats.
Supply chains that benefit from sexy industries even sexier....existing cash cow plus TAM expansion. Sexy^3.
TAM expansion is probably the reason Softbank did all those great investments..
The key is to be able to leverage relationships and track record to get into those companies at a reasonable price (still high multiple, but not crazy high). The founder CEOs are usually spinning because on the one hand they've had a lot of early success that's made them rich on paper (and importantly, richer than they ever needed to be), and on the other hand they need to accomplish so much to actually realize it.
So they're ready to give a fat discount to the right fund, if the fund convinces them they'll take them to the promised land. Think of every Shark Tank contestant who chooses Mark because of his cachet or Lori because she's the Queen of QVC, over a more financially attractive offer from Kevin because he's just the finance guy. Same kind of thinking.
So more directly to your question, yes you can make money if you're able to get into exciting companies at less-than-nosebleed prices. But the challenge is being more than just a check writer.
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