Warren Buffett, in sharing his perspective on the secret to getting rich on Wall Street, observed that “you try to be greedy when others are fearful. And you try to be fearful when others are greedy.” We agree.
Notwithstanding the rampant fears created by the coronavirus pandemic and the accompanying (and still unfolding) economic impact, great investment opportunities to create wealth remain. And, perhaps, there are no better opportunities to create great wealth than by investing in today’s most promising early stage companies. Indeed, we expect to see many new market leaders emerge because of their technologies, innovations, foresight and leadership.
In our view, many of the early stage companies in our emerging post-COVID-19 world that are most likely to emerge as market leaders will all have the potential to make a real, positive difference in the World. Companies, for example, in the health and wellness space, the clean energy space, and technologies that are built on artificial intelligence and machine learning.
We recognize, of course, the challenges in evaluating the quality of early stage companies, including as a result of the lack of traditional financial metrics that are discernible only from at least several years of operating history. Nevertheless, and while every company is different, we believe that great companies are also alike in many critical ways. As a result, our team at Varia Ventures focuses on what we consider to be three particularly critical criteria: (1) the quality of the company’s team, including the founders, strategic partners, and other investors; (2) whether a business has some “traction” as evidence by having products or services in the market and is looking for capital to scale up, and (3) whether the business is developing a transformative product and/or service.
We think those investors who are willing to invest in high quality opportunities, on reasonable terms and conditions, will find that – notwithstanding today’s “fearful economy,” “being greedy” will prove to be very good thing.