With growth equity firms and venture capitalists continuing to invest heavily in new and existing projects, there’s a strong need for solid leadership. For investors, realizing their vision requires a strong and capable C-suite, which often means executive recruitment. Leadership that understands ongoing societal and technological shifts will maximize the possibility of success. Bad execution, on the other hand, can spell disaster for good ideas and good money.
Healthy Venture Capital and Growth Equity Markets
Although most industry watchers expected the COVID-19 pandemic to take a toll on venture capital, 2020 turned out to be a boom year for the sector. This according to an Ernst & Young study, which found 2020 to be the second biggest year for venture capital in history.1
“Against the backdrop of the worldwide rollout of vaccination programmes, the new U.S. presidency, and Brexit finally coming to a close, PE investors are demonstrating an overwhelmingly bullish outlook for the industry,” says S&P Global.2
Indeed, the future continues to look bright for those who can navigate, or leverage, industry-spanning paradigm shifts.
Impact of ESG on Industry and Capital
Environmental, Social and Governance was already a major factor for investors but ever-increasing scrutiny from both governments and consumers has made it an absolute imperative. A recent S&P survey found 40% of firms reporting that they are planning to work on improving ESG standards within their current portfolio companies.2 Strong company leadership must not only be capable of enacting positive change but also be proficient in championing their company’s efforts as an effective spokesperson.
Traditionally considered an obligation, investing in sustainability and positive social change also represents an opportunity as new technology and consumer priorities transform industries.
“We think about impact [investing] as not mutually exclusive with financial returns,” said Connie Deng, a senior associate in venture capital at Emerson Collective, a social change organization based in Palo Alto, California. “We actually think they’re mutually beneficial. If you have a choice between two companies that are the same, but one is a little bit more mission-driven, there’s an obvious bias there.”1
Of particular importance is the alignment between investors and company leadership. Joanna Griffiths of women’s apparel e-commerce company Knix Wear Inc. recently completed a round of funding while visibly pregnant. The founder and CEO disqualified outright any potential investors who questioned her commitment to the company in light of her pregnancy.
“I don’t care if they gave us the highest valuation, it didn’t matter,” Ms. Griffiths said. “If that’s how they felt about me as an entrepreneur and as a female founder, they sure as hell were not going to understand the mission of Knix and what it is that we’re trying to accomplish.”3
Harnessing Technology in Industry
It goes without saying that many investment plays center around technology but the ways in which companies are leveraging the power of tech differ.
Internally, executives must continuously modernize processes. This could mean utilizing communications and project management software to get the most out of a remote or hybrid staff or instituting automation and artificial intelligence to update factories and production facilities.
Externally, a keen understanding of technological developments is key to understanding new opportunities and delivery systems across industries. While cutting edge sectors such as remote healthcare and financial technology spring to mind, they represent just the tip of the iceberg. Other, less tech-obvious industries can also benefit from an upgrade.
David Frankel, a co-founder and managing partner of Founder Collective finds that centuries old industries, such as floor installation or oyster harvesting, are often primed for improvement through utilization of decades-old technologies. 1
Other emerging markets represent an opportunity to capitalize on consumer technology we take for granted, often skipping several generations of tech in the process. Such is the case, for example, when developing nations move straight from paper banking to mobile payments.1
“Many industries are running on outdated technologies – banking, aviation, telecoms, and more,” says Coresignal. “These are often extremely expensive, on-premise solutions that have stayed in place because of an “if it ain’t broke, don’t fix it” mentality. The pandemic was a wake-up call to companies that were living with decades-old technology to make the change. It shook up boardroom complacency on tech, and unstuck years of inertia to the benefit of start-ups. Incumbents in every industry will continue to be disrupted by new, cloud-native solutions, and investments will keep flowing into this space.”4
Executive leadership recruitment will always at least consider industry specific experience. Just as important, however, is the capacity to navigate and capitalize on changing landscapes, where consumer habits, technology, politics, cybersecurity, and societal progress redefine the economy on a constant basis.
