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What we like
Above all, GCP invests in outstanding management teams, who are committed to building leading technology businesses that grow to become important players in their respective field, usually significant global markets or particularly dynamic and profitable niches.
Specifically, plans that catch our attention usually feature:
- a simple, compelling business idea with a clearly communicable and plausible business model. We look at both concepts that may become stand-alone products or may end up as a feature in someone else’s offer,
- a significant market opportunity, either on the basis of a substantial and profitable existing market and/or a market that is set to experience explosive growth. As most investors, we are wary of concepts that seek to “educate” customers or where markets need to be “created”,
- companies addressing such markets need a sustainable competitive advantage over alternative offers. We will look at the initial advantage and the possibilities of protecting and enhancing this advantage over time,
- a plausible exit opportunity within the lifetime of our funds.
When assessing management teams, we specifically look at three aspects:
- Honesty: This goes beyond the obvious call for non-fraudulent behaviour and openness towards business partners such as VC investors.
Above all, it is about honesty towards oneself, of escaping from self-delusion: Are the assumptions made in the business-plan realistic? Is the management team aware of the inherent risks and its own limitations? How does it seek to address these issues? - Frugality: As stewards of our investors’ money, we want to see their cash working as hard as possible to create value through business success – we do not want to see it spent on lavish perks, luxury offices or savings plans.
Moreover, frugality in our view is about being sparing with resources at all times and focusing them on those areas that are critical for the firm’s success - management should set the example for all employees and start by drawing modest salaries. Also, we put great emphasis on an alignment of interests of key executives, founders and investors. - Preparedness: There are two dimensions to this – alertness to seize upon opportunities as and when they arise on the one hand, and determination to follow through on the other. In other words, teams need to acquire the necessary flexibility, speed and timing to adapt rapidly to changing circumstances – foreseen as much as unforeseen (and unforeseeable), as is often the case in the fast-changing and unpredictable world of technological innovation.
Furthermore, managers need to show the required resolution and commitment, including taking the inherent risks (sometimes personal) on the road to success.
Reisnerstrasse 40/3
A-1030 Vienna
Tel.: +43 (1) 513 10 72
Fax: +43 (1) 513 10 72-200
office@gamma-capital.com
www.gamma-capital.com