Selecting which startups to include in a given portfolio is a decision that is informed by considerations from three different perspectives. These are 1) as a standalone startup; 2) Portfolio Management; and 3) matched with our own competence.
Genesys aims to invest in very early stage startups that either represent a breakthrough in an established sector, or are in high growth emerging sectors.
There is no bias towards any particular technology sector, applications market or geographical region. In all cases, the primary selection criterion is economic returns, with secondary considerations of social and environmental impact and value.
With this context, we review scores for each startup from 1) the initial application stages; and 2) the Routes to Value outputs created during the Basecamp process. These include a number of sub criteria that are included in the table below.
|Business Area||Investment Requirements|
|Employment||Potential to create and sustain significant direct and indirect employment (i.e. in the supply chain)|
Low switching and/or education costs
Distinctive competitive space
|Synergy with other companies in our investment portfolio|
|Competence||The necessary competences have been identified and we can obtain them|
|Finance||High growth||High volume, high margin, or both|
|Governance||Business processes in place||Procedures documented|
|Market||Large and growing markets
|Organisation||Passionate, committed entrepreneurs
Open to professional management
|A growth mind-set
Willingness to sell equity
|Product/ Process||Proprietary versus commodity||Uniqueness|
|Technology||Defined, defendable intellectual property
Disruptive versus incremental
|Defensible Market Positioning||Intangible Assets / Switching Costs / Network Effects / Cost Advantage / Efficient Scale|
Using a proprietary portfolio optimisation model developed specifically for Genesys, the portfolio of startups is managed to ensure a balance that ranges from complex and far from market, through to less complex and closer to market. We also limit concentration in any one stage, technology, or sector.
Our Competence Considerations:
For very early stage startups, the ability to ‘make’ a venture work is largely reliant on the ability to quickly do business with a network of new customers. Therefore the quality and reach of the Genesys network, and the ability to understand how set up demand generation for a startup, are part of the consideration for investment selection.