In the third article of our “Investing During a Pandemic” series, I interview Basil Moftah, Managing Partner at Global Ventures a Dubai based $50 million growth stage fund to talk about their investment strategy and the way forward.
Are you investing?
Yes, absolutely, Global Ventures is a growth stage fund, we invest in long term businesses and this is a short term happening. We have a couple of investment announcements coming up.
How have you adjusted your investment strategy?
As a growth stage fund, our main concern has become market growth. We are focusing on a company’s ability to grow in the current environment. We have also become more diligent in checking how companies are spending their money, and ensuring that they are not over-investing too early.
How have you supported your portfolio companies?
In the short term, a lot of support has been on the financial side whether through direct investments or helping them secure financing from banks or third party providers.
In the medium term we’ve been spending a lot of time building a community with our founders. We have a weekly call with our founders, limited partners and investors in the fund to share thoughts and ideas.That community has created some interesting new ideas for the founders to think about.
In the third way, a couple of our businesses have decided to pivot the way their business is run based on the current circumstances to go after new verticals. For example Lunch:On, a company that used to do business lunch for people in their offices, they now do the same thing but deliver to their home. That requires quite a change in logistics. So we worked with them on how to make those changes more cost effective.
What are actions startups can take to mitigate the situation?
For a very early stage idea or company, they need to reassess if this idea is really valuable in the new world we’re living in and consider whether there might be something better to look at or start instead. As for later stage companies, I suggest the company revisits how well it is serving its clients and how resilient it is now. For me, now is the time to invest in your service.
Global Ventures is also recommending all of its portfolio companies to be conservative with cash, and to downsize their organization, via salary reduction or other means of cost reduction, if need be. The long term survival of these companies is more important for employment. If a company that is in trouble continues to pay salaries, it doesn’t reduce its cash burn down and ends up going bankrupt and there’s not going to be a company at all.
What are promising industries for you?
On the short term, health tech or digital health have become increasingly more important for Global Ventures. We’re currently speaking with many companies, since now is the time for them to grow quickly.
However, Agritech, Robotics are also equally interesting in the medium or long term. The problem that COVID raises is not the problem of just being a disease. It also raises the question of food security and automation. They might not be directly related to the disease, but they are related to the way we live and work.
Can you give an example of a founder or startup whose reaction impressed you?
It’s not a portfolio company, but what KarmSolar did recently to use its capabilities to provide an open source design for a COVID-19 field intensive care hospital was really impressive. If it’s true or partially true then I think it’s an admirable thing to see.
What actions do you hope to see by other ecosystem players to provide support during the crisis?
It’s a complicated question, because everybody comes from a different world. But what becomes very obvious to me and I think also obvious to others, is that not every company is going to survive this crisis and this may be a good opportunity for some great mergers and acquisitions to happen.
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