The Venture Fund Betting on Antifragility
This post was first published on August 11th, 2021.
One may ask, “what is antifragility?” It is a concept developed by Nassim Nicholas Taleb, a statistician and former options trader. Taleb is fascinated by uncertainty and his essays seek to outline and predict the risk associated with Black Swan Events; events that are considered unpredictable and may be catastrophic but upon hindsight could be both predicted and guarded against.
Throughout his writings, Taleb outlines and develops the idea of Antifragility; a concept where shocks are not only withstood but act as fortifiers. 2020 has been a poster year for economic turmoil and fragility; a year where the prevailing philosophy of economic growth and stability have been inverted. It is with this backdrop that BoCG Ventures (BV), Venture Operating Model (VOM) was developed. Our investment philosophy is focused on finding, funding, and operating antifragile ventures in order to create stability and growth for ventures and investors alike.
BoCG’s guiding principle can be summarized by the acronym “FFOE” which stands for Find, Fund, Operate and Exit. The FFOE principle guides each investment decision and allows the venture managers to quickly ascertain a venture’s viability through a few simple questions:
- Is this venture antifragile?
- Is growth scalable through technology?
- Do we have the experience to operate it?
- What is the target exit strategy?
The BoCG team starts every venture discussion with the above concept and only proceeds with next steps if the FFOE benchmarks pass our litmus test. Embedded in the questions lies our venture sub-theses of 1) creating intrinsic value, 2) withstanding economic shifts, and 3) ensuring portfolio diversification. Our first Antifragile Fund is focused on assets within real estate, financial services, philanthropic development, and marketplace sectors.
BoCG identifies ventures with strong leadership vision and partners with investors to fund venture operating companies; investing opportunities range from traditional equity investments to debt financing. To ensure asset diversification, the BoCG portfolio is organized into distinct venture operating companies responsible for 2–3 portfolio assets. The portfolio companies generally operate in distinct sectors driven by technology infrastructure to create scale and mitigate risk. BoCG operating managers take an active role in each portfolio company to provide expertise and guidance. Consistent operating transparency is ensured through real time business intelligence applications that provide three-way data sharing between Investors, Operators and Ventures.
Antifragility is not a new concept but the application of the concept in investment selection and technology-driven operations is novel. The 2020 pandemic has not only revealed significant cracks in the current worldwide economic infrastructure but also highlighted that investing with antifragility in mind is advantageous. BoCG’s operating model applies antifragility to technology and operations and thereby rewards those ventures that assure investor returns. The game has changed and opportunity favors the bold.
To learn more about our work, contact our team or follow us on LinkedIn. For more insights, follow our writers and editors: LK, Chris MGH, and Gabriel Queiroz Silva.
_________________________________________________________
