Discipline — everyone knows its importance , but still few follow .
Patience- most of the times it comes with time and experience.
As an entity who deals with both public and private markets ,it’s important to have both the traits .
Allow us to share how we navigated this part –
The 15 month period of 2021–22 , was filled with heightened optimism and every idea , worth its salt was getting funded .
And not only funded , but also at valuations, which ( at hindsight ) was at crazy levels . FOMO was in play .
At Auxano, we stayed away from this all razzmatazz. The funds mandate is to invest . Invest it will , but not at any price .
The valuations need to be realistic and justified . Only because, there is a TermSheet with a certain valuation, others should also bite ( nowhere is it written) .
At the same time, Auxano was actively seeking opportunities all around and waiting for the time to invest. For nearly a year , no new fresh investment was carried out . Was working closely with the promoters of the existing portfolio and sharpening the saw .
As the euphoria settled , over a period of 4 months , carried out 4 new fresh investments.
It has been rightly said — After the event , even a fool is wise .
The period post the euphoria has seen downrounds , closure , closures , et all.
One needs to consider the errors and mistakes, which were avoided too , as one evaluates a fund .
Prevention is better than cure . The irony is — Applause is more often than not only to those who have cured .
Discipline is following the set routine and process at all times .
In Auxano, we have a checklist at all times.
At the evaluation stage, the Term sheet stage , due diligence stage , Share holder agreement stage and also post the Investment stage .
Many a times , we are told , we seek too much data . Information in private markets are very limited and not easily available. In such a scenario , its always a good practice to have as much data as possible. The data will only allow to make an optimum decision. ( We have walked away from opportunities, where inadequate data was received, irrespective of the pedigree )
As a financial institution , we would like to play on our strengths . Patience and discipline have to be carried day -in & day-out ….
Author:
Brijesh Damodaran
