Lessons from an EM in EM Part II: How (and why) to actually add value as a GP?
Post two in a six-part series — Lessons from an Emerging Manager in an Emerging Market
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Secha Capital is unique because of our stage of investment (growth), sector focus (large, “boring”, fragmented), but our key differentiator and unique selling point is our Operator-Investor model.
A Secha Capital Operator-Investor is a high-powered resource who joins a portfolio company for at least a year to assist in strategic planning, key hiring, tech enablement and other operational projects and key initiatives.
But why this design and model? Well, in our experience in Southern Africa, there is both the oft-discussed missing middle, as well as a human capital gap.
Based on our theory of change (below), we decided to re-direct the flow of high-powered human capital to where our best and brightest could have the greatest multiplier effect. (We expand on the development component in this Stanford Social Innovation Review piece).
This sounds good in theory, but how do we empower the Operator-Investor (OIs) to become a competitive advantage for us and our portfolio?
We’ve found that when we combine the grit and domain expertise of our entrepreneurs with the hustle, attributes and willingness to learn of our OIs, that is where the magic happens:
The OI’s role starts during the investment thesis, outbound sourcing and really comes alive during the due diligence where we, with the management team, develop a value creation plan.
The OI role is unique at each company — sometimes she is in charge of growing a new sales team and re-defining our go-to-market, other times as the temporary CMO or head of HR and sometimes the OI is the Chief of Staff to the CEO. It is wherever the company needs her.
But, of course, this role needs structure in order to be repeatable and to create a flywheel of lessons for Secha in order to impart the skills and knowledge transfer to all of our portfolio companies. After doing this ten times, we have refined this process into S.A.I.L — Strategise, Assess, Implement, Learn.
Secha’s SAIL value creation framework ensures that each step along the way, we — investors, management, team — know where we are going, what we want to accomplish, why and how.
As we detail above, each step has key activities to create an output that enables us to achieve a clear outcome.
I encourage you to read through the table, but, succinctly…
Strategise: Quantify and plan growth initiatives to that we have a value creation roadmap for the whole company.
Assess: Identify and remove growth “lids”, up-skill talent, increase productivity and scale the team.
Implement: Embed a culture of execution via an entrepreneurial operating system.
Learn: Install SOPs and track OKRs to ensure a tight feedback loop and foster a dynamic, repeatable, stronger growth model.
The OI model SAIL framework is an intimate and unique approach for a fund. It’s differentiated from the standard GP value chain of find-fund-support, but it is not for everyone.
In the next post, we will expand on why we believe that you need to re-think your fund model as an “EM in an EM” and why the skills required are different compared to a fund manager who is not based in an emerging market.
Questions, comments, rebuttals or just want the slides behind this post? Feel free to leave a comment or email us at associate@sechacapital.com
