I have been investing since the year 2000, when I purchased my first shares from my company’s Employee Stock Purchase Plan. Not a great year to get started in terms of short-term appreciation in value, but it was a good time to start learning about investing. Really, any time is a good time to start learning about investing. Since that first investment, I have seen my share of ups and downs, made some very good bets and some not so good ones. And, I want to note that I’m using the word “bet” intentionally. Investing does involve a number of factors I cannot control or even influence. However, unlike betting, you can beat the house over the long term.
I’ve been investing full time since 2016, and oftentimes I am asked for tips, advice, stocks to buy, etc. Other times, I am asked my opinion on individual startups. A couple of weeks ago, I was talking with a friend and he asked me where I see growth opportunities given current market conditions (inflation, stock market dipping, investment capital outflows slowing, etc.) The question made me pause and think for a minute. When the answer came to me it was a bit surprising, a bit obvious and also reassuring. First of all, like other investors I will tell you to look for companies that make something that is a must-have and not a nice-to-have. Secondly, look for those that are cash efficient and either profitable or can/will be in short order. Lastly, look for companies working in markets/problem areas that are large and growing. For me, that means companies working in cleantech and healthtech. While I think there are some great public market companies working in these areas, the real innovation, impact and financial returns will come from early-stage startups.
Texas, where I live, is experiencing one of the worst heat waves in history. It has gotten so bad that a high of 100 degrees seems “cool” by comparison to days nearing highs of 110. You have no doubt heard of the heatwave punishing the UK and parts of Europe as well. Unfortunately, these events seem to be getting worse, and more frequent, and this trend will likely continue in the coming years. Climate change causes a myriad of problems from straining energy infrastructure, adding strains on fresh water supplies, worsening air quality, etc. In turn those problems lead to poorer quality of life, health problems and even death from climate-related causes. As with far too many maladies, poor and minority communities also bear the brunt of the worst impacts of climate change. Like any complex problem, many factors got us to this point and it will take many solutions to mitigate (and hopefully reverse) our current course.
Luckily, every day I see ingenious entrepreneurial-minded people taking on these problems with market-based business solutions. The good news for investors is that the market for these solutions is large and hungry for new innovations. While many of these problems will require groundbreaking technological breakthroughs, there are also plenty of opportunities for companies to optimize, or innovate on existing solutions to create massive benefits at scale, along with value for investors and society. Whether it’s moving existing diesel engines to low carbon bio-fuels, helping solar companies find, educate and delight customers or improve access to healthcare in Spanish speaking Medicaid populations, there are many ways to make the world just a bit better, and these incremental changes add up to significant advances over time.
That is why at SWAN Impact Fund we believe in doing well and doing good. We believe in the power of entrepreneurship to create companies, solutions, jobs, wealth, impact and a better tomorrow for all stakeholders. We have seen that smart capital can help entrepreneurs optimize operations, attract talent and find customers. While we face a number of serious, daunting problems, we should not accept dire consequences as a given. Instead, we should work to make positive changes, even if small, and support those who are working every day to find meaningful solutions to large-scale problems.