Passion and Strong Relationships Key to Investment Success
Investment, venture capitalism, mergers and acquisitions. For many, these endeavours are considered the sport of the rich and famous. But one Canadian startup is proving that strong relationships and passionate minds are just as, if not better, equipped for these rewarding undertakings. CloudTweaks discusses , its accomplishments, investment strategies and philosophies, with co-founder .
Valsef was founded in 2011 after the partners successful sale of their first business.Initially created as a vehicle to invest in, the partners started by investing in stocks,performing deep dives into different business models, expanding their knowledge, andgenerally trying to figure out what to do next. A year in and their internet business was launched, buying and commercialising internet-based publishers they felt had great potential. Three years on and the company started their own software business, buying and investing in software businesses that cater to very specific verticals.
Strategies & Philosophies
Valsef’s has delivered high returns along with a low loss ratio. With the four mainstays of management, competitive advantage period (CAP), quality, and price, Sam Youssef insists that success lies first in superior management and the proper appreciation of human resources. With this in place, it’s important to find companies in the CAP – no mean feat. Quality, of course, is essential to businessstrength and Valsef looks for characteristics such as low cyclicality, high returns on capital employed, and sustainable pricing power, to name a few. And finally, price. In business, it’s nearly always going to come down to cold, hard cash, and Youssef suggests it would be ‘grossly hypocritical’ should he not employ the capital of Valsefshareholders rigorously and diligently.
Sam Youssef explains that their investment philosophy differs between stocks, internet and software projects, but recognises thatValsef has a very limited circle of competence and so sticks to the areas in which they’re most comfortable and capable. Says Youssef, “Whenever we try to get fancy and invest in stuff that’s not our core competencies we haven’t done well.” Valsef isn’t about flash orglamour, but rather hard work, proficiency, and staying power. “We want businesses that can’t be destroyed by technological innovation or a change in consumer tastes. We look for businesses that have fantastic economics,” says Youssef.
When Valsef invests in or acquires internet-based businesses, the team begins management from headquarters but keeps existing employees in place. Youssef explains, “We usually have a lot to bring to the table in terms of our ability to improve the content and advertising relationships, so that’s the first thing we work on.” With the software businesses they invest in, Valsef runs each company independently and leaves present management and employees in place. Thereafterthey share best practices helping these companies run optimally and focus on the long term, which, says Sam Youssef, “sometimes in and by itself improves the positioning of the company.”
Valnet Inc, the “crown jewel” of Valsef Group, is one of, if not the, fastest growing web-based publishing/media companies according to Sam Youssef. Buying brands that have a strong following and a solid base, the company expands qualitatively through the production of high–quality editorial and video content. Says Youssef, “Our philosophy is simple; we build the best content for consumption online… Valnet now owns some of the fastest growing YouTube channels with those were started from scratch leveraging the popularity of the publishing brands we’ve acquired.”
, the software company launched more recently, entails the acquisition of established and enduring software companies catering to specific verticals. But Youssef emphasises that they’re in it for the long haul. These acquisitions are run in a decentralised fashion, leaving businesses where they are, with a president controlling the company. “We’re here to help,” says Sam Youssef. “We find that sometimes being the top guy is a lonely job; you don’t have many people to bounce ideas off of. So we’ve built a kind of ‘President’s Club’ for our presidents to share ideas and best practices, helping improve the performance of each of the independent companies.”
All in all, Valsef’s five–year journey displays a remarkable progression with the morepragmatic backing of hard work, informed foresight, and requisite expertise. The next five years will likely be fascinating, to say the least.
Published: August 26, 2016