Equity PowerAlabama: A Venture Capitalist’s Journey Towards a Sustainable Future
Wiley (October 2022)
How to thrive in “the fastest growing and most dynamic markets around the world”
An emerging market economy is one that is in transition to a developed economy. Emerging market economies typically feature a unified currency, stock market, and banking system; They are in the process of industrialization. Emerging market economies can offer higher returns to investors due to their potential for rapid and substantial growth.
In simple terms, an emerging market is one in which an increasing number of people buy, sell or trade. The community can be local, regional, national or international. Marketing creates or increases demand for whatever is bought, sold, or traded. W. Chan Kim and Renée Mauborgne would describe it as one that requires a “blue ocean” strategy. That is, “the simultaneous search for differentiation and low cost to open a new market space and create new demand. It is about creating and capturing uncontested market space, thus making the competition irrelevant. It is based on the view that market boundaries and industry structure are not given and can be reconstructed through the actions and beliefs of industry players.
Asha Mehta points out that technology is key among the drivers of growth in emerging markets. In addition, the use of machines has brought substantial benefits in terms of objectivity, scalability and cost. “I know. I’ve been a global quant investor for over 20 years, using technology to hedge tens of thousands of stocks and further technology to build portfolios with hundreds of stocks. This infrastructure has allowed me to invest capital in the remotest corners of the world, in small increments reaching the corporations of the poorest countries, all thanks to technology”.
Her breadth and depth of experience, as well as her highly developed analytical skills, have prepared her well to explain, as she brilliantly does in this book, HOW to thrive in “the fastest growing and most dynamic markets around the world.”
Since I was a child, I have seen my favorite books as “magic carpets” that transported me to strange places and ancient situations that I could not otherwise experience. Why was Achilles so special? What was Christmas like in Dickens’s London?
In or near the downtown business district of most major cities, there is a farmers’ market where, at least until COVID, vendors have offered fresh fruit slices as samples of their wares. In that same spirit, I now offer a representative selection of Mehta’s comments to suggest the thrust and flavor of his thinking. Your rug awaits you….
o “When the China land market came along, I couldn’t resist the challenge. With the impressive breadth and depth of the local market and its extensive price gouging, I was able to find plenty of investment opportunities. In established developed markets, ‘unicorn’ stocks – those with attractive growth prospects, good management teams, and yet an undervalued valuation – were hard to find, but in China, the opportunities seemed almost ubiquitous. (Page 14)
o “After the week in Vietnam, I felt that my visit was a success. The spirit and vitality of the people I met validated the data showing a favorable emerging market environment, although I understood the risk of my thesis. [A journalist’s whispered words re government suppression and corruption] haunted thoughts, but once I changed the model to account for corruption and related risks, Vietnam was irresistible. In short, I would invest, but over time. I would shift the exposures more towards Vietnam’s thriving consumer sector.” (41)
or “That afternoon I returned to my hotel feeling optimistic. The renewable technology revolution was alive and well at SSA [sub-Saharan Africa] But I came back to reality when all the lights went out. As the hum of the generator mixed with the nightly sounds of nature, I was reminded that more than two out of three people in SSA still did not have access to electricity. I couldn’t help but think of all the people who couldn’t afford backup electricity generators; children without light to study and thus get out of the cycle of poverty; adults holding phones with dead batteries, unable to access their banking apps; and all local hospitals unable to perform emergency surgeries.” (115-116)
o “Sustainable investing calls for investors to appreciate the dual purpose of their capital to generate a return for the investor and to use the capital to build the ecosystem of tomorrow. Investment portfolios are ‘fit for the future’ when they are invested to generate profitable returns not only today but also in the next generation. With today’s technology and sensitivities, we can create portfolios that bolster climate mitigation, ensure social stability, and promote strong governance standards.” (177)
Those who share my great respect for this book are urged to read two others: Handel Jones’s When AI rules the world: China, the United States and the race to control a smart planet (Bombardier Books, Oct 2022) and Steve Brown’s The innovation ultimatum: Six strategic technologies that will reshape every company in the 2020s (Wiley, February 2020)