Emerging Sponsor Evaluation
Asset Class
Strong emerging sponsors see where their asset class is changing and where opportunities are opening up. They need a clear story about why they’ll win against established players, backed by a differentiated angle.
Investment Thesis
The investment thesis needs to show alignment between market opportunity and execution capability. The best emerging teams often have an edge through specialist knowledge, strong networks for finding deals, or better ways to assess and manage risk. These advantages need to be genuine and lasting, not just temporary leads that competitors can easily copy.
Team
Team evaluation transcends individual resumes to understand the group’s collective strength. How long have they worked together? What skills does each person bring? Most importantly, do they share the same vision and values? Teams that have tackled challenges together often make better decisions than groups of talented individuals who are just getting to know each other.
Track Record Substitutes
By definition, emerging sponsors don’t have an applicable track record. In some instances, prior work may may not be completely relevant in their new venture. Discussing historical “point capabilities” and how it may be modified for the current venture will be important. These examples should demonstrate end-to-end investment capabilities from sourcing through value creation and exit.
Qualitative Framework
Everybody that meets with an emerging sponsor will form a view on the team based on qualitative factors emphasizing intangibles. There are common frameworks available (e.g. “4 C’s” framework). The key thing is that individuals must develop a gut-level conviction on the team itself.
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