COVID-19: A Focus on Fundamentals

COVID-19 has us questioning what a “new normal” will look like regarding how we work, travel and invest. It has amplified pre-existing challenges and created new ones.

One key lesson it has taught us across every aspect of our lives is how important that a focus on the fundamentals is and the need for access and flexibility is essential.

When you consider investment, even before the pandemic, some have been frustrated with the lack of ways to access growth in the private markets. Many advisors relied upon Liquid Alternatives to provide accessible alternative exposure for clients. This asset class has performed inconsistently and more poorly since COVID-19 spiked in February. New work-from-home and travel behaviors may also continue to influence real estate or fuel prices for the foreseeable future. Some thoughts on fundamentals, access and flexibility now and in the future:

Financial professionals need an alternative investment instrument with greater access without the traditional limitations of traditional venture capital because, as COVID-19 has shown us, things can change.
Food and health are fundamental and non-discretionary. We all must eat. No matter where else we hunker down in times of crisis, this is indisputable.

A New and Better Investment Instrument

Imagine the best of venture capital without the barriers — lower investment thresholds, greater liquidity, ongoing optionality and lower fees. This is what makes the Yale Endowment model so successful yet has eluded most investors. COVID-19 has shown access and flexibility are essential in our investments and lives.

A Focus at the Nexus of Food & Health.

COVID-19 has shown us that travel and physical workplaces are (somewhat) discretionary. But we all must eat. Food and health are our most basic human needs. Americans spend over $1.7T a year on food* and the same healthcare and productivity loss from diet-related illnesses such as cardiovascular disease, type 2 diabetes, and obesity.** Here are some companies moving this from promise to progress to reverse this trend and create more nutritious and healthier food that is also accessible and affordable:

Bonumose makes Tagatose production affordable and commercially viable. Tagatose is a fiber-based, sugar substitute without sugar’s glycemic and other negative impacts. You can watch a recent discussion with Dr. Robert Lustig, a known expert on the health impacts of sugar here.
Benson Hill is enabling the production of soybeans with higher protein content and healthier oils while still maintaining the competitive yields farmers depend upon. You can catch that discussion here.

These are just two of the more than 2,500+ companies we’ve evaluated and chosen for investment and growth. The arenas of food and health will enable investment with impact; the ability to do good and do well is our focus.

*USDA Economic Research Service / Farm Bureau

**Milken Institute. “Economic impact of excess weight now exceeds $1.7 trillion: Costs include $1.24 trillion in lost productivity, according to study documenting role of obesity and overweight in chronic diseases.” ScienceDaily, 30 October 2018. <www.sciencedaily.com/releases/2018/10/181030163458.htm>.

Investments in private offerings are speculative, illiquid and involve a high degree of risk and those investors who cannot afford to lose their entire investment and who cannot hold an investment for an indeterminate period should not invest in such offerings. Past performance is not indicative of future results. Securities are offered through North Capital Private Securities, member FINRA/SIPC. All information provided herein should not be relied upon to make an investment decision and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Prospective investors are recommended to consult with a financial adviser, attorney, accountant, and any other professional that can help you understand and assess the risks associated with an investment opportunity.

Consideration

With 2021 well underway and with public markets still strong, we think it is an important time to highlight some of the key private market, venture investment themes that iSelect fund has identified for the year. We believe technologies transforming the Agriculture, Food and Wellness markets will flourish, with a focus on four areas: technologies that enable better food choices to drive better health outcomes, technologies that drive better, more profitable farm operations, technologies that drive the Consumerization of Healthcare, and biome-based treatment technologies. At iSelect, we invest for impact AND performance. We offer qualified investors access to emerging growth companies through our national venture capital strategy. Our unique structure allows our investors to continue to invest in these companies as they develop.

Timing

Why is now the right time for venture? The answer is that now is not explicitly the right time. Venture is something we need in our economy at all times. Now is not better than any other particular time. The question is, why ever stop? When we look at the challenges we’re facing in food and healthcare the reality is there is someone, somewhere who has an insight about how to build a product that will solve those problems. And if they put the right resources to it, they will succeed. As long as we need new technology to make life better or make our lives more enjoyable, we need venture capital to help fuel those entrepreneurs.

What is iSelect as a product?

iSelect is a very unique product, but when you break it into its parts it’s fairly easy to understand. On the front end we’re a traditional venture capital fund. We have a diligence process. We have an investment process. We have categories of industries where we have focus and real expertise, and we invest in companies in those areas that meet requirements for the fund. On the back end we’re unique in that we don’t raise a large amount of capital at one time and deploy it over the life of our fund. Each deal that we bring onto the fund, our investors have to prove and determine to invest in that deal. We have to constantly prove our diligence standards. It’s accessible, transparent and easy for investors to come in and see our comprehensive process.

What is the ideal iSelect company?

We are looking for founders that are passionate and we want the problem they’re trying to solve to be big, real, and painful. We want the solution to be revolutionary and we want our capital to be able to help them solve that problem. We want to know that they have customers involved and that the solution they’ve come up with actually meets those customers’ and market needs. And we want the team to be capital efficient with the money they’re spending.

What does the ideal iSelect company look like?

We’re looking for a company that has an opportunity to have a 10x return to our investment or greater in a period of three to seven years. What excites us at iSelect are companies that are solving big problems. We want companies that are going to be the Monsantos of the future. Not just in the size and the scope, but the impact they have on people’s lives. We want to create positive impacts on people’s lives, so we invest in areas like agricultural production and areas like producing healthy foods for our kids. They are problems that impact real people’s lives on a daily basis. That’s what we’re trying to do at iSelect. We’re trying to solve the big problems out there. Find ways to bring capital to the entrepreneurs who are the real heroes out there getting up every morning, beating away at these things that are problems that you and me and everyone else faces in their everyday lives.

What is iSelect?

iSelect is a venture capital firm. What that means is we look at hundreds and hundreds of different companies and we apply tough diligence standards to each of them, looking at whether the team has a good plan for growing the business, whether the team is qualified and credible, and more. We do that to resolve the few who provide the best opportunities for investors. And then iSelect takes that smaller set of investments and goes to investors who are interested in venture capital and provides a way for them to invest in these companies, either individually or all at once. We co-invest alongside other venture capitalists. We source transactions through to an exit where the company would become public or get bought. And we manage that whole investment process on behalf of our investors.