Asking why one makes an investment is an important question. The obvious answer is to make money, but there is often a deeper reason. Understanding the reason behind anything one does is important. Today we will discuss some reasons why investors make their decisions.
Know Why You are Investing
Why are you investing? The answer for most would be to earn returns. It’s healthy for any individual to want financial stability. If one wants to earn money, investing seems like a fine choice. Then, come more questions. What is a good investment? In theory, that would be the one that gives you the highest returns in the short and long run.
In the real world, these situations are rare. Finding an investment opportunity that gives short and long-term growth with high security is a dream of many investors. The biggest corporations in the world often face loss or have bad quarters. Companies go out of business or show slow growth. This is the nature of business.
What if there were different ways to look at the problem? What if there was a basis for your decision-making that gave more insight?
David Kezerashvili is the owner of venture capital firm InfinityVC. He believes that the answer to this question is innovative value. This is not a new concept. Value investment strategies have been around longer than most of us. Warren Buffet is one of the best-known proponents of the strategy. Investing in innovation is common sense, but it’s also the most logical step forward. Why? Let’s dive deeper into Kezerashvili’s philosophy.
We Are Looking For Solutions
What do people want to buy? Most people are looking to buy solutions to their problems. Coca-Cola is so popular because it solves the problem of thirst. More than that, Coca-Cola provides added value to the solution of quenching thirst. The drink is something tasty and bubbly besides solving the problem. Almost every company or industry is looking to build a value proposition based on this idea.
When you are investing in a company, you are not funding a brand or a certain product. Often the most critical resource of a business is its talent. The people that work there are the drivers of innovation. Kezerashvili often looks for companies with solid staff before a solid idea. A good idea without innovative people to realize it would be a bad investment.
Innovation is tied to value, but it’s a little different than simply numbers on a page. Most people understand the concept of buying low and selling high but innovation takes different paths. Often investment in innovation can prove to be less than profitable at first. Research and development are often long processes and require as much patience as capital.
Innovation as a Giant Wave
Determining the value of innovation is a bit harder than other factors. When an innovative technology or product develops, it’s not simply a new product to sell. True innovation has its own value. Big breakthroughs with one firm often affect the whole market. Whether this is by raising all boats or by disruption, the effect is often huge. 5G networking technology is a great example of this type of innovation. The whole tech sector will see the effects of these new protocols. Some firms have brighter futures with new innovations. Others seem doomed to be disrupted out of the market.
It doesn’t have to be tech or a science field for great progress. Even new methods in architecture or retail are worth a lot of attention. InfinityVC is only one of Kezerashvili’s investment vehicles. Unlock Group is a non-tech-focused firm. With Unlock Group Kezerashvili is doing something innovative in the Ukrainian real estate market. Hundreds of aging and unusable buildings are holding back Ukraine’s growth. Innovatively, Kezerashvili and his partners are not scrapping these structures. Instead, the renovation has provided greater value to the community. It has been an incredible success. Despite being an unorthodox solution, it is a solution, not just more talk.
Focusing on innovating, and creating value is Kezerashvili’s strategy. Investing toward innovative value is a bit of a risk but the payoffs are market changing. Good, but not innovative, products can earn some money. Revolutionary and innovative products make investors rich.
Whatever the industry is, there is always a company that’s going to change the whole playing field. That’s the one you should always consider investing in. With due diligence, you can both have great returns on your investments, and support the rapid advancement of progress.
