At 33, Alexander Dillon is the co-founder of GenCap Management, a New York based equity investment firm. In this interview with TechBullion, Alexander will be discussing pre-IPO and equity ventures at GenCap Management.
What is GenCap Management and what inspired you to start this investment firm?
GenCap is a family office structured investment fund. My partner and I invest our own capital into high growth, catalyst-driven companies across a variety of different sectors.
Tell us more about the late-stage pre-IPO opportunities, what do you look out for in businesses at this stage and what specific services do you offer?
We don’t offer any specific services. We are only an investor seeking to invest in companies that have proven themselves at the very early stages and have a management team that is ready to take the company to the next level.
How big is the equity investments market, and which trends of businesses are investors more interested in this 2022?
The number is pretty huge, I think the equity capital markets are probably nearing 100 Trillion dollars worldwide. 2022 will be an interesting year, we’ve already seen a lot of investors losing their appetite for overvalued speculative growth stories. I believe the trend will be towards real growth in revenue and bottom-line profitability.
How involved are you in the businesses you invest in and how do you manage the risks associated with equity long/short investments?
We don’t actively get overly involved in the day-to-day operations of our investments. Every so often we find an investment that we might also be of some strategic value to as well as growth capital. Those companies we tend to form a more intimate relationship with.
Our strategy with GenCap to mitigate risk is to simply invest in things we know and understand. If we cant understand the road to the companies success, we will often pass, even if others are jumping at the same opportunities.
How much can a business at late stage pre-IPO raise from GenCap Management, do you also invest in any other forms of startup and what are the processes involved?
Most of our investment opportunities are introduced to us through investment banks. These banks often prepare the offerings or marketing materials so that GenCap and other investors can easily access the relevant information and digest the investment opportunity.
We are “first money” into a few start-up companies, however, it is not the firm’s main focus.
What are the major problems you face when investing in businesses, how do you mitigate these problems?
Since most of the companies GenCap has invested in are private at the time of the investment, the biggest problem is always transparency. Since these companies have no obligation to file their quarterly and yearly reports until they IPO it is sometimes difficult to get the full picture.
What major challenges do businesses looking for equity investments face, what is your advice for anyone looking for equity investment?
The biggest hurdle has to be getting in front of the right investors. There are investors out there for every opportunity. If you have a business worth investing in, the biggest struggle will be gaining the right audience.
As a New York based investment firm, you must have some competitors coming from a global investment hub, what competitive advantage do you have over other investors?
Surprisingly at this level, we often co-invest with groups of other like-minded investors. Often when a bank is shopping around a deal, we are not the only investor on the cap table.
I think what keeps opportunities flowing is our relationships. We have strong relationships with the management we invest with as well as the banks and firms that often bring these investments to us.
Any success stories to share with us from your previous investments and any exciting new ventures to share with us?
We don’t often disclose our portfolio publicly, but we are very excited for a handful of investments that we expect to have successful public exits sometime in 2022.