Thinking Globally, Acting Locally…It Works In Basketball and Investing
“Thinking Globally, Acting Locally…”
… this was a headline in the New York Times the other day reflecting on the recent March Madness Cinderella story of Davidson College and Coach Bob McKillop. Struggling to compete for players against bigger, more entrenched basketball programs like Duke and Georgetown, Coach McKillop started recruiting aggressively in Europe and even Africa in addition to regularly teaching at basketball camps abroad. He was willing to recruit raw talent at places far away, and then shape it in North Carolina by offering players not only the opportunity to play basketball, but also a top rate, personalized education afforded by the small school atmosphere. In other words, Davidson College was willing to take a risk and devote resources on a global level but then relied on strong local leadership and culture to build a first-rate, successful team. Matching a global idea with a strong local network and culture was the winning ticket—until Davidson faced No.1 seeded Kansas, anyway.
Now, why does this remind me of our venture capital business? We can all agree that the world is dramatically smaller now. As a venture investor, I’m seeking businesses that will not only pull from the global economy for innovation and talent, but also have the ability to grow into sustainable firms that service or successfully compete in global markets.
I’m certainly not alone in this. The venture industry is increasingly willing to invest in regions that were classically off limits, in terms of both airplane time and culture. According to the 2006 Deloitte study on Global Trends in Venture Capital, 58 percent of venture capitalists indicated that they are increasing their global investment focus. And their justification for doing so depends heavily on particular characteristics of the local “entrepreneurial ecotope” where they are seeking investment opportunities, including lower investment costs, higher-quality deal flow, the emergence of an entrepreneurial culture, diversification of industry and geographic risk, and access to foreign markets and capital.
Coach McKillop used global resources, then applied local support and expertise to create a franchise that was able to compete on a broader scale. The same strategy can prove successful for emerging innovation businesses as well.
While it’s important to never lose sight of the global market opportunities, the support required for growing fundamentally strong companies has historically come from, and should continue to come from, their local community. As part of an international venture firm, we certainly don’t shy away from growth strategies that will require our portfolio companies to tap our global networks to succeed—in fact, we consider the firms’ ability to do so to be one of our key strengths. But in each region we invest, we put investment partners on the ground to work closely with entrepreneurs and strategic partners to develop local networks. The best firms all do this—and when local entrepreneurs evaluate out-of-town investors they should look for far more than just money or expertise, they should look for local presence and commitment.
Even with an eye on globalization, all businesses are still best built locally.