Andrea Kowalski, Principal Investor at Bailador Technology Investments
This month we speak to Andrea Kowalski, Principal Investor at Bailador Technology Investments about her move to the United States with Bailador and technology growth areas.
What is your role at Bailador?
I’m a Principal at Bailador, which means I am responsible for various aspects of the business from deal origination through to portfolio management and board representation.
The first step in sourcing a new investment is identifying key sectors and growth areas that are of interest to Bailador. The team and I spend a lot of time sitting around the table (or Google Hangouts as my new location requires!) debating key trends and ideas. Most companies are sourced through Bailador’s network, or proactively sought after if considered strong leaders within their verticals. Investment decisions are ultimately made by a committee, with significant effort carried out by our investment team on the qualification, deal negotiation, due diligence and documentation processes.
When a deal is done, my role moves into portfolio management, which typically involves sitting on the board as a Director or Observer, and working very closely with management teams. In the first 12 months of investment there tends to be considerable ‘hands-on’ work, supporting management teams by supplementing short-term gaps in the C-suite team. It’s important that Bailador assists where we can on whatever tasks, projects or issues are required in order to best position the company for its next phase of growth.
How did you come about joining Bailador?
Before Bailador, I spent six years in investment banking (with a focus on engineering and technology sectors), three of which involved principal investment. I then spent three years working for a venture debt fund in Europe, where I focused primarily on building out our German business from a satellite office in Berlin.
I was visiting Australia in 2014, when I was approached by a recruitment firm and also a colleague of mine from business school, who had worked with Paul Wilson at CHAMP, informing me that Bailador had recently listed Bailador Technology Investments and was looking to build out its investment team.
I met with David and Paul and was immediately interested in the opportunity. I was impressed with the versatile and accomplished careers both had built and tremendously excited by the entrepreneurial nature of Bailador itself. Most importantly, I felt the team to be a really positive cultural fit, one of the most important considerations when joining an investment firm.
You’ve recently moved to the U.S., what are you looking to achieve over there for Bailador?
Bailador specialises in companies that have a global reach, therefore it’s quite natural that our companies have offices, and in some cases HQs, in the US at the time of investment, and if not, are in the process of increasing their US presence significantly.
Two of the companies I sit on the board of, Instaclustr and Stackla, are headquartered in California with key management members based in the US. A third company, Standard Media Index, one of Bailador’s first investments, is headquartered in New York. Also, companies such as Rezdy, have quite a significant presence in the U.S., as it presents a huge growth market, which we also expect will be the case for several future investments
I will be supporting our portfolio companies by working closely with the management teams on the ground, as well as facilitating their expansion efforts. Additionally, the vast majority of acquiring companies and follow-on investors are based in the US or Europe, and so being based on the East Coast offers a great opportunity to establish relevant relationships with strategic parties and support the teams in executing on a path to exit.
Whether it’s an IPO, exit, strategic partnership, a new investor coming on board, or even a new investment, the earlier you can start establishing relationships the better. So much success in this sector stems from the ability for the people behind these companies working together to achieve a common goal.
Another key advantage to being based in the US is having a pulse on what’s happening in arguably the most technologically advanced country with the largest tech ecosystem globally. Unless you’re on the ground you miss a lot of the detail, whether it be an understanding of emerging trends or movement within the competitive landscapes relevant to Bailador’s current, or future, portfolio.
Where do you see the growth areas in I.T.?
It’s hard to avoid buzzwords like Artificial Intelligence when asked this question! The issue is not that the term is incorrect, rather it is often used incorrectly, but that’s an aside. An area of growth that’s positioned to revolutionise every vertical right now is the ability to draw powerful insights from the mass amount of data collected to power company (or customer) decisions. At scale. Real time. I think the inherent value of this data remains untapped in a lot of companies – making sense of this data without automation requires dedicated resources and is ultimately not scalable. Either businesses have yet to develop the required automated processes, or are unclear as to how best to monetise this data for use by other companies that have the tools readily available.
Another growth area relevant for Bailador is the increasing emergence of digitally native, vertically integrated, retail brands. Let’s talk about one of the most powerful (and in my opinion, impressive) companies of the past decade: Amazon. Six weeks in New York and Amazon is a pivotal part of my life. Forgot to pick something up during the day? No problem - order before going to sleep and it awaits you at your front door by morning. Amazon has paved the way for emerging companies by establishing a trusted channel (online) that’s cannibalising traditional brick and mortar stores. However, consumers are still looking for specific brand experiences – brands they can identify with and whose products bring satisfaction beyond convenience and price. Online is the future, hence ‘digitally native’. Vertical integration is key as it enables companies to remove brick and mortar operating expenses and pass these savings onto the consumer. There have been a number of global successes, particularly in apparel, eyewear and mattresses, and I think we will see this category flourish in the next decade.
A third growth area is the ecosystem that surrounds electric vehicles and self-driving cars. I could not be more excited by the vehicle innovation from a consumer perspective, but beyond the cars themselves are the required software and hardware capabilities required to fuel this sector (no pun intended…). The battery and charging docks for electric vehicles, the technology that cools the battery, sensors and cameras for autonomous, changes required to road infrastructure and then there’s the infotainment – the driver no longer needs to drive, he/she can work, watch movies or video-dial into board meetings. Imagine virtually attending foreign language classes while commuting to the office?
Why do you think Bailador differs from other VC funds?
There is a lot of hands-on support that companies get to benefit from. Bailador is focused on ensuring a business is appropriately set up for its next phase of growth. We’re not looking to take the wheel out from under management, rather it’s about being there to support the team by providing additional resources in the short term, thinking through the most effective organisational structure, helping recruit A-grade talent and establish critical internal processes and greater governance necessary as the company scales.
As our investment mandate focuses on companies in expansion stage, we tend to focus a lot on international expansion and scalability of the core business into new geographies and new product lines.
Culturally-speaking, as I can’t understate the importance of a strong cultural fit between a company and its investors, Bailador is open, direct and transparent. Through our up front due diligence, we understand the risks associated with a given investment and as we are pragmatic individuals, we ride through the ups and downs to success alongside the management team, focused on constructive solutions to problems that arise over the course of the journey. We are data-driven, and encourage companies to apply greater rigour and analysis to business decisions. We also form human connections with our management teams – we’re there for them to pick up the phone at any point and vent their frustrations or celebrate their wins.