INSIGHTS AND RESEARCH

Integra Digest: Intergenerational Investment and Venture Capital:

Generational wealth planning encounters three key questions: how to sustain wealth, how to engage the younger generation and how to maintain family unity. The answer to all three? Venture capital. 

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Integra Groupe

November 11, 2022

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November 11, 2022

Integra Digest: Intergenerational Investment and Venture Capital:

Intergenerational Investment and Venture Capital

Integra Digest

Generational wealth planning encounters three key questions: how to sustain wealth, how to engage the younger generation and how to maintain family unity. The answer to all three? Venture capital.  

Venture capital presents a unique opportunity for intergenerational wealth management, and it does so by resolving the pain points outlined above. Venture capital investment provides a higher return when compared to public markets, consequently offering portfolio security for continuing both the accumulation and the preservation of wealth. Returns are sizeably higher in venture capital because it is at the root of innovation and change, moreover it offers niche entry points for investing in emerging trends and disruptive technologies of the future. A diverse, forward-thinking portfolio is never a loser.  

Venture capital also promotes healthy integration of younger generations into wealth planning and management. Tastes vary generationally for investment and, as the Bank of America’s 2022 study shows, the younger generation values sustainability above all else, moreover, the younger generation of investors (those under the age of 42) no longer believe that traditional holdings will be profitable in the long run, so they aim to halve their investment in public markets. Venture capital is the product of entrepreneurship, and this is further part of the appeal for intergenerational discussion: merging ideas, “expertise, insights and interests,” as Cambridge Associates’ Venture Capital Positively Disrupts Intergenerational Investing puts it, will have a positive impact on decision making when approaching the subject of private market allocation of wealth for current and future generations. A new age of generational wealth management is abound, alongside a prioritisation of private equity investment. It is a continuous phenomenon – the old is always replaced by the new: the young take over from the old, newer companies disrupt existing mammoths, and private equity overtakes public markets. To be ahead of the cycle intergenerational wealth planning needs to include venture capital allocation and further include the younger family members in this discussion.

“By accessing specific opportunities aligned with individual interests, each family member’s distinct perspective, passion, and personal values can be incorporated in the family’s investment choices,” when deciding to invest in venture capital (Cambridge Associates 2020). The younger generation, for instance, is much more socially conscious – they seek to make a positive change with nearly all of their investments. Profit and impact need not be separate for wealth planning, and venture capital provides an early entrance point to companies who achieve both in the long-term. Although every family is unique, the wealth accumulated likely trails back to some sort of entrepreneurship. Investing in venture capital is a chance to reconnect with initial family values and to show, teach, reminisce with younger generations about the importance of the entrepreneurial spirit and how far it can take one in life.  

“At Integra Groupe we are long-term investors, and we generate exponential returns by investing in the companies of the future. But in addition to this, we want to build a sense of belonging and true ownership between our investors and the companies in our portfolio. Each investment is a story, a solution to a problem and above all an opportunity to generate value. That is why it is important to understand and align the interests and values of our investors with our investments.”

Integra Groupe

November 11, 2022

October 28, 2022

Integra Digest - Microtrends: Enterprise Software

Enterprise Software Microtrend

Integra Digest

Nearly all microtrends derive from larger economic and cultural shifts – the Megatrends, thus, enterprise software is not exempt. Enterprise software, although directly emerging out of the technological progress megatrend, has had unexpectedly rapid growth in the past few years. Why? Enterprise software came to be in the 70s and 80s but in the bygone days it primarily concerned the removal of bureaucracy and streamlining communications within the corporate sphere, and this continued to be the main selling point right up until this past decade. Now, however, software itself is changing the traditional practices across almost every industry rather than merely being of help. Software is an agent of digital transformation which is deployable quickly, painlessly, and is thus malleable to any forthcoming new and disruptive technologies.

Owing to the adoption of microservices and application programming interfaces (APIs), as well as artificial intelligence coming to independently manage business decisions, there has been a growing focus on the revival of enterprise software as an investment trend. One of the gravest pain points for any company is organising and analysing the collection and collected data as without these analytics in place companies struggle to predict, improve, and ultimately, sell. A company’s operational processes are, as principal, akin to architectural structures and when changes need to be made at the base level this can be difficult and costly, however, statistics have shown regardless that companies who implement a more tech-open approach outperform their traditional counterparts both medium and long-term.

As stated previously, technology in general is in a constant state of flux; it evolves annually, monthly and in some cases even daily. The variety of enterprise software being brought to the market is vast and executives often struggle to foresee the ‘best’ or  the ‘most convenient’ due to sheer amount of products being on offer. One of the bigger standard changes which we expect to permeate for the next few decades is cloud-computing which some companies are just starting to implement and some have already surpassed by implementing ‘metaverse’ systems, so-called ‘web3’, quantum computing and ‘hyperautomation’. Moreover, apart from the current automation trend taking place there are also six further nuanced areas which lead the revived enterprise software microtrend: connected intelligence, interaction explosion, distributed meaning, limitless modularity, perpetual motion, and cybersecurity arms race, as suggested by Bain & Company reports.

Connected intelligence is a niche, ongoing technological breakthrough whereby big data models and institutional analysts are replaced with artificial intelligence (AI). AI allows for customer experience to be personalized based on the data acquired, not roughly but precisely. Furthermore, AI as an embedded machine that is learning in every kind of application allows businesses to streamline the connection between accumulated information (both structured and organic) therefore personalising services and/or optimising the use of existing enterprise resources.

Interaction explosion is a microtrend in which the progression from mobile apps to a multiverse of other digital interactions. In summary; customer service is becoming digitalised because the customers themselves expect this, rather than being a cost-cutting method for corporations. Cold calls and over-the-phone customer service is considered outdated, thus, an agent-to-agent strategy, or perhaps an omni-model strategy that performs well is key, whether an “interaction starts with a person or from an autonomous device” (Bain & Company). The most important aspect of this trend is the ability of machines to interact with one another—and not just in pre-programmed situations, but in contextual and creative ways which allows for the making of decisions in real time based on existing parameters. Conversational AI is already underway in underpinning many people-to-digital interactions and with virtual agents increasingly able to manage interactions companies adjust by looping human labour into the process only if absolutely necessary.

Distributed meaning is a software trend through which companies aim to transgress the process of data usage and storage, in essence, make data meaningful. By “enabling access to more data beyond company walls, powered by a layer of intelligence that facilitates end-to-end transactions and inform[ing] companies about what data is available, how it’s being used, and what it can tell you about customers or suppliers,” distributed meaning allows companies to know more and participate much more actively in the data economy. Open-data ecosystems and decentralised asset classes have seen a massive spike in investment primarily because they challenge the traditional meaning of “ownership” which often involves state control or governance. Companies who successfully digitalise will likewise need to be prepared for decentralisation, and unfortunately those who do not will most certainly be left behind.

Let's look at limitless modularity, perpetual motion and the cybersecurity arms race as defined by Bain and Company’s 2022 leading software predictions. As stated by CBInsights; “Ultimately, [we] expect 2022 to be a year of adaptation, where players across the board will invest in solutions for the new — and increasingly virtual — ‘normal.’” We believe, concretely, that enterprise software is to be one of the leading virtual-tech adapting trends.

Limitless modularity – the progression of open-source coding to standardised cloud-oriented interfaces. To summarise the history of this transition is simple: open-source coding is recently much less stigmatised as ‘sceptical’ or ‘unsafe’ for businesses to employ. Rather, many now rely on existing and readily accessible coding systems for data collection and other operational programming e.g. customer service bots. Furthermore, with the freely available resources, companies need only to invest in modulating the existing parameters to be unique to each area of business, meaning applications are exponentially modified and “seamlessly scalable”(Bain and Company). As enterprise software moves deeper into the virtual sphere there are bound to be bigger and more permanent changes coming in the next couple of years for this industry.

Perpetual motion – the adoption of “traditionally technologically-centric methods… [becoming] the norm across business lifecycles.” (Bain and Company). In short, business design and development will likewise be as technologically engineered as any other code-based structure within a given business – processes are indeed becoming “agile”. (Bain and Company). With AI and other virtual technology, software can learn and adjust processes by itself – meaning a company spends less but achieves more throughout a particular cycle.

Last but not least we are looking at the cybersecurity ‘arms race’. 2020 alone saw an increase of 485% of malware and security breach attacks on company software, exclusive of cryptocurrency traders. Unfortunately, with the scaling of virtual and cloud applications, the aforementioned number is only set to rise. The worry underlying this aspect of the software microtrend is that there is a lack of robustness, thus it is belying current innovation. Attackers and thieves are more and more sophisticated by day, often exceeding the capabilities of the so-called cyber ‘defence systems’, both new and existing. In the near future AI will be headlining the role of the defence, however, until it is fully able to detect fraudulent patterns of behaviour other measures need to be implemented for safeguarding; namely, “secure access service edge (SASE), a cloud-based technology based on digital identity” (Bain and Company). Online safety of companies, employees and stakeholders has and always will be a pain point. Investing in software which protects all sides from ill treatment will be a hugely profitable endeavour.

Do you have a company tacking these pain points and riding the high of these trends? Get in touch via our For Founders page.

Integra Groupe

October 28, 2022

October 18, 2022

Integra Digest: Emerging Managers During Market Volatility

Emerging Managers During Market Volatility

Integra Digest

How are investors building more resilient portfolios?  By embracing emerging managers during market volatility, blending VC vintages and acknowledging the advantages of leveraging ESG criteria in value creation.  To learn how let’s take a closer look:

“Integra Groupe reimagines the alternative investment business model. Lean, diverse, hungry and opportunistic. We have the agility and cross-disciplinary approach to recognize trends that more established funds may be too large to react to quickly, namely both micro and mega trends.

Having spun out of larger firms we bring years of experience working with and learning from the heavy hitters. We are highly motivated with the knowledge that the IRR of early funds is the key indicator of success that makes it possible to recruit new LPs and increase check sizes from follow-on LPs. We must prove to the market how our market-first data approach and propriety ESG tools are innovative and improving upon antiquated industry practices. Emerging managers are now the bread-winners of the investment sphere.” – Francesca Whalen Managing Partner, Integra Groupe

  • Vintages:

“In wine production, prevailing conditions during the growing season influence vintage quality. Similarly, prevailing market conditions can impact private equity results” state Kunal Shah and Tatiana Esipovich of iCapital Network. [1] A “vintage” year in private equity is conventionally defined as the year in which a new fund makes their first investment followed by a classical trajectory of five years of investing and deploying capital and a further five years of so-called ‘harvesting’, thus a vintage has, on average, ten years from entry to exit. It is important to blend vintages as private markets are also prone to cycles and volatility, often mimicking the larger market conditions of public markets but not to the same extent. While some funds may have luck in investing at the lowest point in valuation environments, others may have “ill fortune” by investing right before an unforeseen market crash making for a ‘bad’ vintage. Moreover, because private equity investment by funds is not a one-point lump sum entry but flexible and spread out over several years, it is almost impossible to predict the profitability of the investment environment which is current for a given vintage, similar with attempting to predict whether one vintage year of wine is going to be good or bad at the time of bottling it - while soil, grape and climate conditions can be predicted as positive or negative, a ‘good’ wine is always valued retrospectively, as is a given fund’s ‘vintage’ and the then-current private market conditions.

The cyclical volatility of private markets has, since the early 2000s, [3] shown emerging managers and new venture funds diversify not only their asset classes but also their strategy of capital deployment – investing at different market and valuation environments to dilute the risk of having a ‘bad’ vintage. In essence, both smaller and larger funds are spreading out entry points to minimise the risk of investing all at the very peak. While a fund may claim to have a concrete ‘vintage selection process’ based on micro and macro conditions, this is inapplicable in real terms as it would require incredibly extensive market knowledge and perfect economic predictions far into the future. This is simply unattainable and not claimed to be done even by the leading economists in the world. That being said, investing in top-quartile managers remains nonetheless a priority: “A superior winery tends to produce a better product on average across vintages. Similarly, experienced, talented private equity managers demonstrate the ability to consistently add value in both bull and bear markets.” [4] A broader portfolio and a diverse vintage will harbour the best returns within venture capital, oftentimes with lower investment minimums for investors.  

Strong managers know that blending vintages is a crucial part of any investment strategy.

  • Emerging Managers:

Having spoken of the importance of managers, it is time to look at why emerging managers have the strongest results during public market volatility. The risk profiles of private investment, specifically Venture Capital, are not the same as 20 years ago (where fund managers were limited in numbers and hard to contact), now new funds and managers emerge daily and they “generate compelling returns relative to public markets.” [5] Cambridge Associates’ data has further shown that new and developing funds accounted for 72% of the top returning firms for the period of 2004 – 2016. [6] Newcomers and earlier-stage investing funds have a different approach than long-established, big-brand-name funds in their calculus – the managers are “optimizing for outsized returns to build their reputation, not for management fees.” [7] What does this mean, typically? Emerging managers are working harder and smarter. Moreover, emerging managers and first funds are often working in their own niche – an opportunity they saw others overlooking within private markets.

Source: Buyouts Emerging Manager Report 2021
Source: Buyouts Emerging Manager Report 2021

Conversely, despite better returns and opportunities presented by emerging managers and funds, they are greatly underinvested in; with less than half of all venture allocations going to first and new VC funds between 2004-2019, according to NVCA and Pitchbook data. In short, many still prefer the ‘blue-chip’. [8] With the stellar reputation of emerging managers, rightly earned by riding high during the pandemic market turmoil, more investment is abound. Forbes describes investing in emerging managers as “a smart bet” during market volatility, why so? [9] The answer is quite straight forward: larger potential for 2x, 5x and 10x returns in the long-run and relatively little risk. Of course, risk is still present, as with any kind of private equity investment, however, emerging managers have been shown to mitigate risks effectively through thorough due diligence and management strategies of their portfolio companies. Emerging funds are generally a median size of 10 million USD (data on US VC), [10] and invest in a variety of pre-seed, seed, and Series A companies: typically, a portfolio of 5-25 early-stage companies. The VC market is power law driven, as such, it is the outliers (namely ‘the unicorns’) who the ones generating almost all of the return. [11] Consequently, the more exposure a fund has to seed ecosystems globally, the greater their chance of selecting a unique company which will become a unicorn.  

Finally, there is also a growing decline in public companies while the private market continues to flourish, with IMARC Groupe predicting its worth to reach $585.4 billion by 2027. [12] What this effectively represents is a shift in market structure, while unicorns exist many of them choose to remain private much longer meaning their larger equity and returns are limited to their initial investors; those from the pre-seed and seed rounds. Over the last two decades the number of publicly traded US equities has nearly halved, [13] while the number of part-realized and unrealized VC-backed companies grows stably year on year. Although not all companies will of course survive many will still generate sizeable returns for their investors even if they never reach the elusive ‘unicorn’ status. In 2019 private market capitalization was quite significantly higher than public, proving once again that emerging funds and managers are a safer investment even with all associated risks, skepticism and cyclical volatility.

  • ESG in Value Creation:

Venture Capital grows companies from the very infant stages into big publicly traded entities, thus how they are managed at the earlier stages impacts the later buyers, investors and stakeholders when a company progresses upwards the investment chain. This appears to be common knowledge, however, while VC ecosystems may be becoming more institutionalised there is nevertheless a lack of early ESG incorporation practices. Why is this worrisome? If an early-stage company has negative or irresponsible practices or processes, even if the start-up is profitable and scaling well, as the company grows so will its problems. Principles for Responsible Investment highlights the following: “Venture capital investments have the potential to be incredibly disruptive to the broader economy and society and can be exposed to a range of ESG risks with significant consequences, including privacy violations; human rights abuses; poor governance and climate-related risks.” [14] At later stages of company growth and development all initial practices, whether good or bad, become ingrained and thus difficult to change.

Source: Private Equity Wire Survey, September 2022

ESG non-compliance will not only be costly for the founders and later stage investors due to risks incurred through malpractices (intentional or not) but it will also reduce the company’s functionality, efficiency, and reputation (especially important when a company decides to become publicly traded). Oftentimes, due to a lack of regulation around ESG and also an inexistent standardised practice, start-ups prefer to do a “growth-at-all-costs approach” to counter the high failure rate of investments and simply as a result of them being very early stage. Many see ESG as ‘something’ they will need to implement later on, say at Series C level, but not from the onset. [15] This is a big mistake made both by the companies themselves but also GPs and LPs. Although it is difficult for any given company to be fully ESG compliant (for reasons of the asset class or the product itself for instance), it is nonetheless important to implement ESG practices and measure ESG metrics as much as possible from the first round of funding. ESG, as well as preventing risk-associated costs also aids in value creation.

Integra Groupe and our Better Future Fund allows our investors access to very real benefits of the strategies and practices discussed above which we incorporate wholly and actively within our investment thesis when looking at existing and future portfolio companies. The strategy is driven by bottom-up founder and firm financial analysis, top-down industry and macro assumptions and an industry first proprietary ESG framework, to produce outsized returns by investing early in the market leaders of tomorrow.

Reference:

[1], [2] & [4]https://www.wealthbriefingasia.com/article.php?id=184740#.Yzw7sS0w173

[3] https://www.preqin.com/insights/research/blogs/the-rise-of-emerging-managers-in-venture-capital

[5] & [13] https://www.cambridgeassociates.com/insight/venture-capital-positively-disrupts-intergenerational-investing/

[6], [10], [11] & [15] Ibid.

[7] & [9] https://www.forbes.com/sites/heatherhartnett1/2022/09/12/when-public-markets-experience-volatility-experts-say-to-invest-in-emerging-managers/?sh=50195dc05aaa

[8] https://www.venturecapitaljournal.com/emerging-managers-time-to-shine/#:~:text=Emerging%20managers%20have%20always%20played,PE%20commitments%2C%20according%20to%20PitchBook.

[12] https://www.einnews.com/pr_news/593165703/venture-capital-investment-market-to-reach-us-584-4-billion-by-2027-catalyzed-by-rising-number-of-start-ups

[14] https://www.unpri.org/private-equity/starting-up-responsible-investment-in-venture-capital/9162.article

Integra Groupe

October 18, 2022

October 14, 2022

Integra Digest: MicroTrends - Mental Health and Wellbeing

Mental Health and Wellbeing Microtrend

Integra Digest

Following World Mental Health Day on October 102022 and the many negative events currently ongoing in the world we, at Integra, seek to improve ten million lives in the coming years, and often improving lives means improving mental health first. it is vital to look at investment into mental health services, and why they are crucial to all demographics.

The World Health Organisation issued alarming statistics in 2020 on the effect of the pandemic on mental health – it estimated that globally, 284 million were suffering from severe anxiety and a further 265 million from depression. Unfortunately, this health sector still remains significantly underinvested in, with only 2% of government health budgets currently being distributed to the provision of mental health and wellbeing services. In recent decades mental health has been quite a topic of discussion and research amongst academia, with some studies showing a clear correlation between poor mental health leading to lesser physical health, i.e., anxiety, depression and stress actively change the brain’s functionality and can actually reduce the performance of neurons and alter certain neurological pathways, in other words, poor mental health damages us.

Although mental health as an area of medicine has become more institutionalised and accepted, there is still a great stigma surrounding it, whether that stigma be self-inflicted, social, or structural. “47 percent of respondents (<30 years old) report high levels of distress due to global climate change, 41 percent to the war in Ukraine, and 28 percent to COVID-19.” (McKinsey) Contrary to mental health being declared a “national emergency” during COVID-19 in many developed countries these efforts are not consolidated in practice – the biggest killer of those under 29 years of age remains suicide, and the figures continue to augment rather than subside.

We believe strongly that private investment into making mental health care and services accessible is vital and as an area of Venture Capital quite often simply overlooked (LPs or established managers tend to perceive mental health as somewhat ‘unprofitable’ or as something that is ‘of the past’ since an enormous number of mental health support companies do already exist). The truth is, always, that quantity does not equal quality and founders aiming to tackle specific mental health service gaps, from grief, to anxiety, to isolation and all things in-between, are a worthwhile investment. The median millennial, baby-boomer, Gen X and Gen Z will, on average, experience severe mental health issues at more than 3 points in their lifetime, so, to disregard this microtrend as solely “Gen Z relevant” is inadequate, moreover it is dangerous.

Stresses of daily life are augmented by the instability of the world; ongoing wars, political tensions, cost of living crises and climate change are all very real triggers. The world is facing a downwards slope in terms of mental wellbeing and health in all generations. Now is a time to invest in companies disrupting and permanently changing this trajectory – access to new mental health services and resources are needed today like never before.

In developing economies, it is more common to see illnesses which were previously considered “private” or “shameful” to be overlooked within the wider healthcare systems and to be disproportionately underfunded by government aid. Unfortunately, mental health falls into this category time and time again. It is, nonetheless, crucial to ensure mental health services are officially considered primary care across the world, however, many countries still have a way to go before reaching this important milestone.

In recent years the mental health sector has seen an incredibly high increase in research and official statistics, largely owing to the initiatives of the World Health Organisation. If one was to generalise the prevalence of mental health disorders and their effect on communities as well as individuals, the generalisation would be to call this an epidemic on the rise. This is however vastly inaccurate – mental health issues have merely become a more commonly accepted topic of conversation and research hence we see what appears to be a large incline in the number of people affected by mental health issues and illnesses, say, compared to the late 20th Century. To summate, more people are not “getting sick”, rather they are coming forward to seek help. In 2018 for example “an estimated 47.6 million adults aged 18 or older (19.1 percent) had any mental illness (AMI)” in the US alone (Key Substance Use and Mental Health Indicators in the United States: Results from the 2018 National Survey on Drug Use and Health). The numbers are alarming and yet little extra funding has been issued by governments, thus it is time for market leaders to take the stage.

While it is controversial to call healthcare a “market” or a “trend” it does not render the statement any less true – until all healthcare is universally free and readily available to all someone is making a profit. So, as the markets themselves beseech investors to cover the existing gap – mental health care and service provision, at Integra Groupe we are doing just that. Public Health Review concludes the following: “almost all Latin American countries still invest far less in public mental health than in other public health problems with comparable disease burden. Moreover, a large part of public mental health resources are still used to maintain a system of mental hospitals that do not offer appropriate treatment.” How do we disrupt these normatives and failing institutions? By investing in world-class early-stage companies who are truly changing the mental health field: Papa, Almaya, Cuéntame and Oye.

Cuéntame is a B2B mental wellbeing start-up which is empowering companies to lead the future of employment culture by providing personalized mental health solutions to each employee. Why is this a worthwhile investment? One of the key daily life stresses amongst those of working age is, as one may have already guessed, work. Providing active mental support and help to employees not only increases their productivity and ability to work, it is also essential part of healthcare one which the majority of labour is not granted.

Papa is one of our Integra Growth strategy companies that focuses on elderly care. Unfortunately, there is an overwhelming amount of empirical evidence demonstrating the negative effects of social deprivation on mental and physical health, and it is a circumstance in which many seniors live daily. With an aging population demographic mental health services also need to be focused on the elder generations, not only the young. Loneliness is a leading contributor to poor mental health and severe depression and Papa is solving this huge pain point through their Papa Pals system.

Almaya eradicates a separate mental health pain point and trauma trigger – grief and bereavement. It has been scientifically confirmed that the loss of a loved one can affect mental health to the point of physical malady, and unfortunately prior to Almaya there was nothing to provide emotional insurance. Almaya uses top-end deepfake and AI technology to generate a ‘digital-self’ who can converse, listen, and appear in real time through their app as if the person was truly before you.

Oye recognises that the journey to better future has to start from within – ourselves. Change the exterior world by taking control of the interior. With its creative and bilingual mental health wellness app OYE is helping the world feel emotionally stronger by introducing valuable wellness practices, ranging from the individual, unusual and experimental to the mainstream and standard such as meditation. Mario Chamorro, JBalvin and Patrick Dowd have entered into this mission together by connecting their personal experiences, aspirations and knowledge with the purpose of breaking the cultural stigma around mental health in Latin America and facilitating access mental wellness services for all in need.

Integra Groupe

October 14, 2022

September 29, 2022

Integra Digest: Megatrends - Emerging Markets

Emerging Markets Megatrend

Integra Digest

Emerging markets are often linked to high investment risk, and this can often deter investors from deploying capital into truly exceptional companies. Emerging markets tend to have less government regulation in place and are seen as having higher volatility, both politically and economically. However, the BRIC countries (with Argentina, Iran, and Saudi Arabia alongside them) are beginning to show time and time again that investment into emerging markets can be safer, for reasons of higher capital appreciation, and needless to say, cheaper.

The Western and US economies have long been considered the breeding ground for unicorns and innovation (most notably Silicon Valley), however, the saturated seed and pre-seed market may be proving itself to be oversaturated. G7 countries will soon be replaced as hubs for innovation and technology by Asia, Africa and Latin America as a result of rapid economic, population and middle-class growth.

Such geo-political and economic power shifts are the reason why our Better Future Fund focuses on Latin American founders and start-ups. While emerging markets may be on the rise, they still carry a stigma of risk which in turn leads to their under-valuation. At Integra Groupe, we seek to change such views. Latin America presents a unique investment opportunity. Why? There is regional and local conviction to capitalise on opportunities by challenging the traditional systems in place to create better outcomes for local and wider communities, tackling real pain points and improving lives for the current and future generations. Latin American founders are fearless, driven, and resilient and their initial initiatives soon prove to be the backbone of becoming market leaders.

The Better Future Fund currently has 7 world-class portfolio companies who scale disruptive solutions to solve big challenges:

Almaya - Deathtech
Almaya

OYE - Mental Well-being
OYE

Siglo - Telecom
Siglo

Sellrs - Ecommerce
Sellrs

Cuéntame - Mental Health
Cuéntame

Kurios

Plenna

Integra Groupe generates differentiated return streams, transforms game-changing ideas into incredible business and aims to improve 10 million lives in the coming years. By mitigating any risks, doing thorough due diligence, and a differentiator which allows us to access the best investment opportunities, Integra Groupe has invested in EdTech, HealthTech, FemTech, E-Commerce, Telecom, and surprisingly DeathTech. Emerging markets showcase precisely how early-stage companies are driven to change the world for the better and greener, making it a better place for all. With Latin American VC continuing to pick-up into the second half of 2022 there is no doubt our portfolio will expand.

Yours should too.

Integra Groupe

September 29, 2022

July 29, 2022

Integra Digest: Urban Globalisation

Urban Globalisation

Integra Digest

While urban globalisation continues to be a profitable megatrend, it is not without challenges even for developing countries who are currently reaping ‘dividends’ from the fruitfulness of urbanizing. Rapid migration can strain the resources of an urban city quickly, with infrastructure, environment and living conditions being most at risk, as such these pain points become a great opportunity for investment. The UN estimates a 78$ billion investment into global infrastructure being made within the next decade, meanwhile 55% of the total world population currently live in urban cities. The figures speak for themselves and they are both set to grow.

What are the niche areas of investment to be explored? The leading demographic of urban cities is young and working age professionals who often leave their friends and family behind, thus, participation in city governance, job creation, inclusive infrastructure, adequate housing, and connectivity are the most in need of investment and streamlined solutions. Urbanisation is also not actionable without a technology abled transition, and digital, data-driven enterprises are solving many pain points. In fact, the market for tech in so-called ‘smart cities’ has grown by nearly 20% from 2015-2020, but there are still basic necessities to be met – access. Integra Groupe invested in Siglo for this very purpose, giving fintech start-ups the pathway to increasing inclusivity, facilitating connectivity, participation and creating opportunities of those in urban hubs through quickly eradicating an everyday challenge in developing infrastructures – reliable and quick access to internet.

Creating radical tech-enabled solutions to everyday problems is the symbiosis needed for urban globalisation’s sustainability.

With rapid urbanisation occurring globally, it is necessary for significant urban planning to take place. While statistics are difficult to gather, with only estimates available regarding the number of people moving from rural to urban areas annually, it is still clear that the volume and concentration of urban populations is not slowing down in the slightest. Nonetheless, the available knowledge highlights some important areas needing improvement and investment:

  • More people live in urban areas than not across the globe.
  • 1.5 million people moved into urban areas per week back in 2015, this number is expected to double by 2050, if not to exceed this projection.
  • Capital cities remain the most densely populated while newly urbanised cities are quickly catching up.
  • While urban globalisation is a huge megatrend, only 1% of land is defined as a built-up area, meaning population density within that 1% of land is extremely high.
  • The popularity of employment continues to fall in agricultural sectors.
  • The definition of “urban” cities is not globally agreed upon, each country declares its own criteria for classifying a city as ‘urban’ – meaning data can vary significantly by country.

The main attraction of urban cities for both investors and residents is that they harbour a unique ecosystem – they achieve more than the sum of their contents. This ability to extract more financially and socially than combined parts provides a rather attractive symbiosis, one which is not, unfortunately, immune to combustion.

As urban populations grow, to some extent uncontrollably, communities and governments face big challenges to develop infrastructure to account for the value of incoming residents. Worryingly, infrastructure and housing does not grow at the same velocity as populations do because of constrained capacity and finance. Realistically speaking local and national government budgets are not as effective at responding, at an ideal speed, which is why private investment is so important to bringing solutions to immediate problems urban communities and businesses face. This is a fine opportunity for investors with attractive returns, returns which are not only commercial but also government backed.

Given that United Nations’ expectation for urban globalisation is that more than 68% of the total world populations will reside in urban areas by 2050 is it vital to remember that sustainability is key to a prosperous future – key to investment returns and also key to sustaining such positive population metrics. The UN’s eleventh Sustainable Development Goal (SDGs) is to “make cities inclusive, safe, resilient and sustainable.” As part of our ethos at Integra Groupe, we invest in companies which actively seek to sustain SDG goals, moreover to actively employ ESG investment across all areas of their business model.

Integra Grupe

July 29, 2022

July 21, 2022

Integra Digest: Technological Progress

Technological Progress

Integra Digest

The introduction of the Internet in 1983 has paved the way for changes within humanity that could never have been fathomed at its conception. The advancement and adaptation to technology is omnipresent and here to stay. Technological progress is a predicted megatrend with not only the Internet as a key player but big data, cloud computing, DNA sequencing, energy storage, advanced robot technology, the internet of things, artificial intelligence, mobile internet, internet payments, nanotechnology and 3D printing.  

With the high volume and speed of technological progress it is a lot to unpack. However, these technologies are not possibilities but our reality therefore organizations which do not understand these processes must learn quickly. These technologies will increase efficiency and effectiveness; provide transparency and predictive ability and improve the general well-being of people by making new products and services fully available.  

Technological progress can be taken for granted for our future and we are witnessing LATAM’s rapid digitization before our own eyes. When brick and mortar businesses go from pen and paper to SaaS inventories, education is conducted via Video, work becomes remote and 60 million more Latin Americas become banked, the old processes become obsolete and our manner of communication and life changes forever. Integra invests in disruptive technology because it is aligned with our thesis to improve 10 million lives in 10 years.

Over the next five to ten years the world will see an inevitable increase and change in the technologies we currently know and use. As such, there is not only a need for businesses and organisations to implement strategies for using the new technologies, but also to educate themselves and their stakeholders – thus developing an understanding and swift adaptation. Apt capability of deploying new technologies has proven to benefit companies greatly, more so if said companies readily invest into new tech opportunities.

Which technological breakthroughs will we see flooding markets soon?

The first of many is, of course, automation. Automation more broadly entails automated systems which replace or simplify human labour. We have of course already seen a glimpse of this as customer services and advertising have largely become replaced by online chat bots and tailored voice recordings designed to address customers’ needs efficiently and quickly, thus cutting labour costs significantly for businesses. In the near future error-sensitive tasks and jobs will be almost entirely replaced by artificial intelligence, robotics, and cloud technology. Thus, automating business models and organisations as a whole is a significantly profitable investment opportunity as for investors as for the businesses themselves. Employees, akin to consumers, have developed an increasingly high benchmark for digital apps, systems, and platforms they use daily, thus investing in a high-tech work environment and corporate technology will not only improve the efficiency of workers but also the efficiency of the entire business, without much cost-cutting.

Streamlining markets is also one to look out for. Technology which facilitates transactions, direct relationships between consumer, supplier and business ultimately enables markets to grow stably and competitively – driving costs down while increasing quality. Technology such as big data, ‘the internet of things’ and instant mobile payments further allow for businesses to be proactive by knowing their customers future needs, and therefore allowing to capitalise on those very needs and requirements in due course. The facilitation of such market innovation is the reason we invested in Sellrs, a Mexican SaaS providing omnichannel software solutions for SMEs in Mexico and Colombia and eradicating a market gap for brick-and-mortar SMEs’ access to credit, integrated point of sale solutions (POS), sales management tools, logistics and marketing.

Last but not by any means least is new products and services derived from technological advances. Those very products one thought, even five years ago, would be impossible to create and use, like 3D printers for example or self-driving cars, both of which now exist. One major technological breakthrough which is gradually becoming a megatrend on its own is nanotechnology and DNA sequencing. With the help of nanotechnology and DNA sequencing businesses will be able to create higher quality and completely sustainable materials and products at an affordable price. This megatrend is also rather broad in its reach – from medicine, air and space travel, agriculture and, finally, electronics – thus containing huge opportunities for investment into a large number of various start-ups breaking into these sectors.

Integra Groupe brings you closer to such incredible investment opportunities meanwhile providing a gateway for founders operating in these megatrends to exploit their full potential.

Integra Groupe

July 21, 2022