Note: This article is the first in a series of interviews highlighting the work of interesting family offices.
Shehbaz Hussain is an Associate Vice President at Conconi Growth Partners, a family investment office based in Vancouver, BC, Canada. In addition to investing in and partnering to build great businesses, philanthropy is a critical component of CGP’s mission. CGP donates a significant portion of its profits to the Robert L. Conconi Foundation.
Shehbaz, thank you for participating. Tell me a little about your family office and how it came to be.
At Conconi Growth Partners, we are obsessed with understanding how things work, and trying to make things better by partnering with the most talented entrepreneurs we can find, and diligently allocating capital. Our office was founded by Alex Conconi, who in 2010 started managing some of his father’s investments while his father, Bob Conconi, was undergoing treatment for cancer. The plan at the time was not to setup a “family office” per se, but to bide some time until Bob could resume responsibility for his own portfolio. However, by the time Bob was done with treatment, things were progressing very smoothly, and together they agreed there was an opportunity to do more if they committed to building a team and intentionally increasing the sophistication of their decision making.
Today, our core management/investment team comprises four individuals, but is supported by a wider team who supports multiple businesses in our group. In addition to active and passive investments, we are also routinely involved in the spawning of new businesses, as we believe there is no more sustainable way to make change than through the creation of a profitable business. Today, Bob manages the Robert L Conconi Foundation. Each year we donate a portion of our profits to the Foundation, believing as Robert does, that “Each of us have a responsibility to leave this world in a better place than we found it.”
Does your family office have investment guidelines or preferences or a specific impact investing mission?
We do maintain an investment policy statement, but colloquially we like to think in terms of “mandates”. Some of those mandates are internally managed, and some are externally managed. We have internally managed mandates focused on mortgages and angel investments, and externally managed mandates on public equities, private equity, etc. In addition to our for profit mandates, The Robert L. Conconi Family Foundation has an impact mandate.
Has the office been doing early stage investing since its founding?
Right from the beginning, early stage investments have been part of the mix. We believe that never before has a small team of people been able to generate such outsized value, and touch the world in such an impactful way. That trend only seems to be increasing. We modeled our early angel mandate off of the work of David Rose, as presented in his the book “Angel Investing”, but in the years since we have added our own flare. At the end of the day, it is all about people. We are always on the lookout for good people we can partner with and support who have the vision and capacity to execute and build.
How big a part of your portfolio is the early stage work?
At any given time, up to 15% of our assets under management could be invested in early stage startups. This includes businesses which we are a minority investor in, as well as contributions to early stage businesses that we have founded and are an active participant in the management of.
Where does your best deal flow come from? Do you syndicate with other offices, VC funds or angel groups?
Deal flow is both inbound and outbound. For outbound, we will reach out to a company who we think may be a strong fit. For inbound, we collaborate with many other offices, VC funds or angel groups on deals opportunistically, accepting referrals and warm introductions. Rarely will we answer in-bound requests for financing that do not come via a warm introduction. There is just too much spam out there for us to be able to field all of the unsolicited inbound requests for financing that we receive. If a founder is serious about working with us, they are always able to find a way to get a warm introduction.
Would you consider yourself an active or passive early stage investor?
We are fundamentally passive, focused on “soft influence” as opposed to “hard power” via deal terms, etc. However, with any company we are invested in (and many we are not) we will do whatever we can to help support the founders by leveraging our network or experience where we can, and get out of the way when we cannot.
Do you lead rounds or do you tend to follow other leads? What's your view on taking a board seat?
Typically we follow, as a minority cheque, following rather than leading. However, we do lead a few deals a year. If we lead a round, it is often because there is a unique overlap between the company and our platform. In those cases, we will sit on the board. However, we see sitting on a board as being an important responsibility, rather than an honourific that we may “take”. Where we are on boards, we are active participants, and take the role seriously. For that reason, we are careful not to over extend ourselves as board members on too many deals.
Do you have a thesis or focus on any particular type of founder, company or industry? Are there certain kinds of startup companies you steer away from?
While we’re industry agnostic, over the years, Fintech, including real estate and mortgage-tech, has become a core exposure. This follows from the Buffet/Munger approach of investing in things you understand, and avoiding what you don’t. We understand Fintech and have a lot to offer there. However, we will occasionally back the right entrepreneur in areas where we have less expertise, so long as we think we can understand the major risks and opportunities the company faces, and if the area is one in which we are interested in building further expertise.
Are there some portfolio companies you are especially proud to be working with or simply would like to highlight?
If you could give entrepreneurs one piece of advice about working with you, what would it be?
It all boils down to the people. Customers are people. Investors are people. And you, and your team, are the people who are going to find those people. Hire the right team - one that is aligned with you and has bought into your vision - and think for the long term (the infinite game).
What do we look for in particular? We pay particular attention to intellectual honesty, integrity, work ethic, and good communication. These four attributes are a potent combination in any entrepreneur.
What's the greatest advice you received about early stage investing?
Focus on the problem, not the solution.
What tips would you pass on to someone making their first investment?
To someone making an early stage investment- allocate only as much as you’re prepared to lose.
What is your biggest challenge running a family office?
Risk management. Finding the right balance between growth and preservation of capital.
Do you have set expectations for founders on how they should lead their teams and communicate with their investors?
Lead by example. It’s the quickest way to earn respect. Once respect is earned, leading becomes a whole lot easier. Always be transparent with investors as backers who were prepared to lose their investment from day one. Transparency will only facilitate more help and support. Communicate often. Over communicate. Nothing clarifies like clarity.
What do you see as the key drivers of success when investing and driving returns?
An aligned and well incentivized team, with a growth mindset and high execution capabilities.