By AltG Innovation Centre On Behalf Of Poornima Vardhan And Taponeel Mukherjee
The short answer for the "Strategic Secret" is "A Superior & Proprietary Idea Generation Framework". Read on to learn more about the longer version.
We understand the significance of having an edge in idea generation when competing in the dynamic and highly competitive market environment, whether in India's private or public markets.
Three methods we use to generate investment ideas through the APEXX Formula to identify opportunities that traditional methods often overlook.
1. Leveraging Existing Infrastructure
One of our distinct approaches to generating investment ideas involves recognising the potential within existing infrastructure. Businesses that can adapt and repurpose their infrastructure to deliver additional revenues become prime targets for investment. This strategy is not confined to any particular industry; instead, it's a mindset that seeks creative solutions to maximise existing resources.
Imagine a traditional car dealership, for example. Beyond merely selling vehicles, we might identify an opportunity for the dealership to venture into the insurance business. The dealership can create a new revenue stream through insurance services by leveraging its existing customer base, data, and physical locations. This diversification allows the business to enhance its profitability and provide investors with a unique value proposition. This approach highlights the ability to identify latent potential and capitalise on it, demonstrating a capacity to think beyond the conventional boundaries of investment.
2. The Transition From Asset-Heavy To Asset-Light
Another innovative strategy involves recognising the transition of businesses from asset-heavy to asset-light models. Many companies operate with significant capital investments in assets, such as real estate, machinery, and inventory. However, transitioning to asset-light models can substantially impact profitability and unlock value for investors.
For instance, we might identify a business moving from a Company-Owned Company-Operated (COCO) model to a Franchise-Owned Franchise-Operated (FOFO) setup. This transition can reduce operational costs as the burden of maintaining and managing physical assets is shifted to franchisees. By spotting such transitions and understanding their implications, we position ourselves to capitalise on the shifting dynamics of these businesses. This proactive approach exemplifies the capacity to foresee industry trends and identify promising investment opportunities well ahead of the curve.
3. Converting Costs Into Revenues
The third method employed to generate investment ideas revolves around converting costs into revenues. In this approach, we identify businesses that have the potential to transform certain cost elements into additional income streams. This concept is closely related to leveraging existing infrastructure but focusing on specific cost lines.
To illustrate, we might identify a business with captive operations or cost centres that can be repurposed to generate additional income. This may involve selling excess capacity or services related to these cost lines to external customers. By doing so, the business transforms what would typically be an expense into a new revenue stream, thereby enhancing the overall profitability of the business and offering investors a compelling value proposition.
In conclusion, not being bound by traditional investment paradigms is crucial for success in India investing and business creation. From repurposing existing infrastructure to recognising transitions from asset-heavy to asset-light models and converting costs into revenues, spotting the hidden treasures is a "Strategic Secret" that matters.