Venturing into Innovation: An In-Depth Interview with Ariel Barack of Ordway Selections
Over the years, Ariel has been at the forefront of shaping Ordway Selections, guiding it through key milestones and strategic decisions, as well as identifying and nurturing promising startups and visionary entrepreneurs.
Published by Connect Group |
19 October 2023
Venturing into Innovation: An In-Depth Interview with Ariel Barack of Ordway Selections
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In the dynamic landscape of venture capital and private equity, the role of an investor goes beyond mere capital deployment. It's about making strategic decisions, identifying promising startups, nurturing visionary entrepreneurs, and leaving a lasting impact on industries and society as a whole. In this exclusive interview, we delve into the insights and experiences of Ariel Barack, the Senior Partner at Ordway Selections, an investment firm with a unique focus on capital deployment in specialized sectors, particularly food, agriculture technology, and more.
Over the years, Ariel has been at the forefront of shaping Ordway Selections, guiding it through key milestones and strategic decisions. Ariel also shares their strategies for identifying and nurturing promising startups in Switzerland, emphasizing the power of an active and high-quality network of partners. Ultimately, Ariel uncovers the untold story in venture capital—the hard work, commitment, and dedication involved in supporting startups. Join us in this enlightening interview as we explore the world of venture capital through the lens of Ariel Barack and Ordway Selections.
Can you provide insights into the key milestones and strategic decisions that have shaped Ordway Selections over the past couple of years during your tenure as Senior Partner?
The design of our firm and operations is very intentional and is the result of a lot of reflection. We view sourcing, pricing, and due diligence as the keys to successful capital deployment and have therefore designed our operations to maximize the professionalism with which each of those activities is handled. Our issue of course is resources, both the cost of doing so at scale and more importantly the realisation that the leading experts prefer to be self-employed. This was actually a hidden opportunity in plain sight, as we can partner with expert teams as co-investors and LPs, thus gaining access to all of their capabilities, while they are trying to pay us back our capital with a profit! We’ve therefore been operating with this partnership mindset, which allowed us to both learn from the leaders of our sector and to deploy capital into transactions that would otherwise never reach us.
Could you elaborate on the strategies Ordway Selections employs to identify and nurture promising start-ups in Switzerland?
While we have a global investment mandate, there is no place like home, and Switzerland has an impressive start-up scene that is rapidly growing. The key to our success, in my view, is our active reference collection and follow-up. Whenever we meet an impressive professional, be they an entrepreneur, co-investor, or operator, we ask them who they admire and who they are watching/following, and then we contact those individuals. We find that most people are delighted to not only recommend but to introduce us, to the people that they admire, which allows us to continuously grow an active and high-quality network of partners.
Ordway Selections has a distinct investment focus. Could you share stories of start-ups within your portfolio that have achieved remarkable growth and innovation in the food and agriculture technology sector?
A recent success story is a company called Vanilla Vida, which grows natural vanilla and sells it to the food industry. It turns out that +95% of the vanilla the world consumes is synthetic, as vanilla is very difficult to grow. This company used machine vision, sensors, and climate-controlled environments, resulting in a natural bean that has a stable flavor – ideal for food companies looking to ride the natural ingredients trend. The company now has more demand than it can supply!
Family offices are known for their commitment to long-term value creation. How do Ordway Selections collaborate with family offices to pursue investment opportunities that align with their values and long-term objectives in these specialized sectors?
With reference to Vanilla Vida, we also have a nice example here. One of our co-investors and close partners is the family office of the Ferrero family. When the opportunity to invest in this company arose from one of our LP positions, we invited this family office to co-invest in the transaction together with us. Because together our sizing was meaningful, this put us in a position to lead the investment round, which also secured us a board seat. Obviously, Ferrero knows infinitely more about the usage of vanilla in the food industry, so we also offered them our board seat, thus both helping the company by bringing them a board member who can help them and protecting our collective interests in the best possible manner.
Given Ordway Selections' specialization in asset management, could you describe the distinct investment strategies and collaborative approaches you use when partnering with family offices, limited partners, and other private equity stakeholders?
We believe co-investing with each other should be simple and have grown frustrated with having to spend equal time on selecting investments, and figuring out how to execute them… contract, tax planning, and legal terms are cumbersome. We decided to standardize our approach to co-investing by learning from the Swiss banks, learning from their securitization practices and the usage of products with an ISIN number that allows for simple trading – and in our case co-investing. We designed and built a dedicated securitization platform, so that for each of our investments we can create a segregated balance sheet and bank account, and our co-investors receive a standard term sheet based on which they can decide to participate in a transaction, or not. All the fees are transparent, and all of us go into the same vehicle at the same terms. This approach allowed us to partner with the leading family offices in our region, and even to have some of the largest wealth managers recommend our investments to their clients.
Leveraging your expertise in talent identification, how crucial is leadership in the success of Start-ups, and could you highlight stories of visionary entrepreneurs who have thrived with the support of Ordway Selections?
All the cliches are true, and people are the differentiators in the success or failure of a company. What is underestimated, is the ability to listen to these leaders and offer them sympathy and support. There are countless examples when things go wrong in our portfolio companies, and we are their first call – because they know we won’t get scared, and that if we can be transparent with each other, they have our support and involvement. Such trust relationships have allowed us both to find solutions for our companies and to call on others in our network to get involved. After all, overnight success in the start-up business typically takes around 10 years, and when a company does succeed, all the failures are painted as learning experiences.
Switzerland is renowned for its stability and innovation. Could you explain the specific advantages of having Zug as a strategic base for Ordway Selections' venture capital activities and how it enhances your company's operations?
Zug is small enough that we know many of our fellow investors, and it is big enough that most of the global investment firms either have a local presence or come to visit existing / prospective investors. Every day in Zug there are influential and impactful discussions, and we’re delighted to be a part of some of them.
Impact investing is gaining momentum. How does Ordway Selections approach investments in startups with a strong societal or environmental impact? Can you share examples of investments that have not only generated financial returns but also contributed significantly to societal betterment?
We believe the impact is the result of successful operations. In other words, it is not our objective, it is our desired result. A good example of this is our investment in a biological pesticide company called Vestaron, whose products are being used by farmers to replace the toxic chemicals that currently are a foundational element of the global food system. The usage of Vestaron’s products doesn’t only mean revenue for the company, it means better human and soil health, and the protection of bees.
Looking ahead, what emerging trends and opportunities do you foresee in the venture capital landscape for food and agriculture? How does Ordway Selections plan to stay at the forefront of these developments?
We believe investors' interest in the food & agriculture sector is increasing each day, as awareness of food security, climate, and sustainability targets all depend on changes in this global sector. We have extended our investment focus from a venture into private equity, operating businesses, and even farmland, as we are excited about the opportunity to generate meaningful financial returns that have an impact. We plan to dedicate all of our resources to actively investing in this sector, and we are seeking co-investors who want to benefit from the infrastructure and access we have established.
Considering the future of venture capital, what untold story do you find most compelling, and how does Ordway Selections envision actively shaping and contributing to this narrative?
The biggest myth about venture capital is the spray-and-pray approach, where investors think VCs just make a lot of risky bets and wait to see what pans out. The hard work of portfolio construction that we see in our funds, the commitment to working with each company to achieve its targets, and then the struggle to convince other investors to also support such ventures, are hidden from most. One of the best examples of dedication, focus, and patience, is Anterra Capital, a team that began working together at Rabobank over 15 years ago. They, in our view, are some of the smartest investors in our industry, but unfortunately, the institutional allocators are not able to recognize this until the funds realize their capital gains and sell assets. I understand why this is the case, but looking at the past to predict future performance is flawed. And I think by the time Anterra’s track record is realized, there won’t be space for new investors.
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