a16z’s Investment Decision Making Framework in a Time of Change - Template
Originally published: 17/06/2021 12:09
Last version published: 16/07/2021 09:52
Publication number: ELQ-61800-2
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a16z’s Investment Decision Making Framework in a Time of Change - Template

An efficient a16z Investment Decision Framework Template to invest in the appropriate opportunities in times of change.

Description
In 2020, Alex Rampell, General Partner at a16z Andreessen Horowitz (Financial Services), published a blog post outlining an investment decision making framework in a time of change (especially at the time for the COVID19 epidemic). The uncertainty levels in a time of change push investors to "think different", and re-orient investment priorities based on contextual opportunities.

https://a16z.com/2020/10/23/decision-making-framework/

His Matrix is composed of two MECE axis:
- Nature of Opportunity (Ephemeral, Structural)
- Impact of Opportunity (Negative, Positive)

This naturally leads to 4 different categories of opportunities:
- Structurally Positive
- Structurally Negative
- Ephemerally Positive
- Ephemerally Negative

In the context of the COVID 19 Epidemic, he illustrates his matrix with several opportunities (see re-construction of his matrix in the cover pictures on this page):
- Structurally Positive: Remote Work Tools, Ghost Kitchens, Diagnostics, Cloud (still!)
- Structurally Negative: Commercial Real Estate, Work Travel (?), Large Cities (??), Telemedecine
- Ephemerally Positive: Zoom Babysitting, Stock Trading, Delivery (Low CAC)
- Ephemerally Negative: Lesiure Travel, Dining Out, Large Gatherings

According to Alex Rampell, only Structurally Positive or Ephemerally Negative have the best investment opportunities. Indeed, structurally positive tends to include opportunities which are better by a factor of 10 or 1/10th of the previous cost (improvement & cost of scale). Consequently, there is no usually no way back when these technologies are adopted (working for a remote work tool company, Wimi, I can only agree to this). For ephemerally negative changes, the fact that demand is halted suddenly, creates new opportunities when things come back to "normal", and the actors having smartly invested will have an opportunity to take strong market-shares.

The bad investments are ephemerally positive, as they encompass opportunities that have only brought temporary value, and have no durable value in the future. Unless the ROI can be extremely rapid (low costs, and quick revenue), it's usually a big risk to bet on a trend that will not carry forward.

Given the success his matrix had in the investment community, especially on social media, I decided to take on the challenge to make a generic version for other investors to use in a time of change (see main cover picture on this page).

It enables a Venture Capitalist, Private Equity Analyst or Private Investor, to map available opportunities in a few clicks to make the right decisions in uncertain times.

The Best Practice is composed of:
- 2 editable Microsoft PowerPoint Template Slides (One for many industries, one without distinction)
- an attached Excel Model behind each slide to plot the Matrix
- with an online & offline 15 step-by-step methodology, with pedagogical illustrations for each step.

Should you have any questions on using this top tier Investment Decision Making Framework PowerPoint slide and matrix, you're welcome to reach out to me via Private Message.

Good luck!
- Tim

⭐️ Bundle of 7 Four-Quadrant (2x2) Matrix Framework Templates (including this one): https://www.eloquens.com/tool/wJa7FKkP/strategy/management-consulting-templates-and-frameworks/four-quadrant-matrix-frameworks-template-bundle

This Best Practice includes
2 PowerPoint Slides Template (with attached models) + 1 Online 15 Step-By-Step Methodology

Tim Demoures offers you this Best Practice for free!

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