Playing the Long Game: Insights for investors from the rebuilding process in sports

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By Matt Dunbar, co-founder & managing director, VentureSouth

When Sports Illustrated boldly claimed on the cover of their June 25, 2014, issue that the Houston Astros would win the 2017 World Series, it seemed to be a ludicrous prediction. The Astros had lost two-thirds of their games the previous three seasons and were in last place in their division at the time. But the writer had done his homework and could see that the organization was playing a “long game.” They were carefully putting the pieces in place for long-term success, despite the substantial near-term struggles – and now both SI and the Astros look pretty smart since the team just fulfilled the prophecy.

When the Philadelphia 76ers launched their infamous rebuilding process in 2013, their new general manager indicated he would take “smart risks” with long investment horizons, reportedly with an unspoken timeline of five to seven years. The team continued to suffer woeful results for the next three seasons, but with four straight top three draft picks thanks to their disciplined long-term strategy, the team now has one of the most exciting young rosters in the NBA and a strong chance to make the playoffs this season. The team’s rebuilding approach inspired the phrase “Trust the Process” for belief in a long-term plan to acquire talent and develop a winning culture, even while gritting through painful losses in the short term.

Closer to home, when Dabo Swinney took the helm for the Clemson Tigers, he famously promised that the Tigers would win championships and that the best was yet to come. Eight years later, the Tigers are defending national champions, and the results of his long-term vision have been nothing short of remarkable, as he has methodically implemented his playbook to build a consistently high-achieving program, on and off the field.

These three different teams in three different sports each share similar strategies: a willingness to endure short-term pain to set building blocks in place for future sustained success. That’s playing the long game. That’s “trusting the process” of rigorous analysis, courageous change, developing talent, and building culture to eventually produce winning outcomes.

In many ways, those lessons from the athletic fields translate well into the realm of angel investing and startup communities. Admittedly, there are many stark distinctions that don’t transfer between the arenas – unlike sports, economic development is not a zero sum game (quite the opposite, actually). There are fewer constraints and more competitors, and the game never ends. But when it comes to trusting the process and playing the long game, the key insights apply.

Similar to the short-term losses incurred by rebuilding sports teams, those involved in cultivating startup communities usually face a “J-curve” in their early efforts, where losses and failures accrue first before successes have time to develop and pay off.   However, as evidenced by numerous studies of angel investor returns, the long-term gains from eventual significant successes produce net positive returns that far outweigh the early losses.

Such is the case with the Upstate Carolina Angel Network and VentureSouth. We understand the long game of startup investing. We know well, like the entrepreneurs we support, that startups are hard, that the default mode is failure, and that only with herculean work, skill, and luck do successes eventually emerge.

While we have had some nice wins along the way (and inevitable losses), the last nine years of refining our processes have now positioned our portfolio to realize significant wins from several companies in the months ahead. But the wins are not just for investors. High-growth startups create all net job growth in our economy – and generate significant wealth in their communities. But often, the critical role of angel investors in long-term economic development is overshadowed by the immediacy of major industrial recruiting wins.

We believe that both are vitally important, so we’ve been playing the long game to build a sustainable infrastructure for early-stage capital formation to help fuel an engine for long-term, sustainable economic growth. VentureSouth has now created 11 angel groups and two funds that comprise more than 225 investors across the Carolinas, and we launched Venture Carolina as a nonprofit organization to help further develop the market for early-stage companies through entrepreneur and investor education.

To explore these ideas and opportunities more deeply, we invite anyone interested in the future economic growth of Greenville and the region to join us Nov. 30 for our workshop on Angel Investing for Economic Developers. The workshop is hosted by Venture Carolina as part of the annual VentureSouth Summit in Greenville, which brings together angel investors from across our expanding footprint. As part of the workshop, we’ll hear an inspiring keynote message from Eric McCarthy, senior vice president of government relations, public policy, and legal affairs at Proterra, a local company with a tremendous long-game success story that illustrates the power and economic impact of angel investing.

Please join us as we play the long game and trust the process for helping create the economy of the future for Greenville and beyond. Learn more and register here.

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