How J Strategies Can Accelerate Your Business
A winning strategy is a bundle of choices. Those choices include the customers to serve, the scope of the business, product offerings and capabilities that interact with one another to help a company make money.
Some executives seek to shape the future with big, high-stakes bets. These are known as strategic priorities, and they typically extend three to five years.
Managing the J-curve
The J-curve is a type of trend line that shows a loss followed by a significant gain. It’s used in a variety of disciplines, including economics and medicine, to describe events like currency depreciation.
For private equity investments, the J-curve is the path of a fund’s internal rate of return over time. When mapped on a graph, the curve’s shape often looks like the letter “J.” The steepness or shallowness of the J-curve depends on how quickly and how much capital is drawn out of the investment portfolio and returned to investors through distributions and realizations (exits).
A number of strategies can help manage the J-curve for your investments. For example, accessing curated deal flow from platforms like can increase the likelihood of finding solid opportunities with low-risk and high returns. Diversifying your portfolio can also help minimize the impact of the J-curve on your overall returns. And implementing exit strategies early on can reduce the duration of the curve.
Investing in Secondary Funds
Investing in a secondary funds can be a key component of a diversified private markets allocation. Many secondaries funds have a wide range of managers and portfolio companies across different vintage years, regions, and sectors. These diversified exposures can help reduce the risk of an overly concentrated exposure in one particular fund or manager. In addition, the supply-demand dynamics of the secondary market typically skew towards buyers and allow for a more flexible approach to recycling capital that may be subject to call from underlying funds.
Adding secondary investments can also help eliminate the J-curve and improve investment outcomes. This is because the underlying investments in secondary funds are generally already mature and have passed the period of negative returns experienced by primary fund investors. Also, secondary funds can benefit from pricing dynamics unique to the space that may provide an opportunity to purchase investments at discounts to net asset value. This can result in a greater mark-to-market gain and cushion against the J-curve.
With a deep network of global partners, J Strategies can mobilize our vast networks to identify and evaluate win-win opportunities to accelerate your business domestically or internationally. Whether it’s capital fundraising, public to private market strategy, equity partnership, political consulting, government procurement or strategic representation at federal, state and local levels, we can help you take your business to the next level.
Co-investments enable LPs to invest directly alongside GPs in private companies, resulting in lower entry valuations and attractive terms. They also provide a potentially useful portfolio diversifier and may result in stronger GP-LP relationships.
However, the implementation of a co-investment strategy is complex and requires specific attention. For example, the governing documents of a co-investment vehicle should limit the ability of the GP to transfer its interest in the target company to an affiliate. Otherwise, this could create a syndication backdoor that erodes co-investor rights. Investors should seek contractual assurances in this regard.
Partnering with Firms
Whether you are building a new business or launching an established company into an international market, J Strategies can help. We specialize in full business incubation, capital fundraising and advising on corporate positioning, equity partnerships, government procurement and strategic representation before federal, state, local and international governments.
Partnering with firms can have a significant impact on your investments. Managing those relationships requires a unique set of skills and specialized experience. However, following these four principles can make the process easier and more effective for everyone involved.