Case Study: Adams Capital Management
1. Adams espouses a “market first” analysis of opportunity by looking for discontinuities. Is this substantive or window-dressing? Do the four types of discontinuities represent applicable guidelines? Are they comprehensive, or are there other discontinuity templates that a venture investor would find useful?
2. Analyze Structured Navigation. Is this a valid measurement of progress in early stage investing? Could such a program ever be a hindrance to company development?
3. How does the ACM approach affect the recruiting, training, and management of ACM partners?
4. How should LPs of ACM view the ACM approach to technology start-ups (i.e.: Discontinuities and Structured Navigation)? Should ACM shift its strategy?
5. If you were an LP, would you commit to Adams Capital Fund IV? How should the ACM Partners position and sell Fund IV?
1. Adams capital management uses a “market first” approach in which the entire firm agrees upon the markets of interest before considering individual companies, thereby investing based on business fundamentals or market analysis. In context with ACM, this approach is substantive since the GP’s all have engineering backgrounds, and they chose to focus on the information technology and telecommunications/semiconductor industries, hence utilizing their experience and expertise in choosing and exploiting discontinuities within the markets. Exploiting market opportunities raised from dramatic and sudden changes in a large and established market is the fundamental core of discontinuity –based investing. ACM partners identified four applicable categories of causes for discontinuities; standards, regulations, technology and distribution. These four categories cover companies that have competitive advantage over a market or companies that are positioned such they would capitalize on a new market reality. In a sense it is comprehensive however as the definition...
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