Ben Spero joined PE Hub’s Milana Vinn to share his insights on how the pandemic has accelerated the digital shift and impacted the portfolio.
Below is an excerpt from the interview:
For Spectrum Equity, the crisis validated many of the trends spotted by the firm ahead of the pandemic – be it around EdTech, e-commerce or food delivery. The lockdown cast a spotlight on things that were already working.
For instance, Spectrum-backed AllTrails, a fitness and travel mobile app used in outdoor recreational activities, has been in high demand during the pandemic. “A lot of people are getting outside and hiking, and I don’t think that’s going to go back after the pandemic,” Spero says. “I think some of these tailwinds are permanent in terms of people’s lifestyles and remote collaboration over the Internet.”
Yet to be announced, the firm also recently backed a tech business that plays in the food e-commerce marketplace and, according to Spero, “was growing gangbusters.” However, this growth momentum has made valuing such businesses a challenge for some.
For Spero, recent conversations have focused on how to discern normal sustainable growth when many businesses experienced a one-time benefit that could dissipate when the world reverts to normalcy. “That underwriting is hard, and you don’t want to be investing behind growth rates that aren’t sustainable and betting on one-time tailwinds,” he says.
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