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Friday, October 27, 2017

Institutional Investment in Cluster Stages of Growth

There are key times when large institutional investors can swoop in a make radical change that leads to cluster growth. The key point is when companies within the cluster have moved beyond their initial inception, or entrepreneurial stage, and into their growth modes. When strategically approached large scale investment in multiple connected businesses will have their greatest impact.

Clusters are often based in market trends and budding new ideas. Whether these ideas are a new widget or a new service doesn't make much of a difference. They grow together, suppliers and producers, that lead to multiple businesses relying on each other for success. Investing in different strategic companies can ultimately lead to higher growth for entire industries.

Industries are like companies and formulate around an idea and entrepreneurship. If the business becomes sustainable it attracts investment capital that seeks to improve upon the product/service and create higher profit margins. As one business grows so does the other businesses within the cluster that connect and relate to it. They all feed off of each other in that growth process and encourage growth of each other.

Therefore, it make sense for large institutional investors to consider the different places within the cluster to invest to ensure that the entire cluster develops together. Injecting needed funds into a manufacturer and the supplier to that manufacturer makes sense in the same way as investing into the supply chain and telecommunications of the cluster leads to increased performance of multiple businesses that use those systems.

When coordinated properly large institutional investors can grow those areas and regions necessary for maximum growth of the entire local economic system. In essence, they can build the system with their investment choices and maximize profits by knowing when and where to invest within the cluster. Watching the life-cycles of multiple businesses within the region can make a big difference in striking while the iron is hot.

That requires the ability to understand the cluster from a micro and macro level. It takes considerable analysis and willing information sharing to allow this to happen. Instead of hiding information companies will need to share information so they can attract investment capital at just the right time within their life-cycle stage to maximize their growth.

Businesses within clusters often develop around new and innovative technology. Offering accurate information and institutional investing in the right places can lead to the growth of multiple businesses at one time. As these businesses grow they create synergy that leads to higher levels of investment return and stronger business outcomes that move initial business entrepreneurship into a growth stage. It is precisely this growth stage, or target return on investment, that institutional investment should seek when considering pack investment into innovative industries.


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