Saturday, September 19, 2009

Five investment themes which can make big money

The secret of sustainable money-making is to provide the products or services having greatest appreciable value to the mankind at any point of time. Hence I believe to make sustainable wealth you need to do something which really helps most of the people, which really improves the quality of life. Wall-street Financial Engineers has once again proved the fact that you cannot fool all the people all the time and continue making money. Hence my themes will not be cosmetic manipulations. They are targeted towards improving the quality of human life and creating value through sustainable business models to create long term wealth.

This discussion will be generic enough for global investors and venture capitalists; but I will provide the examples from my own country India (not for the fact that I have a bias towards India but because I can relate best to this market). I request readers to keep an open mind while reading this post because some of the ideas mentioned will be new and may come as a culture shock. Enough introduction;Let's begin.


Sounds crazy? We knew for decades that Agriculture-based economy=Poor Economy, Industrial/Service oriented Economy= Prosperity right? Yes, it was. But my feel is that we have come a full circle. Increasingly we are seeing the chance of global food crisis and increasing commodity prices. Specifically for India agriculture has huge importance in its macro economy. Still today almost half of the population is dependent on this sector. Sad part is that the Indian agriculture system is at least a decade behind the western system. We have very poor productivity (most of the people in agriculture field are under-employed), huge resource wastages (due to lack of proper distribution system and warehousing), low use of Technology (still agriculture is very much dependent on rainfall) and lack of scale (we do not have fields where large scale automation is possible). These are the problems creating a huge business opportunity. I see a growing market (Increasing Food prices because of global food shortage) and underutilized industry with a scope of huge productivity improvement. That makes it a ideal case for venture capital investment. Keep in mind although I mentioned the examples from India, this is applicable for most of the emerging economics which has not fully utilized the power of technology in agriculture space. Also this investment opportunity is for global investors (especially for those companies who have the knowhow of the use of Technology in agriculture space). The niche areas which can be exploited in this space are: Use of Biotechnology in creating better seeds, manures, pesticides (environment-friendly alternatives), Use of better storage and distribution system (Logistics management), Use of Technology in all the automation opportunities including the use of water-resource management and Food-processing, Introduction of large scale firming through cooperative model or company ownership model etc.


Here I am not talking prostitution (which is anyway the oldest and one of the most profitable businesses of the world) but providing resources and services for healthy sexual needs. Again my discussion will be around the emerging markets such as India because Developed countries have already explored this theme for years. India has probably seen much more sexual activities than its western counterparts but unfortunately most of the Indians are still not comfortable discussing their sexual needs and also lead a very low quality sexual life. India and many third world countries have more cases of prostitution, child-trafficking, rape and other sexual exploitations, HIV and other STDs (due to unprotected sex) than the advanced countries. One of the reasons for this distorted sexual lifestyle is due to lack of Sex-education and a social mindset which consider sex as something bad and unacceptable. This is a huge problem and that creates the enormous opportunity. Let me provide some ideas which can be exploited here: Internet Business for providing quality sex education (people prefer Internet for its interactive and privacy features), furniture for maximizing sexual pleasure(niche but very premium market), matured mating sites(boys looking girls, girls looking boys etc.), Quality matured content(Indian adult content industry is very unorganized producing very low quality content),Sex tourism, Sensual massage services, Theme parks and nightclubs where couples can enjoy quality sex/romantic time without any verbal abuse of police or external parties(two agreeing adults should be provided freedom to live a sexual life), sexual counseling for better sexual health, helping women with sex issues(STD control) etc. Investing in Sex is tricky especially in third world countries because politicians and police always try to make money by making rules which prohibit many sexual acts but still allowing them to continue when you pay the price (bribe). Still my conviction is that you will have a huge market helping millions of people in leading a quality sexual life and at the same time making enormous amount of wealth.


Religion is another sensitive and unconventional theme for investing. Many people hate to consider mixing religion with Business. But I think Religion should be considered a natural service. Let me clarify my point because I know this is controversial. Music and movies are considered service. People go to see opera for enjoyment, entertainment, relieving stress and enriching themselves with new ideas. Same for religion; we want to pray for relieving our stress, getting new ideas, getting mental strength etc. Hope you appreciate the similarity. My point is both should be considered Service and hence to provide good quality service money has to be spent by the consumers. Huge amount of money is actually spent in religion. But most of the time this is unorganized, poorly managed and lack proper accounting (money goes to the selective few, typical ‘executive pay’ problem). My proposal is to make religion a standard business with right pricing (ticketing) and corporate accounting practice(balance sheet, shareholder review etc.), quality products(better hygiene in temples, mosques and churches) and services (research on theology and providing new life perspectives through lifestyle coaching) and new Social Servicing opportunities(Religious institutions will also help NGOs in Fundraising).


This is a more conventional theme but still has a scope for ‘Blue Ocean Strategy’. Huge amount of Human resource is wasted for the Lack of Education in poor Developing countries. I think people have started appreciating the importance of education but many do not have access to quality education. We have scope for improving our curriculum, delivery method and the scale in which we provide education. We have a huge market for this service in the so called ‘bottom of the pyramid’ which has not yet been explored.


They say that Green is the next big thing and it really is. Environmental Protection, Renewable energy sourcing, waste management, Biodiversity control: all of these are major issues facing the mankind and epoch-making Technological breakthrough is needed to really solve these problems. Many small companies have ventured into this uncharted territory but still much more research and funding needs to be in place to keep it going. Sustainability will be the next big business (if at all we can continue doing business) and prudent investors need to put money into this theme.

Happy Investing. Eager to hear new ideas from my readers.