Investment Approach

Evolutionary Tree Specializes in Innovation-Focused, Concentrated-Growth Investing Using an Approach We Call Evolutionary Investing  

Our investment approach is built on:

  1. Focusing on how innovations drive evolutionary shifts and create multi-year growth opportunities
  2. Evaluating investments based on a stringent set of investment criteria
  3. Implementing a rigorous research process to analyze these secular drivers at both the company (bottom-up) and industry/ecosystem levels (meso-level)

Investment Criteria

Every investment is evaluated based on a disciplined set of investment criteria across three core drivers of investment outcomes: 1) industry/meso-level drivers, 2) company/bottom-up drivers, and 3) stock valuation. Our research process is built around in-depth research and evaluation into each of these elements. We strive to own businesses that meet the following criteria:

Industry Level & Meso-Down

1 Benefits from Evolutionary Shift Driven by Secular Trends & Innovation

2 Large Market Opportunity with Room for Growth

3 Attractive Industry Structure & Dynamics

Company Level & Bottom-Up

4 Industry Leader with Strong Innovation Pipeline

5 Multiple Layers of Competitive Advantage

6 Strong Business Model & Financial Position

7 Exceptional Talent with a Unique Culture

Stock Level

8 Logical Valuation Based on Long-term Drivers & Economics

We Focus on Bottom-Up + Meso-Down Dynamics

While we believe a bottom-up, company-focused approach is an appropriate starting point for our research, we complement this approach with what we call meso-down analysis (see diagram). Meso-level analysis – the word meso is derived from the Greek word, mesos, meaning middle – takes into account forces at the industry and broader ecosystem level. Companies rarely innovate on their own. Rather, they often work in innovation networks with other players. This broader context is critical for understanding how innovation evolves over time.

We Focus on Bottom-Up + Meso-Down Dynamics