The podcast of EGADE Business School and the Undergraduate Business School of Tecnológico de Monterrey is available on Spotify, Amazon Music, Apple Podcasts and YouTube Music.

By JOSÉ ÁNGEL DE LA PAZ | EGADE BUSINESS SCHOOL

In the world of investing, information is power. Before committing capital, it is crucial to understand what data can support sound investment decisions.

In episode 169 of the Business Territory podcast, called "The Information you Need Before Investing," hosted by Alicia Galindo, research professor at EGADE Business School and the Undergraduate Business School of Tecnológico de Monterrey, and guests Jorge Ramos Mercado, research professor in the Department of Finance and Business Economics at EGADE Business School, and Ernesto Garza Guerra, founder and advisor to companies such as Kontempo and Frictionless, shared their perspectives on how investors can use surveys, focus groups, and other flexible methodologies to collect critical data.

Ramos Mercado and Garza Guerra agreed that appropriate data collection and analysis are fundamental to evaluating the viability and profitability of investments.

Garza Guerra stressed that although financial statements and market analyses are crucial, he personally values the human team behind a company more.

"I like to analyze or understand, interview and chat with the founder, the CEO, with the key people in the organization," Garza Guerra stated, underscoring the importance of getting to know the people who lead and execute the vision of the business.

On addressing the complexity of investing in new business models, Garza Guerra suggested three approaches: don’t invest in something you don’t understand; use your network of contacts to obtain information and perspectives; and create a benchmark with similar models in other markets to evaluate the viability and potential success of the investment.

"If you don’t know about it, don’t put your money in it," warned the  EGADE - UNC Charlotte MBA in Global Business & Strategy program graduate, advising investors to focus on the sectors or businesses they are familiar with.

In turn, Ramos Mercado offered a more technical perspective, explaining that in situations in which there is insufficient information, using methodologies that make it possible to obtain data quickly, such as surveys and focus groups, is advisable, even if they are less precise than other, more traditional methods.

"When you have to produce information, obtaining imprecise but instant data tends to be the best option," Ramos Mercado explained, noting that this approach can be instrumental in the early phase of a business when the ability to influence its development is more significant.

Ramos Mercado also cautioned about the inherent risks of investing in new businesses, mentioning that, according to statistics, most new companies fail, emphasizing the importance of having the right information before making decisions.

"Investing in new companies is far riskier... it is important to be fully aware of that reality," the scholar concluded.

The episode closed by reflecting that although investments always imply risks, being well-informed and using the appropriate methodologies can significantly improve the probability of success.

To listen to this and other episodes, Business Territory is available on Spotify, Amazon Music, Apple Podcasts, and YouTube Music.