Why founder-led businesses are set to outperform in 2025 and beyond

We are searching for exceptional Australian founder-led businesses to invest in. Those businesses where the founders have a strong stake, driving an almost obsessive commitment to success.

Over the course of 17 years investing in Australian businesses, I have witnessed how strong founders and management teams that have alignment with minority shareholders is an excellent recipe for success. 

Founder-led companies comprised around 20% of our holdings in our small to mid-cap focused listed investment companies (LICs), WAM Microcap (ASX: WMI) and WAM Research (ASX: WAX) have generated 64% of investment portfolio returns since 2018. Both LICs have delivered annualised returns exceeding 15% since inception or the adoption of the current investment strategy.

After taking a deeper dive into what is driving this outperformance, it became clear that unique attributes that founders bring to the table play a pivotal role – a compelling vision, belief, long-term investment and commitment, close engagement with shareholders, and a more hands-on role within the business. 

At the end of the day, it is their name, reputation and legacy on the line.

I have seen this first-hand in Geoff Wilson AO, who founded Wilson Asset Management in 1997. Since then, Wilson Asset Management has exponentially grown funds under management and now invests more than $5.5 billion on behalf of over 130,000 shareholders. Working closely with Geoff has provided me with critical insight into the drivers of a founder-led business and why Wilson Asset Management has such a strong and proven track record of supporting other founders.

What we look for in a founder

Just as important is strong alignment of interests where we are specifically looking for founders who not only have skin in the game but are also committed to growing the business with minority shareholders.

2025 - why it’s a good time to invest behind founder-led IPOs

Recently, my fellow Portfolio Manager at Wilson Asset Management, Oscar Oberg, wrote an article highlighting the expectation that domestic interest rates will follow rate cuts in the US and New Zealand. This presents a welcome tailwind for an IPO market that’s been relatively stagnant since 2022.

We are well-positioned to take advantage of the next IPO cycle. Based on our calculation, founder-led IPOs during the last IPO cycle significantly outperformed their non-founder-led counterparts. This opportunity is very exciting to us over the coming period and the team will be assessing every opportunity that comes across our desks.

It is for these reasons that we are backing founder-led businesses to continue outperforming in 2025 and beyond, and we remain committed to identifying undervalued companies with a catalyst to outperform.