A decade of investing: what Fund I taught us about backing infrastructure in emerging markets

When we made our first investment in 2016, we believed we were backing technology businesses. By the time Fund I exited in early 2025, we understood we had been backing something more specific and more consequential: the infrastructure layer of economies that were being built in real time, by founders operating in markets that formal capital had largely ignored.

That distinction, between technology as a product and technology as infrastructure, took years to crystallise. It cost us capital in some instances and generated it in others. The pattern of where we won and where we lost is what sharpened it. Fund I was, in retrospect, the process by which Kingson learned what kind of investor it actually is.

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What we got right

The return speaks to something, but not everything. A 3.5x net at 20.5% IRR across a portfolio of early-stage companies in emerging markets, through a period that included COVID, significant currency volatility, and the kind of operational turbulence that characterises frontier market investing, is a result we are proud of. It was not inevitable, and it was not accidental.

The decisions that drove the return share a common characteristic. In each case, we backed businesses that occupied a structural position in how a market functioned, not simply businesses with interesting products. The companies that compounded were the ones whose absence would have broken something in the ecosystem around them. That is the test we now apply explicitly. At the time, we were applying it intuitively, and not always consistently.

One of the clearest examples of this in the portfolio was a business operating in manufacturing and distribution, supplying into an industry where it held real pricing power, real relationships, and a cash conversion cycle it managed with discipline. It was not the most exciting business in the fund. It did not have a large addressable market story or a viral growth curve. What it had was sound unit economics, a founder who understood the basics and executed them without distraction, and a compounding effect that became significant over time. That business reminded us that clarity in the fundamentals, maintained consistently, is a more reliable path to return than complexity managed optimistically.

We also learned early that follow-on discipline is where a fund's character is actually revealed. It is easy to back a winner in the first round. The harder and more consequential decision is whether to follow that winner into subsequent rounds when the capital requirement grows and the fund's resources are finite. We backed our winners. We reserved dry powder deliberately, investing a maximum of 50% of the initial check size during the deployment stage and reserving the remainder for follow-on. That discipline, maintained under pressure, is a significant part of why the exits compounded the way they did.

Co-investment mattered too, and not primarily for the reasons most fund managers cite. The financial risk-sharing was useful. More useful was what the right co-investor brought to the cap table beyond capital: networks, credibility with customers and regulators, and the kind of lateral pressure on a founder that a single investor cannot exert alone. We became deliberate about who we co-invested with. A co-investor without a genuine network contribution is not a co-investor. It is a passive financial participant, and that does not add value when a business is navigating difficulty.

What we got wrong

The honest account of Fund I includes the investments that did not work, and what they had in common.

The first pattern worth naming is the gap between a sound thesis and a trustworthy founder. We have backed businesses where the infrastructure opportunity was genuine, the technology worked, and the market need was real, and still lost because the person leading the business could not be trusted to honour the commitments they had made. That experience is a difficult one to sit with, because the investment logic was correct. The lesson it produced is now non-negotiable in our due diligence process: character is not a soft consideration that sits alongside the investment case. It is the investment case. A sound thesis in the hands of the wrong founder is not a recoverable situation. It is a matter of time.

The second pattern was more subtle and in some ways more instructive. We backed a business whose growth story was legitimate. It scaled its user base as it had committed to, hit the milestones it had projected, and made a credible case for deepening into its customer relationships over time through an expanded product offering. What we did not see clearly enough, until it was too late, was that the unit economics underneath the growth were never properly resolved. The business model carried a structural complexity that the accounting struggled to reflect accurately, and as the company grew, the financial reporting became increasingly difficult to interpret. By the time we understood what was actually happening inside the business, the decision-making had already been compromised by months of operating without a clear picture of the numbers. We lost everything there. The lesson is specific: a business that cannot produce clean, legible financial reporting at a relatively early stage is telling you something important about how it is being run. Revenue growth and user acquisition are not substitutes for financial clarity. They can mask the absence of it for longer than they should.

The third failure mode, which runs across more than one investment, was moving too slowly when situations required decisiveness. Emerging market investing does not reward deliberation in the same way that developed market private equity might. When a business is in difficulty, the window for corrective action is shorter, the consequences of delay are steeper, and the options available narrow quickly. We learned to act sooner, cut losses faster, and resist the instinct to give a struggling company one more quarter to turn itself around. That instinct, which feels like patience and support, is often neither. It is the avoidance of a difficult decision that the evidence has already made for you.

The lesson that changed everything

The most significant shift that Fund I produced was not tactical. It was about what we believe we are investing in.

In the early years of the fund, we evaluated businesses primarily on their product and their market opportunity. By the final years, we evaluated them primarily on their structural role. Does this business sit at a layer of the economy that enables other things to function? Would its absence create a gap that is genuinely difficult to fill? Is the data or the transaction flow it controls proprietary in a way that compounds over time?

The businesses that answered yes to those questions performed. The businesses that answered no, regardless of how interesting the product was or how large the addressable market appeared on paper, mostly did not. That pattern was consistent enough across the portfolio to move from observation to conviction.

It is why Kingson's current investment thesis is organised around infrastructure rather than applications. Not because applications cannot generate returns, but because in the markets we operate in, at the stage we invest, the businesses that build and hold the foundational layer compound in a way that application-layer businesses rarely match. Fund I taught us to see the difference. Fund II is built on it.

What carries forward

Eight years of managing a fund through the conditions that emerging markets produce, specifically COVID, regulatory shifts, currency volatility, and the particular operational pressures of backing founders who are building without the institutional support infrastructure that developed market companies take for granted, produces a clarity that no amount of desk research replicates.

We know what founder distress looks like before it surfaces in the financials. We know how government procurement timelines behave and why forecasts built around them are almost always optimistic. We know the difference between a business with momentum and a business that looks like it has momentum. We know when to back harder and when to stop.

That knowledge is not easily transferable through a document. It lives in the judgment calls we make in pipeline meetings, in due diligence conversations, and in the moments when a portfolio company is under pressure and we need to decide quickly what the right intervention is. Fund I is the foundation of that judgment. The return is the proof of it. The learnings are what we carry into every investment we make from here.

Kingson publishes perspectives to help allocators think more carefully about capital deployment in high-growth markets. This piece represents our considered view, not investment advice. For allocator enquiries, contact advisory@kingsoncapital.com