Daphne Tong: A captain’s role
Now more than ever, investing needs to be a team sport.
In finance, you’ll often hear sports metaphors thrown around. The desire to win big, the thrill of gameplay, the athleticism of the big players. The clichés write themselves.
But it was still surprising when Daphne Tong, WestCap’s Co-head of Investments, brought up rugby.
Daphne is both soft-spoken and petite. Her voice is calm; soothing. Her mannerisms are precise and considered, resting on smooth confidence—the opposite of what you’d associate with the rough and tumble chaos of rugby.
But Daphne knows about rugby. After all, she was the captain of the women’s team at the University of Pennsylvania. And the parallels she draws aren’t about intensity or aggression, but about the strengths that each player can bring to the table.
“The analog is that in rugby there are a lot of different leadership styles and there’s a role for everyone. I managed to find my role, the scrum half, who tends to be small in stature because you have to be very low to the ground to pick up the ball. You’re also the one who is directing the plays the entire way. I may not be the loudest person, but I can make my voice heard the entire time.”
The skills she picked up on the field have stuck with her throughout the years. Her position required alertness and the ability to make quick strategic decisions, two important qualities to have in investing.
But more importantly, Daphne’s experience playing on a team shaped her understanding of how individuals should work together. Anyone—no matter the role—can impact the outcome of a game.
Finding her voice
This is a belief that Daphne’s been honing since the beginning of her career.
Daphne’s foray into investing started at Blackstone. At the time, the firm was relatively small—she was the second woman to ever be hired as an associate in the New York headquarters.
“Back then, mega-buyout private equity firms had a reputation for being hardcore work environments and I’ve always been known as a very…”, she pauses, “nice person.” But some of her former classmates worked there and they assured her she’d fit right in. And that she did, spending 9 fruitful years there.
During her nine years at Blackstone, she learned how to craft a space where she could be successful while still being true to herself. “As I’ve gotten more seasoned, I’ve become more confident in who I am. There was a period of time where I thought you had to dress a certain way. What can I do to have a deeper voice or a lower voice? Is that the answer? But now I know I can be assertive, while still being myself. I found my voice when I realized it’s really impossible to change who you are. That’s been a good lesson for me.”
Ultimately, she credits her success at Blackstone to two things. The first: intellectual curiosity.
Every time the firm looked at a new company, she’d go out of her way to develop her own perspective and present it to the team. She’d ask incisive questions, poke at specific diligence outcomes, but most importantly, she’d listen.
“So much of investing is an apprenticeship model. That’s how I learned—by watching my peers and seasoned investors. I used to sit in one of the Blackstone partner’s offices and hear how he negotiated deals, worked through tactics, and spoke with management teams. This was many years before Zoom, so no one knew I was there sitting by the Polycom, listening and learning.”
The second way she differentiated herself was team management, which came naturally to her. Daphne developed a reputation for being an excellent leader who would take the time to grow the people on her team. She realized one overlooked skill was understanding and leveraging the different strengths of each investor. Instead of leading by being the loudest person in the room, she could build a stellar team to lean on. She could listen.
“One takeaway has been to find trust in the people I work with to get to the right answer. We must depend on our deal teams. Why should I be the only voice in the room?”
She also learned that teamwork could extend beyond the firm’s walls.
In 2009, Blackstone invested in a company called Summit Materials. It was a business that worked with the most basic elements imaginable—crushed aggregate rocks and building materials. Daphne would go on to spend 6 years working closely with the company.
She even traveled to rural Missouri, Kansas, Utah, Kentucky and beyond to see the operations firsthand. Being up close and personal meant she could gain a more comprehensive understanding of the business, while strengthening her relationships with the leadership team. Together, they grew the company from the original seven founding management team members to 4,000 employees and north of $3B of enterprise value.
“That was one of the most operationally intensive portfolio companies during that time at Blackstone. It was a rare opportunity to build a business from scratch.”
Her experience working with Summit Materials shaped Daphne’s view of partnering with founders and portfolio companies—and would prove to be relevant later on.
A more collaborative model
Daphne first met Laurence Tosi (L.T.) while working at Blackstone. L.T. was a serial entrepreneur and founder of tech companies including Ipreo, which Blackstone invested in. In 2008, he joined the firm as CFO and ran their Innovations Investment Fund before taking a senior executive position at Airbnb. They kept in touch after Daphne left to join GIC, an investment firm managing Singapore’s foreign reserves.
In 2021, L.T. reached out to Daphne to discuss WestCap. He was building a new kind of private equity firm where investors would work alongside seasoned operators to partner closely with companies in their portfolio. It sounded radically different from how other firms were approaching growth-stage investing. At WestCap, she wouldn’t just be working with other investors. She’d have digital marketers, data scientists, talent professionals, and true operators on her side.
She wanted in.
Now, she co-leads a team of 20 investors with LT. She approaches her role with the same intellectual curiosity she honed at Blackstone. She listens and challenges her team with perceptive observations . Her role is the ‘question-asker’.
But there are other common practices in the industry she doesn’t wish to recreate.
“The traditional model in most investment firms is each partner for themselves. At many firms, you will say this is my deal. I need to get my deal through the investment committee. And at WestCap, no deal is my deal. It’s the firm’s investment. There is no one person advocating for a given investment.”
This more collaborative culture is not just a pipe dream. It’s already baked into WestCap’s due diligence process. By the time a deal gets to the investment committee, over a dozen people across different operating functions have met the potential portfolio company’s management team. They know how the company operates—from their product roadmap to their hiring processes—and can also identify the critical areas where WestCap can best support the company once the deal has closed.
“I’ve seen so many examples of how we make decisions as one firm. And that’s what makes us different. So I always say, we have 20 people on our investment team, but in reality, we have 100 people at our firm who are ready to dig into any given company. This is what’s made us successful.”
Leading through uncertainty
This model will be put to the test in the coming months.
The finance world is rife with doom and gloom. While investors are being more cautious, startups are bracing for the worst.
Having worked through the previous recession, Daphne emphasizes that now is the time to turn inwards and focus on nurturing the investments you’ve already made. Great investors will stand out by the progress that’s made after the deal closes. That’s the work she finds most challenging—and exciting.
“I encourage our investment team to get involved in the day to day of our portfolio companies.”
“Getting involved isn’t just helping with financial reporting around the board meeting, but actually working on a project with the CFO or Head of Strategy—like a potential acquisition or the creation of a new business unit.”
It’s the type of close partnership that’s reminiscent of her time working with Summit Materials. According to Daphne, this is the level of support companies need now, especially as they’re being faced with difficult decisions.
When you have a strong line of communication with management, you gain more visibility into the company’s inner workings. This helps better diagnose problems and come to solutions that may not be immediately obvious.
She recognizes many companies are feeling the pressure to downsize right now in order to be prudent with their capital. In some cases, that’s the right path but cutting staff may not always be the right answer.
She argues a better approach is a renewed focus on creating the most impact for your end-users. This could mean reallocating resources or identifying new opportunities for growth. Currently, the WestCap talent team continues to be hard at work helping portfolio companies with executive and engineering hires.
“Companies need to be careful about how they’re spending the capital they’ve raised and to do that well, you need the right vision. We’ve found that hiring the right CFO, CMO, Chief Product Officer, or COO will actually allow founders to execute better and to have a better line of sight to these critical questions. You would think the answer is to just punt and thread water until things are easy again.”
Daphne maintains that these kinds of surprising—and valuable—insights are exactly why investors need to venture outside of their usual domain. Working alongside portfolio companies and operators should be a requirement. Though some may argue that this more collaborative approach could slow down a firm, Daphne believes that in the end it will lead to less blind spots.
“During times of economic reset, it’s important to not have one person trying to figure out the world on their own.”
She adds, “In rugby, you need 15 people on the pitch, each playing their own role on the field. And that’s very much how we play here at WestCap, because we make better decisions together.”
The above is provided as an illustrative example and designed to demonstrate the benefits to portfolio companies of partnering with us. The information is aimed at prospective portfolio companies and not intended to solicit investors, or an offer to purchase any securities. The experiences highlighted may not necessarily represent or be indicative of current, past or future results and experiences with portfolio companies.