EQT Founder: Politics Biggest Investment Risk Today

In Brief:

Political risk has emerged as the single greatest threat to global investing, surpassing traditional market concerns like valuations or economic cycles. Conni Jonsson, Founder and Chairperson of EQT, addresses this challenge head-on in the Alt Goes Mainstream podcast's DNA series, arguing that geographic diversification represents the only viable mitigation strategy in an increasingly unstable political environment. From EQT's Stockholm headquarters, Jonsson—who started the firm in 1994 with a responsible ownership model inherited from the Wallenberg family—explains how authenticity, long-term thinking, and values-based partnerships have driven EQT's evolution from a European private equity pioneer into a global asset manager competing with American giants. His farm upbringing informs a philosophy rooted in nature's inevitability: logic always prevails in markets, even if it takes time, and diversification across geographies and asset classes provides the most predictable path to long-term value creation in a world where political unpredictability threatens concentrated positions.

Big Picture Drivers:

• Political uncertainty surge: Geopolitical instability and unpredictable policy decisions have elevated political risk above traditional investment concerns, requiring fundamental strategy shifts in portfolio construction

• Automation displacing financial analysis: Traditional spreadsheet-driven financial modeling is becoming automated, fundamentally changing the skill sets required for private equity success toward relationship building and governance expertise

• Wealth channel democratization: Private markets are expanding beyond institutional investors into individual wealth channels, requiring new product structures and investor education approaches

• Values-based differentiation: Cultural authenticity and commitment to responsible ownership are emerging as competitive advantages in attracting both capital and top management talent to portfolio companies

Key Themes:

• Authenticity as strategy: Being genuine and transparent in business dealings creates sustainable competitive advantages by attracting superior management talent and building trust with stakeholders across global markets

• Geographic diversification necessity: Global presence across multiple regions serves as both growth strategy and risk mitigation tool, particularly critical in managing political uncertainties that threaten concentrated positions

• Long-term orientation wins: Patient capital approaches inherited from Wallenberg family heritage enable better decision-making and value creation compared to short-term profit maximization strategies prevalent in the industry

• Doing good equals good business: Sustainability investments and responsible ownership practices directly drive multiple expansion and superior returns, not merely represent costs or ethical considerations separate from financial performance

Key Insights:

• Politics represents the paramount investment risk: Political instability and unpredictable policy decisions have overtaken all other risk factors as the primary concern for global investors, fundamentally reshaping how portfolios must be constructed and managed.

• Geographic diversification is the only political risk mitigation: When politics dominates risk considerations, spreading investments across multiple geographies and participating in all parts of the global economy provides more predictable outcomes than concentrated regional bets.

• Automation will eliminate traditional analyst roles: The spreadsheet-driven financial analysis that has defined private equity work for decades is becoming automated, requiring the industry to pivot toward relationship skills and governance expertise as core competencies.

• Attracting top management talent determines success: The ability to recruit the best executives to run portfolio companies will separate winning firms from losers, achievable only through governance structures and cultures built on honesty, transparency, fairness, and respect.

• Responsible ownership drives multiple expansion: Investing in sustainability and future-proofing companies creates strategic repositioning that leads to higher exit multiples, demonstrating that doing good and generating superior returns are completely aligned objectives.

• Local presence enables superior deal execution: Understanding local markets, people, and circumstances on the ground proves essential for successful investing—sitting in distant financial centers and flying in for deals fundamentally undermines execution quality.

Memorable Quotes:

• "Politics" - Conni Jonsson, answering what represents the biggest risk in today's investment world with a single emphatic word

• "You're going to diversify away from it" - Conni Jonsson, explaining his strategy for mitigating political risk through geographic portfolio diversification

• "Spreadsheet tigers, you know, forget that" - Conni Jonsson, warning that traditional financial modeling skills will become obsolete as automation transforms private equity

• "The glue cannot be money. The glue must be that we like to do what we're doing and that we like to do good things" - Conni Jonsson, explaining why EQT's values-based partnership model differs from traditional money-driven private equity cultures

• "I think that good business is great business" - Conni Jonsson, articulating his philosophy that responsible ownership and sustainability investments directly enhance financial returns rather than represent trade-offs

The Wrap:

EQT's founding philosophy demonstrates how authenticity and values-based partnerships can scale into global competitive advantages while maintaining long-term orientation in an industry often criticized for short-termism. Jonsson's farmer's perspective—that nature always finds its way and logic eventually prevails—offers a counterweight to market panic during turbulent periods, while his emphasis on political risk and geographic diversification provides practical guidance for navigating today's unstable environment. As automation eliminates traditional analyst roles and the wealth channel opens private markets to individual investors, EQT's focus on governance, culture, and attracting top management talent positions the firm for a future where relationship skills matter more than spreadsheet prowess. The firm's demonstration that sustainability investments drive multiple expansion through strategic repositioning validates the "doing good is good business" philosophy, proving that responsible ownership and superior returns represent aligned rather than competing objectives.