Beyond Bulls & Bears

Equity

Meet the Manager: Sara Araghi

Sara Araghi truly embodies what it means to be a mentor—particularly for other women—in an industry that has typically been more male-dominated. She is a portfolio manager and research analyst with Franklin Equity Group and director of Franklin Venture Partners, the firm’s specialized investment team that invests in private opportunities, focusing on mid- and late-stage companies. San Francisco Business Times recently honored Sara in its “Most Influential Women in Bay Area Business” awards, highlighting her role mentoring and investing in female founders. Here, we get to know Sara.

Q: Tell us a bit about yourself and your background.

A: I was born in the United States, and grew up in Los Angeles until age 12, when my parents decided to move back to their country of origin: Iran. We lived there until I completed high school. Those were my formative years. While there, I was exposed to a different culture, society and system of government. Everything was so different than what I had experienced up until then. After high school I moved back to the United States for my undergraduate education and attended the Haas School of Business at UC Berkeley. Then I joined Franklin Templeton out of undergrad and have never left! The San Francisco Bay area has been my home for over 20 years. Most of my close relatives live here. I married, and had two amazing children, a boy now ten, and a girl who just turned six.

As an American teenager in Iran, I was a witness to institutionalized gender inequality, and its impact on individual women, and society as a whole. I believe this experience has shaped me into the person I have become, both as an investor and an advocate for diversity and change.

Q: What attracted you to a career in finance?

A: When I arrived at UC Berkeley, I didn’t have a particular intention to enter the world of finance. Earlier in life I had considered a career in medicine; however, the world of business was more fascinating to me. I was excited about the technology companies being created in the Bay area and was impressed by their people. In my senior year of college, I considered typical post-business education options such as banking, consulting, and large company training programs. I also wondered if I should go to law school next. Franklin Templeton recruited me. I was impressed by the people I met during the recruiting process in the Franklin Equity Group, by the training program, the breadth of investments, and the scale of the company. It wasn’t clear to me then how long I would stay at the company, or even in finance. But one thing was clear—Franklin seemed like a great place to start a career. That was over 18 years ago.

Franklin Templeton gave me the opportunity over many years to learn from mentors in multiple areas: various types of equity funds including growth and income, small/mid/large-capitalization companies, specialization in the consumer and entertainment sectors, private client accounts, crossover/venture investments, and leadership. I was challenged to learn something new at every turn. That continues to this day. Not a day goes by without the opportunity to learn something new from someone amazing. The exposure, the trust and the support give me so much energy to go farther, and to do more. Over the years, I’ve come to love investments, and in particular the areas I focus on.

Q: What challenges do you face in your role, and what is the most rewarding?

A: I wear multiple hats in terms of leading Franklin Equity Group’s consumer analyst team, sharing portfolio management responsibilities for US equity funds and investing in private companies. The synergies I’m able to find between these three areas really allow me to operate at higher level in each.

It is very fulfilling to be the person who identifies an investment opportunity, builds the case with colleagues and watches our investment fund a successful business. More and more of these are with female and diverse founders; we also are helping to bring more diversity to corporate board rooms.

Only 2% of venture capital dollars are going to women—there is obviously a lot of progress to be made. At Franklin Templeton, and with the support of our Chief Executive Officer Jenny Johnson who is a champion for diversity, we are increasing our attention to founders of diverse backgrounds. By identifying, funding and supporting these founders, we are working to move the dial and make meaningful improvements in this area. It is incredibly rewarding to be a leader in this effort.

One of the most rewarding aspects of my role is the relationships I’ve built. My ability to make connections and nurture strong relationships has driven my success and that of my team.

Q: What progress have you seen on gender equality in, and outside of your work?

A: Jenny and her involvement with me and our Chief Diversity Officer Regina Curry is huge for our company and ultimately as allocators of capital. We are investing in female-founded companies with my involvement and understanding of the challenges they have had in raising capital.

There have been a growing number of opportunities for young women and girls to get into the field of finance and asset management. Our firm partners with organizations like “Rock The Street, Wall Street” to educate starting in high school, and “Girls Who Invest” to bring young women in for internship opportunities. I have worked with them and shown them the ropes.

Sara celebrating her daughter’s 6th birthday with her family.

Q: You’re a director of Franklin Venture Partners in addition to managing multiple portfolios—how do these roles complement each other? Why is it important to invest “upstream” in female-founded and led companies?

A: My long history of investment research focused on the consumer sector gives me insight into the patterns of consumers. I know what questions to ask to identify a business that has potential, and many female founders and management teams appreciate seeing a woman in one of the seats at the table making investment decisions—it sets a different tone. Being a woman, and the target audience for some of the business ideas that we have ended up investing in, I’ve been able to understand firsthand when someone has a great business idea, whether it be fashion rentals by mail (Rent the Runway) or the desire for hospital scrubs to be more tailored to women’s sizing (FIGS). Women control a lot of spending power, so customizing business ventures with their needs as a starting point can put a firm ahead—and women are often best positioned to identify those needs.

Q: Can you share an empowering moment in your life you are particularly proud of?

A: I think it’s the “Rent the Runway (RTR)” story. The company offers rental of designer clothing for special events as well as everyday use. In its early years, the founders had challenges raising capital because some investors didn’t understand why women would be attracted to an expanded closet like RTR offered. I was impressed by the unique concept disrupting the fashion category but also wanted to invest behind the impressive founders and management team. As an institutional investor, I was able to get a seat on the board of directors to help the company with its next leg of its development. That has given me great insight into how companies are run in general, especially through various cycles, and has resulted in some great knowledge, relationships and networking opportunities. I am seeing more and more opportunities like this to help these female founders break through and seeing them succeed in the public markets. These are incredible founders that have created strong businesses but have had a much harder time raising capital for various reasons. The RTR founders opened my eyes to this problem, and I am extremely proud that I am now able to be a part of the solution.

Q: If you could speak to your younger self at the beginning of your career, what would you tell her?

A: Ask for help. Build relationships. Sometimes you won’t know what you will really love to do right away, and that is ok. But be curious and don’t be afraid to ask questions. Try to find the right mentors as well.

Q: What are you most passionate about in your life and career?

A: Having two young children keeps me extremely busy and fulfilled! So, I dedicate my time outside of work to them and their happiness, involving myself in school activities and boards. I am so happy that my job is empowering me to mentor female and male leaders on what it takes to be a public company and how to talk to investors as a public company—how to pitch. That’s something I’m really passionate about. I am starting to do informal trainings for female founders in particular; they have started coming to me for help and advice, and it’s extremely fulfilling to help them along their journey.

 

What Are the Risks?

All investments involve risks, including the possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested.  Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions.

Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio.

In general, financial and operating risks confronting companies can be significant. While targeted returns should typically reflect the perceived level of risk in an investment situation, there can be no assurance that the strategy will be adequately compensated for risks taken. A loss of an investor’s entire investment is possible. The timing of profit realization, if any, is highly uncertain. Early-stage and development-stage technology companies often experience unexpected problems in the areas of product development, manufacturing, marketing, financing, and general management, which, in some cases, cannot be adequately solved. Such companies may require substantial amounts of financing, which may not be available through institutional private placements or the public markets, or when such amounts are most needed. In addition, the markets that such companies target are highly competitive; in many cases the competition consists of larger companies with access to greater resources. The percentage of companies that are successful can be small. Investment in more mature companies in the expansion of profitable stage also involve substantial risks. Such companies typically have obtained capital in the form of debt and/or equity in order to expand rapidly, reorganize operations, acquire other businesses, or develop new products, services and markets. These activities by definition involve a significant amount of change in a company and could give rise to significant problems in sales, traffic and customer/agent acquisition and retention, and general management of these activities.

Investments in alternative investment strategies are speculative investments, entail significant risk and should not be considered a complete investment program. The identification of attractive investment opportunities is difficult and involves a significant degree of uncertainty. Any returns generated from alternative investment strategies may not adequately compensate investors for the business and financial risks assumed and there is no assurance any such strategies will be successful. An investment in these strategies is subject to various risks, such as those market risks common to entities investing in all types of securities, including market volatility. An investment in alternative investment strategies may be illiquid or provide for only limited liquidity and are suitable only for persons who can afford the loss of all or substantially all of their investment. Investors in many alternative investments may not receive periodic pricing or valuation and there may be a lack of transparency as to the underlying assets. Investing in alternative strategies may also involve tax and other consequences. A prospective investor should consult with its legal, financial and tax advisors before investing. An investor considering investing in alternative strategies should carefully consider all of the terms governing such investment including investment objectives, risks, charges and expenses.

Past performance is not an indicator or guarantee of future performance. There is no assurance that any estimate, forecast or projection will be realized.

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This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

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