The case for venture

In 2020, there are 4 very powerful and visible phenomena, the convergence of which is likely to bring tremendous change and disruption, much of which will be at the expense of incumbent business models and with significant investment implications.

First, we are at the end of a 40-year cycle of falling interest rates.

Second, post-global Financial Crisis of 2008, we are 12 years into the biggest economic experiment ever undertaken by Central Banks in the form of QE, or money printing, without really knowing how this ends. The 1930s offers an analogy for the last time rates were this low, money printing so rampant, and the wealth divide so big.

Third, we are only 10 years into exploring the possibilities of cloud computing. Businesses can and are being built from anywhere in the world at minimal cost and very, very quickly. It took the airline industry 50 years to reach 50 million customers. It took Pokemon GO just 19 days. It took Lloyds Bank in the UK a century to acquire 7 million customers. Paypal added this many in just 3 weeks in April this year (2020). Quantum computing is next.

Last, the younger generation is arriving into the workforce with record levels of student debt and facing real estate prices four times what they were 25 years ago. With asset prices so far removed from income streams, this generation simply doesn’t have access to the same levels of prosperity as the previous one. And so it has to be reimagined. This changes everything – renting over owning, services over assets.

The coincidence of these 4 observations favors private over public, innovation over legacy – the fourth industrial revolution. And this is starting to get acknowledged.

You can read The Case for venture here.

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