Derivatives and shorting have made their way into the private market.
Selling interest increased to 80% of open order interest at Caplight, while the buy side has dropped to 20%, according to Javier Avalos, CEO of the private-market derivatives marketplace. It was previously fairly even or a 60/40 split, he said. “We basically saw the demand side of the Caplight marketplace go away for the past few months,” he said.
One interesting aspect of tech is how circular it is, making it prone to downside leverage – “Tech, unlike other sectors, disproportionately sells to itself.”
“The circularity goes beyond VC investments,” he added. “Today major tech companies incubate their own customers at a pace and scale not seen in any other industry.”
Using a machine learning model Sparkline Capital were able to cluster firms in similar technologies and then look at how venture investment in these tech clusters evolved over time.
This leads to the following chart of cycles.
“In the dot-com bubble, venture capital firms threw money at internet companies. Next, Blackberry and iPhone ushered in the mobile age. Then, Facebook’s success sparked a wave of investment into social networks. Artificial intelligence grew steadily over the past decade, while blockchain burst on the scene a few years ago. Climate tech investment faded after an initial burst but is now seeing a resurgence.“
A large alternative asset class you probably haven’t heard of is litigation financing – “transactions in which a third party provides capital (debt, equity, or a hybrid) to one of the parties to a legal claim (a plaintiff or law firm) in exchange for a financial interest derived in part from the outcome of the claim.“
This is an excellent comprehensive up to date paper on this sector. The full paper is here and a great summary is here.
The asset class is estimated to boast 20%+ returns and has grown to a dedicated AuM of $12bn.
Outsourcing in the biotech and pharma industry continues unabated, boosting contract research organisations (CRO) like IQIVIA, Labcorp etc.
Interestingly, consolidation has been a big feature of the industry, and this Stream expert call (sign up for free two weeks to access) suggests more is to come.
Interesting first hand account of how Monzo grew from nothing to 1 million users in three short years.
Tom credits – a great product (compared to competition) that was a delight to use, a brightly coloured card, and network effects – “if you had 3+ friends on Monzo when you joined, you had a 70% chance of being a WAU [weekly active user] by day 90, versus only a 50% chance if you didn’t have any friends on the platform.“
Strikes me as a very important move by the US towards “open access” academic research.
By 2026 all US federal agency funded research must be free to read immediately on publication.
This has been talked about for a very long time.
In a recent transcript from Stream by AlphaSense (sign up for two free weeks here), a former Elsevier Director, argued the effect on RELX business will be a “small negative” as they will find ways to charge for ancillary parts of research (reviews, data etc). The hit to smaller publishers will be worse.
The first comprehensive economic analysis measuring the impact of sanctions on economic activity in Russia.
The team relies on “using private Russian language and unconventional data sources including high frequency consumer data, cross-channel checks, releases from Russia’s international trade partners, and data mining of complex shipping data”.
Results are grim – “From our analysis, it becomes clear: business retreats and sanctions are catastrophically crippling the Russian economy.”
Meet one of the most dramatic changes in communication costs in history.
The introduction of the first modern postal system in Britain in 1840.
A 1839 Act of Parliament created the Uniform Penny Post – a single low postage rate and the first adhesive postage stamp, replacing a complex distance based system.
The results were monumental and, as this paper finds, also improved innovation.
Today, 73% of people in the UK consider post as essential or fairly important.
