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.“
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.“
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.
“In fact, flows have remained strongly positive into equities throughout the sell-off. As the chart shows, ARK Innovation ETF has suffered no net redemptions despite declining 71% in price since the peak. The ‘buy the dip’ mentality is alive and well.“
It may seem simple but often the main thing that makes stocks go up is defying the fade in forecasts.
This is true of mega-cap tech stocks.
Despite consistent forecast for deceleration they have maintained 20-30% growth for over a decade now.
NB solid line is actual revenue growth average for AMZN, AAPL, CRM, FB, GOOG, MSFT, NFLX and the dotted lines are average sell-side forward forecasts at those points in time.
Thoughtful analysis of the venture landscape given the current state of public markets from Redpoint ventures.
The background is – public high performing SaaS firm valuations have fallen below their 10 year average now (see chart).
Past public market corrections led to 10 quarters of decline in venture dollars invested of varying severity. The great recession, for example, saw a 30% fall.
“Currently many companies in private markets (particularly at late stage) are in “price discover” mode in fundraises with everyone trying to figure out market price – rounds are taking longer to get done and “willingness to pay” spreads are wide“
