Investing in an Unprecedented Market
“Get on the Bus; Get Dragged Behind the Bus; or Get Run Over By the Bus?”
It took roughly 150,000 years from the first human to the invention of the Printing Press. It took a couple of hundred more years to see the Steam Engine and a hundred more to the introduction of the Internet; about 10 years to the cell phone and 5 years to experience Google.
A few short years later, Facebook arrived and here we are today with more cellular phones than people on the planet, talking to our watch to make a video call around the world while riding in our autonomous vehicle.
Never before has the velocity of innovation been greater and since each breakthrough provides a stepping stone for this next wave, this rate is increasing exponentially.
808 defines the ‘Bus’ as disruptive digital technology. Digital technology is permeating all aspect of our lives and commensurately every business on the planet. Anyone considering an investment must take this digital invasion into consideration as they manage their investment strategy and portfolio.
No matter how well versed one is in various legacy businesses, few investors today fully understand today’s digital technologies. Even veterans in the high-tech industry are hard put to keep abreast with the rate of innovation.
At best, Investors ignoring the ‘bus’ bearing down on them will be dragged behind. At worst, they will be run over.
The Chinese symbol for ‘Crisis’ combines the symbols for ‘Opportunity’ and ‘Danger.
Businesses themselves have already felt the impact of the onslaught of the digital revolution. We’ve seen well-known brands disappear while others are struggling to adapt and survive.
Entire industries such as Retail, Music, Broadcast Media, Manufacturing, Newspapers, Stock Brokerages, Transportation, Energy, Communications, Medicine, etc. have been blindsided and executives and shareholders alike have been left shaking their heads in disbelief.
25 million jobs will disappear in next five years(1); 40% of incumbent established market leaders will be gone(2) ; 25% or the worlds GDP will be digital by 2020(3).
This poses several challenges for investors, both institutional and individual: How does one find these new opportunities before they are mature and become overpriced? Even if found, how can an individual invest? How does one know if an investment has a chance? At what stage should one invest?
This isn’t our father’s market; the mechanisms and even the currency itself is changing faster than most can track. How many investors can describe the difference between an ICO and an IPO? What is a commodity backed crypto currency? Is Bitcoin a currency, a commodity or a security? Complacently ignoring the changes is an option; but not recommended.
“Warning:Do Not Try This at Home!”
The fact is, this is a new era of investment has been primarily left to venture capital (VCs) specialists. Spawned in Silicon Valley in the 1970’s, VCs are a confluence of successful technologists and seasoned business executives. They raise large amounts of funds, usually in tranches, from institutional investors that, at times, reaches into the billions. Today, these institutional VCs provide about 80% of the funding for new ventures, most typically in the later, less risky stages of a business cycle. The individual investor is not usually allowed to participate in these rounds of company funding.
Individuals from successful high-tech ventures sometimes use their hard-won knowledge and funds to invest in new ventures themselves, especially in their domain of experience. These individuals are known as ‘Angels’. More recently, individual Angels have banded together into groups to seek, vet, analyze, negotiate and invest in startups.
The required due diligence is performed by the Angels as they each bring high-tech venture experience. Angels must be willing to invest the time and effort required for participation. But what if you are not one of these who has that degree or range of experience? A few Angel Groups allow non-experts to ‘tag-along’ and co-invest, but how does the novice know which of these opportunities fit their unique investment interest and risk profile? Angels typically provide about 20% of the total vc funds invested each year funds in Seed investments or very early and risky stage of startups. Interestingly, these Angels and other Seed investors account for 80% of investment transactions made.
The process of identification and evaluation of a startup and whether it is a good investment, is extremely challenging. One must identify, evaluate and acquire the opportunity at the right phase of a company business cycle and the right price (valuation). As the old adage states “…do not try this at home…”! Realistically; “…it takes one to know one…”.
Managed Risk in the New Era of Investing in High Tech Startups
808’s deliverable to investors is ‘Managed Risk in this New Era. 808s Mission is clear: to bring together successful experts from their own high-tech ventures and leverage their experience to forage through the plethora of new esoteric ventures seeking funds and create investment opportunities for everyday people who want to participate in this new exciting and pervasive investment phenomenon.
808 Ventures manages a high-tech venture capital fund, yet it is more than a mere manager. Classic VCs take funds from large investors, invest it with no transparency or accountability and the investors do not participate in any of the investment decisions. In most cases, the investors are huge institutions and don’t want to participate-even if they were allowed. 808 acknowledges that among the smaller and less knowledgeable investment community, there are those who will simply commit the funds and sit back.
808 is a confluence of a ‘hands-on’, high-tech venture capitalist fund manager, consultant, advisor and partner, with the personal experience of an array of entrepreneurs that can address and instantiate the unique needs of clients as they relate to this wave of digital opportunities.
In summary, 808 offers a way to address this rapidly changing playing field with a well thought out and fully managed strategy. This strategy is executed by a highly experienced team that, joining with other investors to spread their risk, small or large amounts to maximize investment opportunity while minimizing risk.
For more information about the 808 program, please contact: