THE CEOs’ CORNER
The Abundance Of Capital
X-Prize Founder Peter Diamandis writes a recurring newsletter around abundance. Ever the optimist, Diamandis believes we are living in a world in which resources are becoming increasingly less scarce . . . that tech and other drivers will soon unleash a world of opportunity heretofore unknown.
His most recent newsletter focuses on the explosion of capital worldwide for entrepreneurs, breaking it down into four categories:
Ø Crowdfunding: Worldwide funding in 2017 reached $34 billion, and is expected to hit $300 billion by 2025;
Ø Venture Capital: New records were set in 2017, with worldwide investments exceeding $150 billion;
Ø Cryptocurrencies and ICOs: A rapidly emerging method of raising capital (the number of ICO’s in Q1, 2017 was roughly a dozen compared to more than 100 by Q4 of the same year), ICO’s generated more than $7 billion in the first half of 2018;
Ø Sovereign Wealth Funds and the Vision Fund: Sovereign Wealth Funds hold more than $6.6 trillion in assets, and invested $16 billion in 2017. Softbank founder Masayoshi Son’s Vision Fund raised $100 billion, investing $36 billion in its first year (2016). Son plans Vision Funds 2, 3 and 4 over the next few years, growing to more than $880 billion in investable assets and investing in more than 1,000 companies.
Lest anyone think all this capital is only funding young tech entrepreneurs, a recent research article in the Harvard Business Review found that the average
age if entrepreneurs when they founded their companies in their early 40’s. Take out software startups and the average age is late 40’s. HBR also found that the average age of the top .1% of startups based on five year growth rate was 45.
What does this mean for you? Well, for one thing, competition. Disruptive startups will be more and more common and better funded. With the increasing abilities of artificial intelligence, you’ll do better keeping your eyes on the competitive horizon and away from micro-managing your employees. For another, your employees with entrepreneurial mindsets will find it easier to raise their own capital. So maybe you should be looking to create a more intrapreneurial culture, providing seed funding for innovative, out of the box thinkers. And get started educating yourself about the new financial world and how you might tap into it to launch new products or spin-offs because, if you don’t, someone else might.