The fund will co-invest with the Stride Equity digital investment platform, and will unlock many of the benefits associated with our community of investors and founders.
Why would you do that in this environment, you might ask?
In the face of a challenging macroeconomic backdrop and recent upheavals in the venture capital landscape, the decision to launch a venture fund and invest in growth companies might seem counterintuitive to some. However, upon closer examination of the prevailing market dynamics, it becomes evident that now is perhaps one of the most opportune moments in recent history to embark on this. Let's delve deeper into three key areas where significant shifts are occurring, each presenting exciting opportunities for investment:
1. Change in consumer and investment behaviour
The emergence of the digital native generation, exemplified by Gen Z, marks a profound shift in consumer and investor behaviour and preferences. As highlighted in various studies and reports, including the 2020 First Insight Report and the 2023 Cigna Survey, Gen Z constitutes the largest demographic cohort globally, commanding substantial spending power. Notably, their spending power has seen a staggering 36% compound annual growth rate, reaching $360 billion, up from $143 billion just four years ago. These statistics underscore the immense potential for startups to tap into this demographic's unique preferences and values, which are increasingly shaped by their experiences in a cyber-infused world. Gen Z investors rely on their community to find investment opportunities and make investment decisions on information available on their trusted platforms. Digital investment platforms with strong communities are the obvious source for investments for this new, powerful investor generation.
Other specific trends such as the migration to self-directed, flexible online work further highlight the evolving landscape that startups can capitalize on. By aligning their offerings with these shifting behaviours, startups stand poised to capture significant market share and drive innovation across various sectors.
2. Rapid change in technology and rate of adaptation
While mobile and cloud technologies have dominated startup growth over the past decade, the emergence of new technological paradigms such as artificial intelligence (AI) and mixed reality heralds a new era of innovation. The exponential advancements in AI demonstrate its transformative potential across a myriad of applications. From surpassing human capabilities in image recognition to
augmenting human creativity, AI presents unprecedented opportunities for startups to develop cutting-edge solutions that address pressing societal challenges.
Beyond AI, the increasing adoption of mixed reality, such as Apple's Vision Pro, indicates a paradigm shift in digital experiences. As highlighted by industry experts like Tim Sweeney, the move towards fully immersive digital experiences is inevitable, opening up new avenues for startups to pioneer innovative products and services. By leveraging these emerging technologies, startups can differentiate themselves in the market and gain a competitive edge over incumbents relatively rapidly.
3. Availability of talent
The recent market downturn, exacerbated by factors such as rising interest rates and reduced risk appetite, has led to the availability of talent within the tech sector. Startups that raised too much money too fast and over-hired are now facing the consequences, with flat or down rounds with mass lay-offs at even the largest tech companies. However, this availability of talent presents a unique opportunity for early-stage investing, as skilled professionals seek new avenues for innovation amidst the changing landscape.
It is well documented that periods of economic uncertainty have historically served as a fertile ground for iconic startups, such as the emergence of companies like Google, Amazon, and Expedia during the tech crash. Similarly, the current market downturn, coupled with the convergence of consumer and investor behaviour as well as rapid technological evolution, sets the stage for a surge in high-quality early-stage investment opportunities. By identifying and nurturing promising startups during these tumultuous times, venture funds can position themselves for significant returns in the long term.
The confluence of change in investor and consumer behaviour, technology advancements, and the availability of talent presents a compelling case for starting a venture fund and investing in growth companies. By leveraging the statistics and insights available across these areas, investors can navigate the current landscape with confidence and seize the abundant opportunities for innovation and growth.