Venture Capital

The Future of Personal Transportation….First the Car, Now What?

Elon Musk is a visionary that is making an impact on the way we live. Even after starting companies like Tesla (the electric car) and SpaceX (space exploration), Musk is just getting started. His next vision is rapid transportation via vacuum-like tubes/infrastructure. If you watch the quick video below, you’ll see the simple, but effective theory behind this vision…

Visions like this make you wonder, if this vacuum transportation happens: what happens to the airline industry? will this new mass transit have to be heavily subsidized, much like the airline industry? will this be available on a smaller scale, say for running around town?

That last question got me thinking, what will ever replace the personal transportation industry, aka cars and the roads that enable them? Maybe I won’t see it in my lifetime, but how soon will someone invent a vehicle that doesn’t utilize these expensive, old, and high-maintenance road infrastructures? I know my parents thought life would be like The Jetsons now, or at least own a flying car.

Innovation in the transportation industry seems to be bound by the infrastructure….what if it wasn’t? What if we had a more efficient way for all of us to get to work without the government and taxpayers having to spend endless dollars to maintain and build these roads? Is the future of personal transportation this, this, or this? Which company will lead the revolution, or will it be a startup with massive VC-backing? I feel Tesla’s road-map to success (four rounds of VC funding totalling ~$200mn), followed by low-interest loans issued by the government (in this case the Dept. of Energy), will be a viable funding model. Once commercialization is proved, then the government will be willing to step in if the technology will help push a particular political agenda.

These are all just random thoughts. Elon Musk is definitely a thought leader in the transportation space. I’m interested to see what is proposed next, and unfortunately I don’t have the answer……yet. Do you? Post a comment below if you have an idea.


#GNF Friday – Fortune’s Tech and Finance Roundtable (Aspen, CO)

Lots of great points brought up here, some which I’ve posted about: Shift of Risk to Private Markets (hedge funds getting in pre-IPO rounds) and how user-generated content (UGC) is eating the world

By the way, Bill Gurley is the effin man. Here’s his blog, he’s a General Partner at Benchmark Capital. Dude’s a G. I now have a new person I want to be like when I grow up……

The Shift of Risk to the Private Market

There are some landmark decisions that don’t get the necessary press coverage, until it’s too late and has unintended consequences. Earlier last week, the SEC voted to allow private issuers (like PE funds, VC funds,  and start-ups) to openly market their funds/companies. With this announcement, there are three points I’d like to address.

1.) This is huge for PE and VC firms, as much of the soliciting for funds currently has to be done in a somewhat of an “under-the-table” way. Today, for example, they can privately solicit for funds (via their contacts in the industry), but now they could theoretically put ads on the internet and on cabs if they wanted. The only news they can put out today is when they are finished raising funds and close their funding efforts. Much of the news that leaks is from the privately solicited suitors who talk to reporters in the industry. So, this ruling is huge for them, especially the smaller shops trying to attract new funds/investors outside of their rolodex.

2.) I don’t foresee this affecting start-ups trying to raise funds, the way it will affect PE/VC firms. One of the reasons things won’t change will be the intimacy of the fund-raising process. From a start-up’s perspective, the fund-raising process is very much a boy’s club. Either VC’s currently invested in the start-up introduce them to other suitable interested VC’s, or they seek out VC’s that have stellar talent and expertise in their wheelhouse. The audience is much smaller to begin with, so marketing won’t be as worthwhile. And I don’t foresee any change in investors in start-ups just because their allowed to advertise (like PE firms).

I will say though, Dropbox (the much anticipated file storing/sharing service) could change all of this. They are private, and probably will IPO in the next 12 to 18 months. They’ve already started to act like a publicly traded firm, holding earnings calls and the whole nine yards.

3.) The second phase of this vote, is to eventually remove the requirement that investors in private funds need to be accredited investors (over $1mm net worth and/or over $200k income per year). This will likely be removed soon…..

This is where the shift of investment to private markets will begin. Much of the risk is removed by the time start-ups go public (according to recent research), and there is little upside for the public markets. This is creating a big appetite for investing in start-ups (as well as direct exposure via VC funds), looking at the explosion of crowd-funding. With the shrinking supply in the markets (which are helping support current index levels), and risk being somewhat subdued due to the expansion of ETF and other funds, investors looking to make take on extra risk for extra return will begin delving into these markets. Let’s just hope they’re educated enough to know how risky these investments are (look up the Webster definition of venture). As they say in the  VC industry, if you have 15 investments, you hope that one, maybe two, are home runs and will ultimately make up your returns.

So draw up your doomsday scenarios now. This decision will without a doubt broaden investors investment choices, but could come with unintended consequences if investors aren’t properly educated before “venture” investing.

3D Printing Is Pretty Neat….And Is KickStarting A New Industrial Revolution

I’m sure by now everyone has heard all of the controversy surrounding the 3D printer. If you haven’t, click the link. In summary, you can now print out a functional gun within the confines of your own home within minutes, and there’s no way to trace it. Despite the poor PR of the technology, we’re already doing amazing things, but all the media can talk about are the guns.

Since the gun debate is at the forefront of this new technology’s growing pains, let’s quickly think of some solutions to this issue. Now, the ethics surrounding this technology is something that investors funding these startups will seriously need to consider if they want to put their money to work in the technology right now. It’s unfortunate that such an innovative technology has been put to use in a less than ideal way via printing guns (if America gets invaded by Zimbabwe, then I’m all for printing guns!) But right now I feel the 3D printing industry is at a crossroads, before the snake eats its own tail, so to speak.

–  One route could be a new standard in the industry that mandates all printers record their printed items and that data is shared/monitored (Feel free to invent this monitoring technology and advocate for its standardization. Then pay me royalties when you’re done.) This will create the “safety blanket” industry pundits, investors, and government officials would like to see for such an open-ended new technology.

– Another route could be government intervention of some sort, where 3D printer manufacturers are only licensed to build printers with certain capabilities. But, we all know how well the government runs its operations.

Either way, I feel the industry needs to put its foot down, separate the bad guys from the good, just so one bad apple doesn’t ruin the whole bunch. Aside from the gun issues, the 3D printer is allowing us to do things we’ve never been able to do before, in medicine and in manufacturing.

Let’s take a look at what’s happening in medicine. Recently, someone created printing material made out of stem cells, and what they created (I mean printed), was a human ear. The process was eerily simple. A doctor took a picture of a child’s ear, uploaded it to the 3D printer, and printed out an ear all within 15 minutes. Now the ear had to be left for the stem cells to gestate and grow into skin cells. In fact, ,there is a  company called Organovo that’s leading the “bioprinting” revolution, primarily specializing in customized prosthetics. Currently, many firms and entrepreneurs are racing to create life-like prosthetics that you can feel and maneuver with brain waves, just like a normal body part. (insert some off-color joke about mass printing black penises here).

I personally think that medicine will reap some of the greatest benefits at the early stages of this technology. Manufacturing on the other hand, I believe won’t be adversely affected for some time, call it 15 years. Until these machines are able to produce at the speed and efficiency of multi-million dollar machines/plants, they won’t have much efficacy. But that one day will come. For now, the only place manufacturers will feel an impact is any prototype manufacturing. With 3D printing, entrepreneurs will be able to quickly have a physical prototype of their product, at a fraction of the cost and time, cutting traditional manufacturers out of the picture. So, yes, 3D printing is currently a “bad fit” for some manufacturers — but that doesn’t necessarily mean its a bad fit for everyone. One of the technology’s more promising traits is its ability to offer people customized versions of mass manufactured products like phone cases and cups. 3D printers free manufacturers from the demands of one-size-fits-all manufacturing, which is why it’s got so many fashion and toy companies interested.

If you want to put your money to work in what could possibly the technology that leads to the next Industrial Revolution, DDD, SSYS, and XONE are opportunities. These three companies recognize the low barriers to entry into the industry, that’s why 3D printer manufacturers have been getting bought up at a record clip by these three.

Just like any new technology or disruption to industry, there will be hurdles to jump before the innovation really hits its stride, finds its market, and into mainstream adoption. This industrial revolution 3D printing I mention is going to start will take some time, mainly to iron out the wrinkles. Even if you think 3D printing’s prospects are bleak, who thought AirBnB (the whole sharing economy) would have been as widely accepted. Or Uber, Lyft, etc, etc. Each of these three successful ideas (after being around for 3-5 years) are still ironing out the wrinkles. AirBnB is running into legal trouble with many states now as legislation prohibits paid stays without the original paying tenant under 30 days. Uber and others ride-sharing companies are hitting legal bumps as well.

My point with this is although 3D printing might seem “doomed”, innovation presents new challenges around the way we think and challenges how our economy is governed via the rules we have in place currently. With each of these concepts: 3D printing, room sharing, and ride-sharing, these small legal hurdles will be jumped as governing bodies will see the benefit to the consumer (hopefully). Unless someone with deep pockets in a particular jurisdiction is will to lobby for no change, then we might some less than stellar adoption of these innovations.


P.S. Microsoft just announced that Windows 8.1 will have software to enable consumers to more easily create and print 3D objects. They definitely want to take out the technical skills and advanced knowledge of CAD to create these objects. Breaking down the barriers to allow people to focus on being creative, instead of technical.

The Funding of Weed, Bigger Boobs, and Immortality

Some would argue that those three are the three greatest things known to man. Or maybe I’m just the worst person in the world.

As my first venture capital/funding post, I hope the title attracted your attention (you pothead/pervert/narcissist). Recently there has been some news circulating these three and all three are getting funded in different ways.

Funding Mary Jane

Emerald Ocean Capital is looking to capitalize on the wave of legalization of cannabis across the nation. Currently, 19 states have already legalized the purchase and ownership of marijuana (in some way, shape, or form). Some people may laugh at the founders of Emerald Ocean Capital, but they’re looking to raise between $10mm-25mm in its first fund. They’ll be aggressively funding/acquiring first-to-market mary jane verticals. Like all ingenious ideas, everyone doubts you at inception. I, myself, have my doubts about this new industry. But to help put this opportunity in perspective, what if this legalization of marijuana is similar to the removal of prohibition? If it is, well the alcohol industry is currently $188 BILLION industry. So, yeah…..

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Funding TITTIES!!!

I don’t know where to start this one, but I can’t stop smiling while I write this. So while the marijuana industry will get help from institutional money (like Emerald Ocean, a venture capital firm), silicone in women’s chests will be funded by horny men across America. (NSFW) is the original Kickstarter which was founded in 2005, while Kickstarter was founded in 2009. For those of you unfamiliar with Kickstarter, it’s a platform for inventors to pitch ideas to the general public in hopes the general public will donate/invest in their idea/company. I highly recommend checking Kickstarter out if you haven’t, always cool, new ideas on there.

To save you the embarrassment of clicking on the MyFreeImplants link, essentially women can create profiles and create friendships with men, who will hopefully give them some money to help them fund getting breast enlargements. Once a woman creates a profile, they set a target amount they would like to raise, and select the plastic surgeon they’d like to do the procedure. Your donations are only used if the target is hit. It’s a pretty entertaining/creepy concept. In order to create “friends” women can share pictures/videos/etc. and men can even see the before/after pictures……Okay, now it sounds creepy. But hey, I bet there are enough perverted, rich men out there that’d love to make new friends this way.

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Funding Immortality

So this one is mind-blowing. A rich Russian entrepreneur by the name of Dmitry Itskov has begun a worldwide project/think-tank towards making what was once only possible in video games, a reality. The primary aim of the project is to create the technologies that will enable an individual’s consciousness to be uploaded to a nonbiological host, which would ultimately enable humans to live forever. I highly recommend reading the CNBC article or spend 5 minutes on the website. There is about to be some big money thrown into the advancement of the theory of life extension. Over the last 100 years, the advancement we’ve made in medicine has already extended the life expectancy of humans. Now with all of this knowledge, this dialogue is due to be discussed by some of the brightest minds in the world. And I can guarantee that in these discussions will be some of the financial firms with the deepest pockets.

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