Upending The Investment Value Chain

European Straits #63

Dear all,

As software is eating the world, investors are developing an interest in tech companies as an asset class. Clear signals are coming from those who have the most capital to deploy, such as Goldman Sachs making inroads in venture capital, SoftBank deploying its $100B Vision Fund, mutual funds participating in venture rounds, and family offices investing directly in tech startups. This is good news for tech entrepreneurs, who can access larger amounts of capital. It also shows that the investment industry is going through a transition—one which is an opportunity for a firm like The Family.

If investing in businesses is an industry, then we can understand it in terms of a value chain. At the bottom are the entrepreneurs: as end customers, they are ready to pay in exchange for capital (in the form of interest, dividends or capital gains). At the top of the chain are the ones owning the resource that makes it possible for the entire industry to exist: capitalists.

The upstream link o…