Hobart Startup - Biteable Raises $7m Series A

Biteable - an online video platform and template-based online video builder has raised a  $7 million Series A round making total raise to date $9m 

The Series A funding has been  led by Cloud Apps Capital Partners supporting seed investors Tank Stream Ventures and Justin Lipman of Microequities Venture Capital Fund. 

The money will be used to hire and continue to develop the product.

What is it 

Biteable is to video creation to what Squarespace, Wix is to website creation. 

It has a  sizable content library, which includes a combination of stock photography, stock video footage, and hundreds of animations and scenes. 

Biteable focuses on assets that companies use and reuse — like video explainers for a business, online marketing and ads, videos that appear on product pages, and more. Its videos also tend to be between 30 seconds and 3 and half minutes.

The People 

Biteable CEO Brent Chudoba, joined the company at the end of last year to support 

Hobart  co-founders - Tommy Fotak, Simon Westlake, and James MacGregor.

After helping companies create  explainer videos, they realised the opportunity in the video creation market to create a video builder product that simplified a lot of the decisions that needed to be made when making a video.

Chudoba more recently joined the company as a result of Biteable wanting to bring in a CEO with more experience growing freemium software productivity businesses. Prior to Biteable, Chudoba worked in private equity, was an early SurveyMonkey employee (CRO), and also spent time at PicMonkey (COO), Thrive Global (COO and CFO) and Calendly (Head of Business Operations).

Customers 

Already, Biteable has found individuals from companies like Amazon, Microsoft, Google, Disney, Salesforce, BBC, Shopify and Samsung have used its service, though it doesn’t have any official contracts with these larger businesses.

Pricing 

Today, the startup generates revenue via a freemium business model that includes multiple subscription plans.

A free plan for individual users offers access to the suite of tools for video creation, including the 1.8 million pictures, clips, and animations within the Biteable library. However, free videos are watermarked with Biteable’s branding. 

A $19 per month plan for single users removes the watermark and allows you to add your own, and offers HD 1080p resolution and other features, like commercial usage rights. 

Professionals pay $49 per month for shared editing and projects and use by unlimited team members, and more. Custom pricing plans are also available.

Combined, Biteable’s free and paid users total over 6 million. They create around 100,000 unique videos per month, and that number had roughly doubled over the course of 2020.

Competition 

Vimeo, Canva, Adobe and others, but focuses on creating video assets that have more staying power than temporary social videos.

The Investor

Matt Holleran, General Partner at Cloud Apps Capital Partners, states about his investment:- 

“As a firm, we look for great businesses in high growth industries with excellent teams that we can help reach the next level. 

In Biteable, we see all three of those elements and are incredibly excited to partner with Brent and the Biteable team on this next chapter of growth,” 

Fintech - Go Cardless raises $90 million making total raise to date $240m

London-based fintech, GoCardless , Has raised a Series F of  $95 million Led By Bain Capital Ventures-making a total raise to date of $240 million  

Since launching in Australia and New Zealand GoCardless has seen significant traction current year-on-year (YOY) growth at 251 per cent. 

Hiroki Takeuchi, chief executive officer, and co-founder, GoCardless, says that this new funding round will enable the introduction of instant first payments to more than 2800 of its Australia And New Zealand Customers.

What Go Cardless does 

Go Cardless is a next-generation global bank debit network  enabling Merchants to make  and receive recurring payments and  instant open banking payments with visibility and speed. 

The platform  helps merchants with their  cash flow and minimizes churn by pulling funds automatically from payers-all at a lower cost than other cards. 

Australia Young Enterpreneur of the year award goes to GO1

The Entrepreneur Trailblazer  of the year award goes to the Sydney team at GO1 , which has scaled their online training business with the help of a $40m series C round from Seek, Microsoft and Salesforce!

GO1 helps connect companies and individuals globally to training programs ranging from coding courses to first aid. 

The Conpany created massive goodwill feom the likes of Qantas and Virgin, when they let staff use its platform free when the airlines were forced to stand down most of their workforces.

Square Peg’s latest $600 million investment brings fun to $1.4b

The Square Peg Melbourne team: Dan Krasnostein, Jenna Sheils, Paul Bassat, Leila Lee, and Ben Hensman. Photo: supplied

Square Peg Capital has closed its fourth fund, raising $600 million bringing total committed capital of $1.4b 

Investors in this round include  

Super funds HostPlus and AustralianSuper,  Commonwealth Bank and  Roc Partners.

Square Peg has had some big wins and to date has returned $570 million to investors.

The company’s investment portfolio started in 2012  with Upguard,  Airwallex, Canva, Athena, HealthMatch, Deputy, ROKT and Q-CTRL, alongside international Fiverr, Stripe, and FinAccel.

Paul Bassat told Startup Daily:- 

This is the time for founders of all backgrounds and experience and to reimagine the world that they want the next generation to inherit.”

There has never been a better time to be investing in the future of the technology ecosystem. The pandemic has proven that the way we work, learn and socialise needs a radical reimagining. 

It’s all about the culture - says Brian Chesky - who has just listed AirB&B for 100B

On Monday, October 21, 2013, Brian Chesky sent a letter to his team - which , I believe shows the framework of his success - why he had someone believe in investing $150k in his startup at a $1.5m valuation, why he got Peter Thiel  to invest $150m into his business , and why he has just been able to list at a $100 billion valuation! 

This was the just of his letter to his team 

Peter Thiel said to Brian who had just invested $150m into AirB&B when asked what the single most important piece of advice he had for the team 

He replied, “Don’t fuck up the culture.”

He said one of the reasons he invested in us was our culture. 

How could AirB&B defend, and actually build the culture. 

How many company CEOs are focused on culture above all else? Is it the metric they measure closest? Is it what they spend most of their hours on each week?

Culture is simply a shared way of doing something with passion.

The thing that will endure for 100 years, the way it has for most 100 year companies, is the culture. The culture is what creates the foundation for all future innovation. If you break the culture, you break the machine that creates your products.

So how do we build culture?

By upholding our core values in everything we do. 

Culture is a thousand things, a thousand times. 

It’s living the core values when you hire; when you write an email; when you are working on a project; when you are walking in the hall. We have the power, by living the values, to build the culture. 

We also have the power, by breaking the values, to fuck up the culture. Each one of us has this opportunity, this burden.

Why is culture so important to a business? Here is a simple way to frame it. The stronger the culture, the less corporate process a company needs. 

When the culture is strong, you can trust everyone to do the right thing. 

People can be independent and autonomous. They can be entrepreneurial. 

And if we have a company that is entrepreneurial in spirit, we will be able to take our next “(wo)man on the moon” leap. Ever notice how families or tribes don’t require much process? 

That is because there is such a strong trust and culture that it supersedes any process. 

In organizations (or even in a society) where culture is weak, you need an abundance of heavy, precise rules and processes.

There are days when it’s easy to feel the pressure of our own growth expectations. Other days when we need to ship product. Others still where we are dealing with the latest government relations issue. It’s easy to get consumed by these. And they are all very important. 

But compared to culture, they are relatively short-term. These problems will come and go. 

But culture is forever.

Thank you Brian Chesky - and congrats on an amazing listing !!!

Boom 💥 is an understatement! 

Here is his article on medium Here is the link to Brian’s Article  https://link.medium.com/TSjyuOIQ7bb

Money pouring into startups in the land of Oz

Justin Lipman of Equity Venture Partners is excited to share the first close of their third fund of $50m 💥💥💥💥

EVP Fund III takes FUM to over $120m under management and caps a challenging but rewarding 2020. This fund, and Equity Venture Partners, is built on the shoulders of the amazing founders and startups that they have been lucky to support. 

Justin Lipman and his team of  Howard Leibman, Les Szekely, Daniel Szekely, Mark Velik, Britt Nabarro, Craig Butcher and Carlos Gil are rocking it!!!

OneVentures,  has just raised the first $75 million tranche of its fifth fund

 Square Peg Capital closed a $350 million tranche of a new fund in June, 

Blackbird Ventures also raised $500 million this year and Our Innovation Fund banked the first $60 million of its new fund.

There seems to be a lot of money looking for some good ideas and great teams!

Here’s to 2021!!!

Coviu raises $6m - poised for exponential growth

Chief executive and co-founder’s Silvia Pfeiffer - Coviu - a Telehealth startup - a CSIRO spinout - raises $6m led by Equity Venture Partners -after record growth from Covid-19.

The growth - a beneficiary of covid-19

It has grown  from having 400 video visits a day on its platform to 25,000 at the height of the crisis - it is achieving 13,000 to 14,000 consultations per day, with its team growing from  7 to 35 and revenue surging 11,553 per cent - enabling a decade worth of progress in a year.

This fast growth earned it second place in the Rising Star category of the Deloitte Technology Fast 50 Awards for 2020.

“COVID-19 has caused a fundamental shift in Australia’s healthcare system enabling a transition of Australian healthcare ‘overnight’ into a powerful, easy to use telehealth platform,” Phil Morle, of Main Sequence Ventures shared with the AFR 

What Coviu does 

Coviu is a platform enabling healthcare practitioners to conduct private video consultations with patients securely online. 

It allows healthcare providers to replicate essential business operations digitally, such as Medicare payments, triaging patients, giving prescriptions and a digital waiting room.

Who invested

Led  by Equity Venture Partners and Impact Investment Group's Giant Leap Fund, in addition to Main Sequence Ventures and medical investment group Medical Angels.

Equity Venture Partners investment director Daniel Szekely has joined Coviu’s board as a non-executive director.

Dr. Mian Bi, Lead Investor at Australian Medical Angels, said doctors were taking matters into their own hands by investing in technology that they believe to be critical for their futures. L, and Telehealth is a vital part of how we as a profession will meet the challenges of an ageing population and potential future pandemics.

The benefits and the future  

Dr Pfeiffer said that People have jumped on it, retained it and patients love the flexibility 

Pfeiffer believes telehealth is just the start of the digital health transformation, which will be centred on more home-based medicine, and we will be looking to do a further raise in 2 years time. 

Buildxact raises $6m for overseas expansion

The raise 

Construction technology start-up Buildxact has completed  a $6 million funding round, with Aconex co-founder Rob Phillpot (supported by Leigh Jasper leading the investment after the business recorded more than 140 per cent year-growth revenue since March.

What it does 

The business, which was founded in 2010 by John Allison, provides residential construction companies with quote estimating and job management subscription software.

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Buildxact CEO David Murray says the business has boomed in North America. 

Buildxact will use the funds to increase marketing spending and fuel its overseas expansion.

The secret sauce 

Social media marketing works 

"The Australian business has really taken off and the reason for that we believe is we spent a couple of years working hard to build our brand," he said.

"Now people on private Facebook pages are talking about us and people recognise the brand."

Booktopia lists at a 25% premium

Shares in Booktopia jumped 25% on the opening day of trade after a four-year ambition for founder and CEO Tony Nash came true.

The company (ASX: BKG) opened at $2.86, a 24% premium to the $2.30 issue price, when trade opened at 11am, before ending the day at $2.72 (+18.26%).

1% of the business is worth $3million 

The oversubscribed IPO raised $43.1 million for a market capitalisation of $315.8 million on the offer price. 

Nearly $18.1 million of the raise went to existing shareholders with $25.1 million allocated to growth through the company’s 14,000 sqm Sydney distribution, increasing stock and working capital, listing costs, employee shares and paying down debt. 

Booktopia’s listing is the latest twist in the 16-year history of the country’s largest Australian-owned online book retailer.

In February this year, before Covid-19 hit  Champ Ventures CEO  Su-Ming Wong and JBS Investments CEO John Sampson led a consortium of investors in a $20 million capital raise.

Those investors did quite well!

Since its inception, Booktopia Group has sold over 35.5 million items to more than 5 million customers across Australia and New Zealand.

Mr Nash said the Australian book and publishing market was in its strongest position in many years, with demand across numerous categories at record levels and major new releases, expected to drive sales right up to Christmas.

Vale Tony Hsieh Chief Happiness Officer

Tony Hsieh cofounder and “Chief happiness Officer”  of Zappos for 21 years - prior to that he  founded “LinkExchange” that sold to Microsoft  for $265m.

Tony’s Zappos mantra coined his DNA 

“Zappos doesn’t deliver shoes, we deliver happiness” 

Last night he died in a house fire last week - age 46

Tony inspired millions of people, a philanthropist of note . Tony will be remembered for his commitment to culture, employee engagement, and delivering happiness.

His memory will live on! 

#tonyhsieh #zappos #deliveringhappiness #culture #employeeengagement #shoes #success #leadership #learning #happiness #customerservice #ceo #team

If you’re not an Innovator / back one!

Andrew Sypkes is one of Australia’s most active family office technology investors being a founder investor in 4 amazing success stories that have become Unicorns

• Leigh Jasper’s Aconex 
• Martin Hoskin’s - Redbubble 
• Melanie Perkin’s - Canva 
• Tim Klay and Jesse Levinson’s -  Zoox 

About Andrew Sypkes

Andrew Sypkes began his career with McKinsey & Company and then worked with start-up technology businesses before completing an MBA at Stanford University. He now based in Hobart where he manages his family’s investment business, family office and foundation, and is a co-founder and Director of several private companies and charitable organisations.. 

He is also a partner at SecondQuarter Ventures, Australia’s first venture secondaries fund.

Why angel investing?

Andrew realised he was not  a great entrepreneur , but was great at supporting them - and that angel investing was a great way for him to work closely with entrepreneurs — vicariously living their journey — while actually playing to his more natural analytical and investing strengths.

His first 2 investments got him hooked ....  and he blames Leigh Jasper and Martin Hosking for that!!

 So what makes a founder and entrepreneur succeed?

• resilience
•  interpersonal skills - a great team 
• a combination of big picture thinking
• a sense of detail and urgency  for the daily execution 
• a sustainable competitive advantage - which could be 

an abnormally-sticky product, 

a trusted brand/customer loyalty, unique assets, 

scale economics or 

network effects. 

A great product just gets your to the starting line but is not a durable advantage. 

If you do win, you want it to be big, because that’s how you make a real impact - says Andrew 

To go deeper on that topic, read 7 Powers: The Foundations of Business Strategy by Hamilton Helmer and the white papers about network effects by Nfx.com.

It’s a great time to be in Innovation in Australia!!

Why secondary investing  in the Australian venture capital ecosystem?

Secondary investing is investing in already funded startups  enabling founders, early investors and long term staff to cash put and get liquidity - maybe before a listing 

Andrew saw the importance of this at Aconex pre-IPO when there were numerous early investors and long-term staff who needed liquidity due to their personal circumstances. 

This also included the founders themselves who wanted to take a bit of money off the table to be able to confidently keep swinging for sixes in the next stage of their journey.

Having secondary liquidity available is a sign of a maturing ecosystem, and there have been a few really big secondary transactions that Andrew has been involved with over the past five years.

As a result  he has set up SecondQuarter, Australia’s first venture secondaries fund. 

The fund had  already made half a dozen secondary investments and have committed to work alongside another cohort of top-tier ventures as an ongoing provider of liquidity for their staff and early investors. 

It’s potentially a great asset class -

A secondary Fund  is a stepping stone for entrpreneurs of an innovative company to cash out a little without having to list!

Insights into getting VC investment

https://youtu.be/IK7HkSp1KBI

 

An interesting TEDX talk on Why VCs and Angel Investors Say "No" to entrepreneurs

 By Alicia Syrett - whose quote a famous VC  investor 

She shares 8 things you need to do got a VC to say yes!!

1. Do you Research to your investor 
2. Character natters - be authentic - have a good character 
3. Money for business - not for your salary 
4. There needs to be a Fit
5. Fomo - make them excited 
6. Business basics - fundamentals

• is it scalable and global ? 
• Show traction - execution 
• Customers , partnerships , accolades
• Know your numbers 

      8. Investors make mistakes too - let them know why! Be resilient!! 

Bookipi raises $1.6m

Bookipi, a fast-growing invoicing and payroll processing startup raises $1.6 million seed investment to accelerate its global growth. Investors include Our Innovation Fund, LP (OIF) and investment syndicate TEN13.

Founded by Tim Lee in 2017, Bookipi bootstrapped their business to global scale and built an international customer base of over 640,000 giggers who love their easy-to-use product offering. The business does no sales or marketing and a team of less than five. 

Its being coined as the easiest and most intuitive to use book-keeping platform. To date, the company has two core products: an invoice generator ‘Bookipi Invoice’ and a payroll application ‘Payroller’.

Talk about “beautiful software”

Bookipi’s invoicing app generates over $12 billion of invoices per year, being one of the fastest growing and highest ranked invoicing apps globally. The app is ranked in the top five on the US Apple App Store. 

Payroller, an ATO compliant single touch payroll application, launched less than a year ago and is already processing over $4 billion in annualised payroll through the platform. It is used by both accountants and small business owners.

Following the funding round, Bookipi has made its first new senior hire, with COO Chad Hardy joining the team. A former early employee of Uber in Australia, Chad has strong experience scaling technology startups.

Another business to watch is Anwar Kahlil’s “My Recruitment Plus”

Which will be a unicorn first? 

4 gems to create your elevator pitch

An elevator pitch  is not a sales pitch; it is a creative and succinct way to generate interest in the listener.

With that in mind, here are my 4 rules for creating an engaging elevator pitch:

1. Don't do it in an elevator unless asked!! Just be pleasant! 

 

2. Make it tight.  

It needs to be short, sharp, professional abd natural. It needs to flow from you !!!

 

 3. Share your USP.

A USP is your Unique Selling Proposition. One example of how to craft a pithy USP is to alter a bland, general statement such as, “I’m an accountant and coach and consultant” to something like, “I connect entrepreneurs , business owners and leaders to people and money” instead. This is short, powerful and informative, i.e. the perfect combination for part of an effective elevator pitch.

 

 4. Pass the eyebrow test.

Sam Horn talks  about the "eyebrow test." If what you say in your elevator pitch causes the listener's eyebrows to go up, you've got 'em! 

Leave them wanting more

If the listener’s eyebrows scrunch down, you’ve just confused them. Find a new pitch.

Nuheara - a company you will hear a lot about

Nuheara was founded by Justin Miller and David Cannington , and have developed  IQbuds  - an advanced hearing device which boasts the likes of noise cancellation and advanced hearing capabilities.

Justin who had hearing loss in one ear was fed up with every conversation feeling like a chore, and hearing aids seemed too extreme; there had to be an answer. As a result, the concept of IQbuds was born.

IQbuds² MAX gives the wearer complete control over sounds by offering active noise cancellation and sonic accuracy, with the average sales price being $417.

ASX listed Nuheara (NUH) is commercialising this product and has seen a 543 per cent growth in invoiced quarterly revenue for Q1 FY21of it’s IQbuds.

A few wins in the September quarter 

• it has received its ISO 9001:2015 quality certification, 
• It has negotiated a contract to develop an audio product with HP. 
• The National Health Service (NHS) in the United Kingdom will include the company's IQbuds BOOST.

International sales now account for more than 85 per cent of all orders received with 50 per cent from the United States, 17 per cent from Australia and New Zealand, and Asia, and 7 per cent from the United Kingdom.

Justin and the team at Nuheara are on the path of fulfilling his mission of producing affordable and accessible intelligent hearing alternatives to those in need just like himself.

Justin’s hope is one day, you’ll be able to walk into a store, get your ears tested, and walk out with a solution—just like buying a pair of glasses.

A company to watch 

Start Up- Waddle exits to Xero for &80 million

WADDLE CO-FOUNDERS NATHAN ANDREW AND SIMON CREIGHTON. SOURCE: SUPPLIED.

Sydney-based fintech Waddle is set to be acquired by Xero for $80 million

What is Waddle 

Waddle, Founded in 2014 by Nathan Andrews and Simon Creighton, is a cloud-based lending platform designed to help small businesses access working capital. It’s effectively online invoice factoring .

The tech integrates with a business’ accountancy platforms and offers a line of credit based on their own invoices.

In 2018, the startup secured a $50 million wholesale debt facility, and in March last year, it raised $4 million in Series A funding.

In July 2019, just months after its Series A, Waddle announced a partnership with the Royal Bank of Scotland Group in the UK, making the bank one of the first big banks, globally, to offer clients and automated working capital solution.

The six-month pilot project alone saw more than 400 client applications in the UK, and more than £10 million ($18.2 million) in funds loaned.

As of July last year, the startup had facilitated a total of more than $200 million in loans, and had a client base in the hundreds of thousands.

The Deal

Waddle has been an integrated Xero ecosystem partner since 2016, and Xero is looking to acquire it for $80million. 

It seems that this will be a win win win 

The transaction is subject to closing conditions and is likely to be completed by the end of the year.

COVID-19 has created an amazing opportunity for Australia

“Seen as Covid safe” and a stable, innovative place, Advance CEO Maria MacNamara said Australia has the "single greatest opportunity" to lure back highly-skilled workers the country needed - fuelling the innovation system and economy in an unprecedented way.

Case in point :- 

Hannah Durack - an Ozzie expat living  in New York and working at the Mellon Foundation managing a $75m business - returned for family reasons - covid struck - and is excited about staying in Oz - 

Hannah's story is repeated as almost 400,000 Australians return from abroad during the pandemic.

Overseas travel has increased from 2m per annum to 12m and at any one stage - there are 1m Ozzies luving abroad 

Challenge 

Unfortunately many returning expats are  still looking for work, and their experience reflected an uncomfortable truth: returned expats overwhelmingly struggle in their careers upon return.

“Establishing a local professional network and breaking into the Australian business community” said  Ms MacNamara said.

Opportunity and Government support 

Trade Minister Simon Birmingham said that

we are positioning Oz as a stable and attractive investment destination - specifically in the high growth areas of advanced manufacturing, financial services, and health.

"With one in 10 jobs already supported by foreign direct investment, boosting investment and getting more global businesses to set up shop here will help drive more jobs and opportunities for Australians."

This will give high growth scale-ups, that are looking to international market access to people with global experience,

A new taskforce it says will operate like a "strike team" to "turbocharge" the economy and headhunt individuals and companies that would be a good fit.

Conclusion 

The 20’s  is a great time to be in Australia 🇦🇺 

We need to work together and find a way to channel this amazing resource to continue to build up Australia and to continue to be known as “the lucky country”.

Source :- the abc https://amp-abc-net-au.cdn.ampproject.org/c/s/amp.abc.net.au/article/12654606

So what does a VC think about when they invest?

If you want to understand how a VC thinks about - and what he looks to invest in .... read the below article on John Henderson 

VC’s are looking to invest in  “Babe Ruth’s home run” And to do that you need to invest in a product or service that addresses an enormous market.

The best VCs swing hard, and either hit big or miss big. You can't have grand slams without a lot of strikeouts.

How to hit home runs: 

I swing as hard as I can, and I try to swing right through the ball... The harder you grip the bat, the more you can swing it through the ball, and the farther the ball will go. I swing big, with everything I've got. I hit big or I miss big."

— Babe Ruth

It reminds me of Tim Draper’s comment - that his biggest failures have been in what he has not invested in. If he has a 30pc success rate - he is so far ahead of the game ..... and whose to know where that “home run” is going to come from?

Who would’ve picked a search engine called “Google” when Yahoo was around? Or invested in this dude with. Funny name that had a concept called “the Facebook”?

Be sure to read this article below  - and click the links and read or listen to those articles! 

Thanks John!!

I was struck by a comment from Reed Hastings (founder of Netflix ) on his book tour for No Rules Rules:

“Typically, venture capitalists say that you want to go after the largest market possible. I’ve always thought that’s crazy because you can’t defend it …. I have always thought you want to go after the smallest market possible that can hold your 5- to 10-year growth ambitions.”

For reference, Netflix’s market cap at the time of writing is $212bn - suggestive of a decent sized market…

And Reed is right. Venture capitalists, myself included, have an obsessive focus on large market opportunities. It is a near canonical law in VC that they are a necessity. 

Indeed, Sequoia Capital, arguably the world’s best venture firm, built its investment approach on a focus on large market opportunities to the exclusion of much else. 

The reason for this is that the returns from a venture fund portfolio invariably follow a power law distribution. To outperform their peers, venture funds need their best companies to deliver huge returns. The best company in a “good” fund will typically deliver ±20X cash on cash, with that multiple increasing to almost 70X in a “great” fund.

But I’m starting to wonder if we overestimate our ability to size a future market. I cut my teeth at The Boston Consulting Group and have always considered my ability to understand the structure, dynamics and scale of a market to be a key strength that I bring to the investment decision table.

Is that all bullshit?

At AirTree, we recently passed on a company that we liked on the basis that it would be unlikely to achieve a billion dollar outcome in its current market. 

Was this the right call? 

More specifically, how confident can we be in deeming this an unlikely outcome?

This question led me to go back through past investment papers I’ve written and analyses I’ve run. There is a company in our portfolio which is today worth ±$1.2bn, with real upside potential from there. When we invested 4 short years ago, I thought that, if all the stars aligned and you squinted really hard, it might get to $400m in 2022.

And it seems like I’m not the only “smart” investor to be so wildly off in my analysis as to render it a complete waste of time.

Vinay Iyengar 

@VinIyengar

Incredible to look back at Bessemer's original @Shopify investment memo. The very best case scenario was a $400m exit. Today, $SHOP has a market cap of ~$110b, 275X that amount!!!

The sheer magnitude by which we often underestimate TAM for Internet businesses is astounding 

September 24th 2020

167 Retweets829 Likes

You can find these kinds of errors all the way up the academic hierarchy. They don’t come much more credentialed in finance than NYU Stern’s Professor Aswath Damodaran. But even he famously whiffed by at least order of magnitude when he sized Uber’s addressable market at $100bn.

So what?

So am I wasting my time analysing market opportunities? Am I casually (and offensively!) labelling a swathe of companies as “lifestyle businesses” when in fact they have a far greater chance of achieving a huge outcome than I give them credit for?

I enjoyed Rory Sutherland’s quip that no sane person would have expected there was a market for Dyson. “Anyone who spends $700 on a vacuum cleaner probably employs a cleaner anyway and doesn’t do their vacuuming half the time. What the hell?” And yet James Dyson is worth $6.4bn…

Perhaps Reed Hastings is right. Perhaps all that matters for a sensible venture investment is that, today, there is a tractable path for the company to grow well for 5-10 years. Ideally, in the absence of stifling competition. And perhaps any further analysis on the size of the market is a total waste of time since we can’t even predict whether Donald Trump will still be President in 35 days’ time, let alone what the world will look like a decade hence.

Gosh, that would save me a lot of time and decision-making heartache if so.

What do you think?

 Does your company  fit this mould and might make for surprisingly great venture investments?