The Innovation Landscape is Filled With Noise
Today’s private market landscape is remarkably competitive.
On the investment side, due to accelerating growth of traditional (institutional venture capital) and alternative (corporate, family office, wealth management, endowment, high-net worth individual) participants, a search for yield has spurred investors to adopt greater propensities towards underrepresented sources of investment opportunity – atypical demographic engagement, overseas, and through digital “democratization” platforms.
Amongst the private market landscape, the noise in early-stage startup innovation (Pre-Seed through Series C) is an anomaly. The flow of venture capital investment into private companies is at its highest level in history, with $148 billion invested in 2017. Yet this peak in early-stage private investing has not resulted in significant shifts in investor mentality, nor is it correlated with an increase in successful investment outcomes. Startup exits, in the form of initial public offerings (IPOs) and M&A have in fact decreased.
The discrepancy between successful investment outcomes and the hype around startup investing today is due to two primary factors: persistent imperfect information and the application of traditional ‘group-think’ mentality in a saturated venture capital investment landscape. Simply, too many investment decisions are being made without holistic information access and intelligent investment due-diligence.