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The simple launch ideas were all implemented – those that only required some homebrew hardware hacking or PHP dormitory coding to get started. Nowadays, you may need several advanced degrees to achieve something significant. At least Danny Crichton muses grimly this week in an essay entitled "The Two Doctoral Student Problem of Startups Today". Here is a new example:
Let's take synthetic biology and the future of pharmaceuticals. There is a popular and now well-funded work on combining machine learning and biology / medicine to create the next generation of pharmaceuticals and clinical treatment. The data sets are there, the patients are ready to buy, and the old methods of discovering new candidates for the treatment of diseases look positively old given a more conscious and automated approach to modern algorithms.
In order to move the needle even slightly here, enormous knowledge of two very hard and different areas is required. AI and bio are areas that become extremely complex extremely quickly and in which researchers and founders quickly reach the limits of knowledge. These fields are not "solved" in any way, and it is not uncommon to get a quick answer to a question that "nobody really knows".
Even if you try to build teams with the right combinations of knowledge, each domain is now so complex that the network of skills required is all the more difficult to achieve than in previous efforts.
I partly disagree because innovation cannot be easily transferred to existing domains. Computer scientists in the 1960s hadn't expected personal computing to be a thing until Apple's homebrewers proved it. Enterprise software industry experts in the past decade hadn't expected consumer app developers to use their bottom-up growth capabilities and outperform sophisticated offerings from established companies. I expect all sorts of arcane academic ideas to merge with market demand in an unexpected way and break apart the models we have today, led by people who may not tick all the boxes in traditional areas.
This includes the doctorate itself and the education industry. Here Danny and I agree. The application of software to education has been a struggle because success requires understanding two disciplines, and it concludes that the way we learn needs to be broken down and reformed ourselves:
"We can’t wait for 25 years of school to finish and people upset when they’re 40 before they can take pictures of some of these fascinating intersections." We have to build slipstream to these gaps where innovation has not yet been achieved. "
Edtech's better future
Almost to prove Danny’s first point, some of the largest Edtech companies were founded today by technical experts who were also university professors. Companies like Coursera are now increasing their late-stage funding rounds in addition to a pandemic boom in online higher education.
But this generation of Edtech unicorns looks very different from anything that previous generations of educational experts had imagined, as you can read an overview from Natasha Mascarenhas about Extra Crunch. For example, Udemy was founded by a group of serial entrepreneurs who focused on practical skills from the start (long-time theinformationsuperhighway readers may remember our startup-oriented CrunchU program with them around 2013).
Of course, this generation of so-called MOOCs is generally seen as a limited success. In a column for Extra Crunch, Rish Joshi writes about the falling graduation rates that many students have shown over the past decade. Instead, he sees a new wave of trends, including deeper gig-based expertise and automated niche learning, that enable anyone to acquire more complex skills faster at every stage of the educational process. Here's more about the gig approach:
A potential gig economy for education created by online learning in small groups would have a major impact on the supply and demand side of online education. When educators are given the opportunity to teach online from home, many more people around the world have the opportunity to teach otherwise. This can significantly increase the number of teachers worldwide. It also has the ability to reduce the discrepancy between the quality of teaching in urban and rural areas by allowing students to access the same quality of teachers regardless of their location.
Companies in this area such as Outschool and Camp K12 are pre-college. But look at everyone trying to teach data science, product management, and other concepts that traditional industries need to involve to innovate faster, and you can see the solution Danny hopes will emerge. One day, you might quickly be able to learn a new skill that you need to get a job – or a medical breakthrough.
For more information on the latest developments, see Natasha's second part of her survey of top edtech investors.
Plan your equity after an IPO
Do you think your unicorn employer is the next Amazon or Google? Are you ready to hold a potential winner's share through all the ups and downs of a company? If you haven't done so yet, you'd better diversify sooner rather than later, startup financial advisor Peyton Carr writes this week in a series on:
We consider any equity position or exposure to more than 10% of a portfolio to be a concentrated position. There is no fixed number, but the appropriate concentration depends on several factors, such as: B. Your liquidity needs, overall portfolio value, risk appetite and long-term financial plan. However, over 10% and the return and volatility of this single position can start to dominate the portfolio, exposing you to high volatility in the portfolio.
The “share” of the company in your portfolio often makes up only a fraction of your total financial commitment to your company. Think about your other possible sources of engagement such as restricted stocks, RSUs, options, employee share purchase programs, 401,000, other stock compensation plans, and your current and future salary stream that is tied to the success of the company. In most cases, the prudent way to achieve your financial goals requires a well-diversified portfolio.
A new theinformationsuperhighway newsletter: The Exchange
In addition to the popular equity podcast and regular appearances at theinformationsuperhighway and Extra Crunch, my colleague Alex Wilhelm is launching a new newsletter called The Exchange. It's his weekly summary of the week, based on his daily writing for Extra Crunch and theinformationsuperhighway on tech and startup finance. Here you can sign up. As a foretaste of Alex’s work, if you’re not familiar, in an article this week, he took a look at the explosion in the still new area of no-code software and put together investment activity in a room that was poorly understood will and gets away with this analysis:
From this, we can see that VC totals for code-free and low-code startups were at least $ 80 million in the first quarter of 2020, although the actual number is likely to be far higher. We see at least $ 140 million in money in the second quarter, just between the rounds I dug up this morning.
This will get startups with low code / no code up to pace to raise around $ 500 million at least in 2020. The actual number is larger and can increase significantly depending on how extensive your definition of space is. This means that the startup world is not waiting for venture dollars to realize their vision. The capital is already flowing in large quantities.
The next question is whether the startup and the larger software world can make the world's no-code services so easy that many people are ready to train themselves. The greater power and ability that can be offered in exchange for learning a new way of interacting with software will likely help determine how much acceptance and how quickly it is achieved.
All about theinformationsuperhighway
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In the course of the week
Don't let VCs be the goalkeeper of your success
Go SPAC yourself
Nielsen is revising the way the digital audience is measured
Accept the perfect storm of cyber security
Four steps to create a draft for ethical data practices
Ann Miura-Ko’s framework for building a startup
From farm to phone: a paradigm shift in the grocery business
All B2B startups are active in payment transactions
When choosing a tech stack, look before jumping
Development and investment in the "Human Needs Economy"
Speaking of Alex:
Hello and welcome back to Equity, theinformationsuperhighway's venture capitalized podcast (now on Twitter!), Where we unpack the numbers behind the headlines.
The crew was headed by the regular contingent this week: Danny Crichton, Natasha Mascarenhas and me. As a tiny program note, we will publish some videos on YouTube again in a few weeks. So be sure to check out the theinformationsuperhighway channel if this is your traffic jam.
And we made a special episode about the SPAC boom if you're interested in financial arcana. More information about SPACs -> here.
The equity crew tried something new this week, namely to focus our main conversation on an issue we are keeping an eye on: the resilience of technology during the current pandemic-induced recession.
Based on the latest economic news, it's surprising that technology layoffs have slowed to a creep. And as we saw recently, a lot of money still flows into startups, even if there are some slumps compared to the previous year. Why are things still pretty good for startups and pretty good for large technology companies? We have some ideas, like accelerating digital transformation (more here and here) and software that eats the world. The latter concept is of course related to the former.
After that, it was time to go through some decent funding rounds of the week, including:
All of this and I have a newsletter that starts this weekend. When you read, you automatically become 100% cool. It's called theinformationsuperhighway Exchange and can be accessed here for free.
Equity decreases every Monday at 7:00 a.m. and Friday at 6:00 a.m. So subscribe to us on Apple Podcasts, Overcast, Spotify and all casts.