5 min read
Abundance of Capital
Dec 11, 2017
There is a growing abundance of capital to fund entrepreneurs’ Massively Transformative Purposes (MTPs) and Moonshots.
Just this year, venture capitalists in the United States have poured over $70 billion into entrepreneurs — just the tip of the iceberg.
In this blog, I’ll cover three places outside of traditional venture funding where I am seeing a growing abundance of capital:
- Crowdfunding and equity crowdfunding
- Initial coin offerings (ICOs) and token generation events (TGEs)
- Sovereign wealth funds and mega funds
Let’s dive in.
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1. The Rise of Crowdfunding
Global crowdfunding has exploded onto the scene, and crowdfunding websites make it easy for anyone to market their ideas and get funded.
The total worldwide volume of crowdfunding is $16.2 billion as of 2017, with 375 crowdfunding platforms in North America alone. World Bank predicts that crowdfunding investments will be a $96 billion/year market in developing countries by 2025.
Kickstarter, one of the most popular reward-based crowdsourcing platforms, has launched almost 400,000 projects, and over $3 billion has been pledged on the site.
The most successful Kickstarter to date, Pebble Time, raised over $20 million in 37 days, with $7.4 million in the first day alone.
Even the Oculus Rift, the product responsible for making Virtual Reality a household name, was funded initially via a Kickstarter project.
Equity crowdfunding is also taking off tremendously, with worldwide volume exceeding $4 billion in 2016 and expected to grow $20 billion by 2020, surpassing worldwide angel capital.
Importantly, crowdsourcing democratizes funding, allowing any good idea, regardless of its origin, to become a reality. As such, Goldman Sachs described crowdfunding as “potentially the most disruptive of all the new models of finance.”
For more of my research and advice on Crowdfunding, check out Chapter 8 of my book “BOLD”, where I outline 12 key steps to designing a successful crowdfunding campaign.
2. ICOs & TGEs
An Initial Coin Offering (ICO) or Token Generation Event (TGE) is a new fundraising tool from the cryptocurrency realm.
In some ways, ICOs and TGEs are like a crowdfunding campaign, but instead of offering a product or shares of equity in a startup, companies offer “coins” (for ICOs) or “tokens” (for TGEs), which allow their buyers to access blockchain-based software services.
Rather than pitch their service to a venture capitalist, programmers may host a TGE and sell a fixed number of their tokens to the open market (usually in exchange for Bitcoin or Ethereum) to fund their idea.
Consumers buy the tokens with the hope that, over time, the software or service will become widely used and increase the token’s value.
This route is especially popular for companies that aim to create decentralized platforms because, by definition, no one owns these platforms or directly profits from them.
Nearly $2.3 billion has been raised to date in ICOs, with the large majority of that taking place in the first half of 2017 ($800 million in Q2 2017).
In fact, in Q2 2017, ICOs outcompeted VC funding in virtually every regard as it relates to funding Blockchain projects (see chart).
Recently, an Ethereum startup and incubator called ConsenSys has been raising eyebrows in this exciting market.
ConsenSys’s MTP is to create simplified and automated decentralized applications to facilitate peer-to-peer transactions and exchanges.
They hope to spearhead this revolutionary idea into the mainstream.
In September, the company launched a $50 million venture fund for startups working in blockchain technology.
I’m pleased to announce that Joe Lubin, founder of ConsenSys (and a co-Founder of Ethereum), will be at Abundance 360 in January 2018.
If you’re an A360 member (or participating via Abundance Digital) and want to know more about the future of blockchain technology, Joe is the perfect person to talk to. I can’t wait to pick his brain and learn more about his budding company.
3. Sovereigns Stepping Into Venture
I’ve noticed an uptick in funding from Sovereign Wealth Funds (SWFs) to promising startups.
SWFs, which run over $6.59 trillion in assets, hope that investing at an early stage will yield outsized returns if the funded firms experience exponential growth.
Globally, there were 42 SWF deals valued at some $16.2 billion last year, according to the Sovereign Wealth Lab research center at Madrid’s IE Business School.
The largest technology investment fund ever, Softbank Vision fund, is backed by two sovereign nations: Saudi Arabia and the United Arab Emirates.
The $100 billion Softbank Vision Fund plans to invest over $1 billion in Uber when it goes public.
The fund recently bought Boston Dynamics (famous for its “kickable” robot dog) from Alphabet.
In addition to the Vision Fund, Saudi Arabia has also made recent headlines with its Vision 2030 initiative.
Vision 2030 describes a prosperous and sustainable future for Saudi Arabia, as the Kingdom prepares for new technologies to outcompete the oil market that its economy currently relies on.
Recently, Saudi Arabia announced plans to invest $1 billion in Virgin’s space tourism companies – an exciting development for those of us who eagerly await our first trip to space.
Many more examples exist of SWFs throwing millions of dollars to promising new companies, including Ireland’s “Strategic Investment Fund” and Australia’s “Future Fund.”
Many countries are so convinced that the future belongs to powerful entrepreneurs with a vibrant MTP that they are pooling together billions of dollars to give them a chance.
They see the potential of exponential technology and the DIY innovator, and they want a slice of the pie.
Perhaps your startup could be the next to catch the imagination of an entire country.
For entrepreneurs, this is an exciting time.
As our future continues on its exponential path, we are heading towards a growing abundance of capital, technology and opportunities, giving an entrepreneur with a vision a shot at extraordinary success and a chance to positively impact the world.
Between crowdfunding sites, ICOs, and SWFs, there is no excuse to put off pursuing your MTP and Moonshot.
The speed at which we can go from "I've got an idea" to "I run a billion-dollar company" is moving faster than ever.
How will you fund your next bold venture?
INTERESTED IN JOINING ME? (TWO OPTIONS)
- A360 Executive Mastermind: This is the sort of conversation I explore at my Executive Mastermind group called Abundance 360. The program is highly selective, for 360 abundance and exponentially minded CEOs (running $10M to $10B companies). If you’d like to be considered, apply here. Share this with your friends, especially if they are interested in any of the areas outlined above.
- A360 Digital Mastermind: I’ve also created a Digital/Online community of bold, abundance-minded entrepreneurs called Abundance 360 Digital (A360D). A360D is my ‘onramp’ for exponential entrepreneurs – those who want to get involved and play at a higher level.
P.S. I've just released a podcast with my dear friend Dan Sullivan called Exponential Wisdom. Our conversations focus on the exponential technologies creating abundance, the human-technology collaboration, and entrepreneurship. Head here to listen and subscribe.