Novice Investor #11 - Metaverse Fashion, VC Disruption and The Best Survey You Will Ever Take
Happy December Everyone!
With the year coming to a close, festive events are filling up my calendar and I have already booked my trip back to Ireland to spend Christmas with family. I am excited.
Given the year-end is approaching, it is the opportune time to seek feedback on the Novice Investor Newsletter. I created a brief survey in the link below (10 Questions). If you have two minutes, I would love to get your opinion. Note, it is anonymous feedback so no going easy on me.
At Kennet, we are delighted to have a new intern join the team. He is adding great value already and unsurprisingly, he is an avid reader of this newsletter. At least for the next three months! I also had the pleasure of another face-to-face board meeting. This time, it was in beautiful Barcelona. I managed to pack my trip with plenty of engaging prospect and investor meetings too. If you made time to meet with me in Barcelona, thank you very much. Here’s a picture of a cool tech-enabled retail concept store I visited on my trip.
Waterfall Model Part 2
The final instalment of the Cap-table/Waterfall video series has arrived. In this video, I illustrate how to dynamically model class seniority and participating preference caps. Maybe not the most exciting topic but using this complete waterfall model template will definitely save you several hours when flexing different investment scenarios.
I do the vast majority of my learning through video, so I love producing content in video format myself. If you can think of any other content that would be more efficiently covered in video format, please let me know in the survey.
Productivity Tech
A nice simple piece of productivity tech this month. Kaizen Flow is a web app with a 25-minute timer and optional background music. It is a tool to use when following the Pomodoro method. This involves doing focused work with no distractions for 25 minutes followed by a 5-minute break and repeating this over 4 intervals. After 4 intervals you take a longer break. I am reading a book on time management this month that indirectly influenced me to check out Kaizen Flow. Ironically, I did not make time to finish the book this month. However, I am gaining some noteworthy tips which I will share next month. This is one approach to time management I am finding useful.
Books & Podcasts
Invest Like the Best - Sequoia’s Crucible Moment
I am a fanboy of the late Don Valentine. His views on compounding and market size sit front and centre in my mind when assessing companies. So, I always like to keep tabs on Sequoia. The fund recently announced a major change to its fund structure. They are ditching the traditional 10-year fund cycle with a single overarching, evergreen fund called The Sequoia Fund. Sub-funds with specified stage mandates will pass distributions into The Sequoia Fund meaning the fund is no longer restricted by artificial time horizons. It also removes restrictions on investments in cryptocurrencies and secondary transactions. While there will be pros and cons of the new fund structure for GPs and LPs, it will ultimately benefit founders which is always good to see.
Best of YouTube
Bloomberg Quicktake - Why the Metaverse Is Fashion's Next Goldmine | The Business of Fashion Show
In October of this year, Mark Zuckerberg announced that Facebook is going ultra-long on the Metaverse. Since then, the Metaverse hype has exploded. In fairness to Zuckerberg, he made his bet on the Metaverse back in 2014 with the acquisition of Oculus. Plus, owning a VR environment is a natural next step for a social media platform. Irrespective of whether it is a good idea or not, it is impressive to see a near trillion $ company going through a refounding moment. It shows real leadership conviction. Kudos to Zuck.
Facebook isn’t alone in trying to own the Metaverse. Gaming companies have a natural head start and decentralised approaches with strong communities already have highly valued environments like Decentraland. It will be interesting to see how it develops but it looks like the Metaverse will be a fragmented place in the future.
The investor in me thinks “what are the sectors that will benefit from the move to the Metaverse?”. The obvious answer is hardware. Better VR/AR headsets are clearly needed to take the Metaverse beyond cartoon fidelity. Even networking infrastructure is in for decades of investment to keep up with the download/upload speeds required for high fidelity VR experiences. One very interesting sector boon is in fashion. Just as fashion is key to expressing one’s identity in real life, the same can be said for it in the Metaverse. This creates a brand-new fast-growing market for fashion brands. The cool thing about this new market is that products have major benefits vs their physical counterparts. Co2 emissions are 97% less, supply chain issues are non-existent, mass manufacture gets extremely easy, gross margins skyrocket and counterfeit goods can be easily eliminated. Looks like tech-forward fashion brands have an amazing opportunity to go after.
Kennet Partner’s Investment Target
Kennet Partners is a Growth Equity investor with over 20 years of experience partnering with European and US SaaS companies. If you know any companies which fit our criteria, please reach out.
Investment size: $8m - $30m
Maturity: Over $3m in ARR
Growth: > 30%
Type: Bootstrapped and capital-efficient B2B SaaS businesses
Geography: Europe & US