Ikove Insights

With The We Company’s (aka WeWork) IPO fast approaching, we wanted to share someinsights on the upcoming offering.

With Uber ready to debut as the third largest tech IPO in the US, 2019 is shaping up as a breakout year for tech as funds unload into the public markets with a significant number of IPOs. The last time this kind of a bonanza occurred, Wall Street was partying like it was 1999, because it was.

The venture capital industry had a blockbuster year in 2018. With close to $130 billion invested in the US, it broke the $100 billion threshold set at the height of the Dot-Com Bubble in 2000.

Commenting on short-term market movements is usually a futile task. One should focus on longer-term macro trends.

In the past decade, we witnessed a complete transformation in the composition of the venture capital industry. A new asset class has emerged: unicorns.

As part of our investment process at Ikove, we look closely at core, top-down technology macro themes that we believe will reshape society and the way we live. We match this macro view with bottom-up research to identify the best technologies that will fit within these evolving trends.

As an investor, it is important to understand the underlying trends in your specific industry. Personally, I believe traditional venture investing is poised to underperform in the years to come.

Every entrepreneur will face this question at some point in the cycle of their business: Does it make sense to pursue outside capital to accelerate the growth of my business or do I go at it alone? With few exceptions, especially in deep technology businesses, startups are able to generate enough early-stage revenue and cash flow to be self-sustaining and rely on a well-defined investment hierarchy and funding process.

All asset allocators suffer from a similar conundrum: Do I sacrifice liquidity to try to achieve greater returns? The fact remains that managers should match their assets and liabilities. The so-called liquidity mismatch was greatly exacerbated during Q3 and Q4 of 2008 and Q1 and Q2 of 2009, when managers were hit with billions in redemptions and caught unprepared, as their positions became illiquid.

Overall, numbers for the VC industry are healthy with total funding on track for a strong year. Deal $ volume is on track to surpass $100 billion, with a strong showing of funding in later stage and so called Unicorns funding with $1 billion plus valuations.

The last quarter of 2017 proved to be a strong and fruitful end to the year for Ikove. As shown below, Ikove and the portfolio companies achieved many milestones throughout the year capped with the majority of successes in Q4.