Harari claims that technological disruption is so widespread that the lines between factual and fictional information are blurring, so that it's difficult for anyone to understand what is happening or predict the future.
In our hearts I think that the majority of us would believe that he is correct. The world is becoming too complex for any one to make sense of everything. Because of the interplay of uncertainties, it's unlikely that we'll ever be able to attain the same level awareness as we had before.
This will affect the ability of ordinary venture partners to succeed in the coming years. Given the rapid advancements in technology, and the rise of new and exciting areas of technology, is it possible to get one angel or handful of venture partners to grasp the changes taking place? Is it possible for anyone in the venture capital sector to claim they are sufficiently knowledgeable about the market and the new technologies available to aid them in selecting the most appropriate firm to market these technologies?
There are options that can be employed to fill in the knowledge insufficiencies.
Hatcher+ has spent many years studying the factors that influence venture capital firms their decisions. After years of investing along with my co-founders Dan Hoogterp and Wissam Otaky and our recent studies, we've come to the following conclusion: In even a tiny portfolio it's quite likely that your most profitable investments turned out to be your most profitable investments due to luck. did you favor.
Understanding that venture returns can be unpredictable led us to explore how to create a portfolio using a power distribution curve. Many of you know that investment in venture capital follows the power law, which results in distributions that are quite different from those of investing in shares that are publicly traded. Some of the results in smaller venture portfolios can alter your portfolio significantly in either an upward or downward direction. Portfolios with larger funds may be better at generating predictable and index-like returns.
Following this study, we launched in the year 2018 with the H2 Fund. It is an information-driven fund which utilizes the power law for ventures, studies on more than 600,000 venture transactions, as well as numerous venture funds. The H2 Fund, which launched in the year 2018, but was temporarily stopped during Covid the year, is now performing within the expected parameters. This is fantastic news for investors who want more predictability from an asset that isn't generally regarded as a reliable asset. Look at more info
Recalling Harari I'm starting to think that the advantages of the H2 Fund strategy may go far beyond our application of the power law and instead involve a better comprehension about the inner workings of decisions-making process and the way they could be altered as our knowledge levels exceed our understanding.
In the majority of venture investors (and their young associates, regardless of how well-educated or educated they are) are in agreement with Harari's assertion that things have become too complex for any one individual to grasp the significance of what is happening, then the old model of investing in ventures could be flawed and is likely to get more flawed as technology becomes more complex.
It is also possible to observe the advantages of the superscale deal origination strategy we designed for the H2 fund.
The biases of your filtering systems will naturally diminish and your options will be more diverse as you work with hundreds of deal origination partners, as decisions that may have been made by a small handful of humans will be replaced by crowd-sourced decision-making processes that involve hundreds of individuals participants in each step.
This is an affirmation that is unquestionably true. It might appear that way. It's been fascinating to watch how the top performers have changed over time, as the H2 Fund portfolio expanded. If I'm being really honest, I didn't know enough about technology, market that is targeted or the resources that would be necessary for success to feel confident investing in the many decisions made by the top managers.
(Interestingly, the H2 leaderboard does include a substantial number of investments which somehow found their way to the portfolio due to it being sufficient to allow for some exceptions, and possibly due to a wider variety of deal originators.[
Logically, I view this as another reason to believe that a multi-faceted origination network may do better than the single decision-maker in an ever-growing world that's becoming more complex. However, this portfolio is not the only one. It would be interesting for other investors to share their own experiences investing as technology continues to advance.
*Note - First Degree is located in Singapore and manages H2 Fund. Hatcher+ has developed the strategy. Fund uses a significantly diversifying early stage venture approach to ensure reliable returns for early stage startup investment. Fund managers have the ability to work with hundreds of angel networks and accelerators to invest in more than 1,000 startups. Investments are made at the rate of about one out of every 100 startups that submit a funding application. By the end of the year the fund will be able to boast only half the number of investee companies as it does today, and it will have come close to its goal of creating the most predictable top quartile, 4.2x net return depending on the current quantity of dry powder as well as the current pace of investments.