In a recent recode podast, Bill Gurley discusses how low interest rates have led to excessive capital and irrational over competition in today’s private, VC-backed market. With higher yield potential, the most valuable companies have drawn billions in funding from migrant investors. This is evident in H1 CVC report by CB Insights, which shows a steady increase to the number of CVC investors, 20% round participation, and an average deal size of $20M+ (~$7M higher than the average VC deal) here in the US.

While there are a number of systemic benefits to the increase in capital, a disproportionate flow to unicorn companies has, arguably, inflated valuations and, consequently, priced out earlier investors. As cap tables continue to fill with unfamiliar names, some companies have turned to debt as an affordable, anti-dilutive means of raising capital.

On Monday, the FOMC meets for the 3rd time this year. An increase to the federal funds rate will be the focus of the meeting. Since this rate is so closely tied to economic growth (and contraction), it’s not surprising to see that companies are taking advantage of the favorable monetary policy while it lasts.

We witnessed 100%+ growth in total debt issued from 2014 to 2015 by private, VC-backed companies in the US. Yet there was a drop in total number of deals over the same period. We project $8.75B in total debt funding over 452 deals at year end., which would be ~$1B shy of the $9.71B raised over 489 deals in 2015.

Though we saw seen a steady increase to the number of deals from 2009 to 2014, the sharp increase in funding from 2014 to 2015 seems to be a result of mega-rounds raised by high value companies. This is apparent from the divergence of average and median deal size.

In 2015, we saw a number of mega debt rounds issued by companies like LendKey ($1B) and Kabbage ($900M), which correlates with the increase in FinTech funding over the same period. These mega-rounds were likely syndicated to finance personal or small business loans.

In 2016, we see companies like Uber ($1.15B) and AirBnB ($1B) raising from prominent investment banks as well. These mega-rounds offer affordable, anti-dillutive capital from new, less risk tolerant investors.

However, as we begin to see more down-rounds than unicorn births, an increase to debt is a troubling trend.

With the rapid technological advances in ion propulsion, thrusters are becoming more powerful, more efficient, and more affordable. Today, the standard for ion propulsion is NSTAR  (NASA Solar Electric Propulsion Technology Application Readiness). (add something about current thrust and longevity). However, with the imminent implementation of NEXT (NASA Evolutionary Xenon Thruster), thrusters will now have 3x the propulsion (and longevity?). But as NEXT becomes the industry standard, we’ll begin to turn our attention to NASA’s Annular Engine that promises an ion beam 2x larger than that of NSTAR. A larger beam will produce stronger thrust, faster acceleration, and greater top speed. To give you an idea, NSTAR can reach top speeds of 10,066 MPH. Though NSTAR takes 4 days to accelerate from 0-60 MPH, the constant thrust allows it to reach speeds ideal for long distance missions.

Today, ion thrusters are used for two primary reasons: deep space exploration and satellite positioning. In both cases, they’ve preformed brilliantly. But as the new ion technology comes to fruition, I can’t help but imagine an entirely different use case. By using the gravitational force of a two+ ton ion thruster, however insignificant, we could potentially alter the heliocentric orbits of asteroids in our solar system. In doing so, the ion thruster could “tow” asteroids into a geocentric orbit for further research and monetary benefit. The asteroid belt offers opportunities of all shapes and sizes. Circumferences range from a 20 feet to 1859 miles (size of Ceres). The selection is (literally) endless. This endless selection provides troves of information and resources waiting to be discovered. And ion propulsion can transform such a progressive vision into reality.

But before mining our solar system, why not monetize an increasingly popular market closer to home. Satellites, and their positioning, are nothing novel. We’ve been launching and positioning them for decades. But with the continued privatization of our upper atmosphere (on demand orbit), there will be an inevitable demand for increased satellite control. Whether it be stationary orbit or repositioning, more satellites means more congestion. And there will be a price for precision. Now, there’s been talk of reducing this congestion, but I don’t see that happening any time soon. The proliferation of geospatial imaging has just begun, after all.

Whatever the scenario, ion thrusters have their place. I’d love to see more private innovation of this technology in the coming years.

Sources:

1. Planetary Resources – Asteroids Will Unlock The Solar System’s Economy
2. NASA – Ion Propulsion
3. B612 Foundation

A few weeks back I wrote about the internet, or lack thereof, in India and its massive market potential. As I researched the region, I came across a company by the name of Branch Metrics. In short, Branch is a unique, deep link generation software for mobile. I’m referring to the types of links you can share amongst your friends for free ride credit, discounts, etc. Though Branch is headquartered in Silion Valley, they recently decided to establish a presence in India. Branch’s CEO, Alex Austin, knows what he’s doing. He spent his time designing apps before he decided to improve the app ecosystem. In reading up on how Alex got the idea for Branch, I came across a post on his Medium page, which was shared by Fred Wilson on AVC. The post provided some unbelievable perspective on difficulties of the mobile app market and some possible solutions moving forward. Though mobile is increasing its reach day-by-day, it’s still easier to develop a business on the web, says Austin. He argues that the adoption barrier for mobile is too high. With over 1.5 million apps now in the app store, the top 20 apps earn 60% of the app store revenue. This is more than just inequality. This is an app ecosystem failure. Think about it. People either search the app name directly, use the home page of the app store, or scroll through top charts. And in any case, it’s costly. Paid promotion is used to establish brand presence, have a relationship with Apple to gain access to the home page, or pay for downloads abroad to push yourself into the top charts. It’s the epitome of pay to play. And without paying, in some capacity, it’s nearly impossible to gain popularity. Actually, Alex did the math. Statistically, the likelihood is 0%. And this is primarily due to how apps are ranked within the AppStore. It’s an outdated model. It bases rank off of total number of these and total number of those. Variables such as time, version #, momentum, etc. are irrelevant. Not only is the hierarchy a mess, but the download process is archaic. Why do I have to download a homogeneous app (could takes minutes with my spotty T-Mobile) just to test it. Call me lazy, but this process is slow and not utilizing the full potential of our mobile computers. And if I’m Apple or Google, I want to address these adoption issues. If they don’t, developers will realize that the system is broken and the odds are against them. And they will adapt by moving on to the next best, or next big, thing.

I recently had the opportunity to watch Particle Fever. Not only did I thoroughly enjoy the film, but I also found a few quotes to be very insightful:

“Jumping from failure to failure with undiminished enthusiasm is the big secret to success.” – Savas Dimopoulos

“The things that are least important for our survival are the very things that make us human.” – Savas Dimopoulos

“When you’re dealing with something that’s a long term project (and the LHC is a long term project, it’s a 20 year project), you can’t think about the end. Ever. If you start out a marathon thinking, I can’t wait to get to the finish line. I’m gonna have my gatorade at the finish line, I’m gonna have my greasy french fries at the finish line, or whatever motivates you… If you start thinking that at mile 1, then it’s like 10 minutes into the race and you’re thinking to yourself, ‘Wow, I’m only at mile 1, I’ve got 25.2 miles to go.’ And if you’re thinking that at the start, then you’re done. Mentally, you are done.” – Monica Dunford

 

We’ve seen a flood of private market investment into India over the last couple of years. And it’s no surprise that a country with 1.23B people is generating healthy amounts of capital inflow. But even with a population 4x larger than the US (not to mention 3x smaller land mass), the majority of India is still without internet. Less than 20% of its people have reliable access. Although this statistic puts our standard of living into perspective, it also highlights the massive opportunities that await.

Much of the world has been slow to move into this emerging market due, in part, to its lack of viable infrastructure. We could spend days discussing why India hasn’t invested in this infrastructure, but we don’t have that kind of time. And while certain investors have been shying away from promising opportunities throughout the region, smart money firms like Sequoia Capital, have been investing for years. As a matter of fact, Sequoia Capital India is currently raising its 5th India Fund. Technology companies have also capitalized on this “internet privileged” market within India. Unfortunately, they continue to be limited by its lack of infrastructure. But despite such challenges, there are certain companies working toward potential solutions.

Earlier this year, Internet.org by Facebook announced plans for a solar-powered internet drone called Aquila. Though Aquila will only provide access to Facebook and few select websites, it could become the new system of internet infrastructure. Aquila, which is currently ready for testing, will fly higher than any commercial airliners while projecting a signal within a 50km radius. With the use of laser technology, additional drones will help to carry the signal over longer distances to reach broader audiences. As excited as I am to see the impact of Aquila, what is innovation without competition?

Google’s Project Loon looks to target the same novel form of internet infrastructure. However, they hope to do so at a fraction of the cost. Instead of using drones, they plan to use balloons (you heard that right). They plan to use high altitude balloons to create a floating web of connectivity. Similar to Facebook, they plan to use a network of balloons to broaden the signal’s reach. Both Google and Facebook’s solutions look to broadcast 4G LTE.

But it’s not the technology that has me most excited about internet in India; it’s the competition. Who has the crazier idea? The more affordable idea? The more reliable idea? It’s competition like this that breeds quality innovation and I’m excited to see how it all plays out over the next decade.

The Internet has reinvented the way we access information and share it with the world. It’s amazing that we can now ask Google (or Siri) for the latest sports score. This would have been hard to imagine a decade ago. But as we continue to push into the information age, evolution is necessary, inevitable, and, according to a recent article from Gigaom, imminent. Now, I disagree with imminent, but evolution is certainly inevitable.

Until this point, we’ve accessed information through search engines, news feeds, video updates, software agents, etc. Though such mediums have advanced with the evolution of machine learning, they have yet to break past the text/voice barrier that within the Internet of Things. But the Internet on Things hopes to combine the two worlds that we know so well: this written/verbal/visual world and the physical world that makes up our everyday lives.

Surely you all remember Google Glass. Though it garnered a great following, it was discontinued in January of 2015. But what many of you may not remember is the app, Google Goggles (Google has since discontinued the app for iOS due to lack of interest). Google Goggles allowed users to search the Google database with a photograph taken on your smartphone, rather than using their traditional search engine. I found this to be the most exciting breakthrough in the history of mobile applications. Though it was far from a finished product, it showed a great deal of promise. This was the first time the Internet of Things was loosely connect to our individual, physical world. And this combination of such software and hardware is what excites me most about the future. Strategic synergies will allow for the “exploration” of our tangible world. With such breakthroughs, it’s no surprise that Google has remained as a Top Investor in Virtual Reality. Though Virtual Reality isn’t the type of pervasive/ubiquitous computing that I’m referring to, the technological overlap is immense.

But, as I mentioned earlier, I don’t believe there will be an imminent breakthrough in pervasive/ubiquitous computing. We’ve only scratched the surface on user privacy and cybersecurity. Consumers are beginning to give the matter more attention, which is great. But that also correlates to a higher distrust in unfamiliar technologies. Though the consensus prioritizes convenience over privacy, there is a growing demand for both convenience and privacy. And until we can fully understanding privacy as it relates the Internet of Things, I don’t believe there will be an explosion in the pervasive/ubiquitous computing market. That and the fact that we’ve just started to accept wearable computing as a viable, and promising, industry. It’ll be interesting to see how it all comes together.

Sources:

1. The Next Information Revolution Will Be 100 Times Bigger Than the Internet
2. Today is the Last Day to Buy Google Glass

The Senate voted Tuesday to pass the Cybersecurity Information Sharing Act (CISA) with 74 in favor, 21 against. CISA is an attempt by the government to stop enterprise data breaches. If successfully implemented, companies would have the “option” to share cybersecurity threat data with the Department of Homeland Security. And by “option”, we mean that companies may be outright required to share data in order to receive government assistance in protecting corporate and user interests. Currently, there are privacy laws in place that prevent companies from monitoring certain types of personal data. Under CISA, companies will be immune from such laws assuming they are collecting information for the DHS. This is a lose-lose for users: either the data is screened to filter out personal information before submission to the DHS or the raw data is sent in full. All amendments that sought to reform this bill’s privacy protections were rejected prior to voting. Though supporters of the bill say that critics misunderstand CISA’s scope, it is clear that the “voluntary sharing” of information is far from voluntary (or beneficial, possibly, for that matter). Critics like Apple, Reddit, Twitter, other tech firms, and public interest groups have already publicly opposed the bill. It will be interesting to see how this bill affects the cybersecurity industry moving forward.