Arrow icon
Ness Labs: Make the most of your mind
Learn more about Joggo

A Summary of

New Kinds of Funding Mean New Kinds of Managing

by
Byrne Hobart
The Diff
View original

The future of growth companies…

  • Companies typically start out using all capital, then progress to growth from some “retained earnings”, then end with all earnings going back to the investor.
  • However, if a company has a business model of “capital-intensive growth” they can use capital to produce “a higher post-dilution value”, then rinse and repeat.
  • Company valuation then is gained in steps from every capital infusion.
  • This requires continual capital raising, previously a confusing signal.
  • However, the pandemic has both facilitated quick virtual deals and made continual capital raising normal.
  • This model can get interesting when debt is a source of capital or when the capital and growth strategies are “fundamentally tied together”.
  • It can also very useful in “industries with scale economics”.
  • Capital investment then becomes a tool to increase happy users instead of happy investors.

“Elsewhere”…

  • China faces tough choices regarding the real estate debt crisis, because growth depends on debt.
  • China can push a stimulus, try to create debt generation in a different sector, or deal with slower growth.
  • Twitch data was recently leaked, revealing that the majority of payouts are made to only “1% of streamers”.
  • Shipping backlogs are starting to reduce, but the problem itself revealed the fragility of global supply chains.
  • Rather than restrict all employees to one rule and deal with thousands of exceptions, Amazon is letting each team decide their workplace structure (home, office, hybrid).  
Related content
See all posts
Arrow icon