As you may know, Al is a VC and does early stage investing from New York. He takes a rather systematic view of this work, as opposed to some other writers who are constantly promoting the “next big thing”.
Al makes the sensible point today that the venture capital market is not so unlike the cement market. Errr … really? It is, in that there is a fixed cycle in both. In cement, it works this way. A construction boo stresses cement production capacity (which is fixed). That bids up prices. Responding to the price increases, some build new cement making capacity. Everything is great until the boom subsides, cement prices crash, and then Ouch! The new capacity and the sunk costs that went into building it is useless.
The demand for capital is cyclical too. Waves of innovation produce waves in demand for money. And when there is too much money chasing too few good projects — ouch!
The thing is that we don’t know where we are in this innovation cycle. Demand for money has been strong and supply growing for some years. How long will this continue? No one knows. But it does help to know where smart folks — like Al — think that there is still room for good projects. Al thinks
The most promising candidates in terms of innovation are blockchains and hard sciences (especially in medicine, but also materials, energy and possibly space).
The hard sciences`Interesting. How are your contacts with scientists?