The global world order is changing. Should Venture Capital change too?

Hi friends 👋,

Happy Hump Day and welcome to the 17th edition of Weekly Olio - your weekly dose of laughter, learning, and maybe a little bit of intrigue due to our thought piece (yes, we mean Publisher’s Parmesan here). 🤭

Many thanks for all your support and feedback so far, we hope it continues the same in the coming days and weeks. 😊 

First up, many congratulations to the RRR team on winning the Oscar for Natu Natu and we can’t stop dancing.

While Natu Natu triumphed at the Oscars, there was a massive sledgehammer that dropped on the tech and start-up world with the collapse of Silicon Valley Bank in the United States. Thousands of startups, VCs and small businesses were suddenly without access to their funds. Founders and CEOs have been scrambling to open new bank accounts while the threat of banking contagion looms large. Founder Whatsapp groups and Google docs have seen frenzied activity over the last weekend.

Marc Rubinstein’s blog detailing how and why the crisis happened is a good read for anybody looking to get up to speed.

The Demise of Silicon Valley Bank - by Marc Rubinstein

Thankfully, the Fed rallied on Sunday night to guarantee protection to all depositors with 100% funds becoming available to all account holders from Monday morning. The UK subsidiary of SVB was purchased by HSBC UK for £1. While equity and unsecured bond holders have been wiped out, public confidence in banking is likely to be restored with depositors being guaranteed access to 100% of their funds.

While the disaster may have been averted for now, the long term implications of this collapse still need some thought. SVB was the banker of choice for fledgling early-stage startups - an asset class few traditional banks understand. Whether we will see a successor or more turmoil - only time will tell.

Now, back to regular coverage.

Today’s, Publisher’s Parmesan talks about the evolving macroeconomic and geopolitical landscape across the globe. The era of U.S. hegemony, globalization, and cheap money seems to be coming to an end which will pose a challenge to the existing venture capital set-up - companies will now have to secure more capital, patience, and governance from investors.

Let’s start with the curation, but first, a word from our sponsors.

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The Quote󠀢 💭

The Tweet 🐦

A lot of social media influencers insist that waking up early in the morning or taking cold showers is essential for success. This is an interesting collection of the daily routines of some very famous creative people - including Churchill, Sartre, Darwin and Nietzsche.

Clearly, there is no single factor/ routine that works for everyone. As they say, you do you! 😎

The Infographic 💹

Whatever the stock market might say, Mark Zuckerberg’s social media empire is truly gigantic. Even with the rise of TikTok, there are four Meta-owned social media platforms ahead of it.

Also, almost all the top platforms are either American or Chinese - food for thought?

The Short Read 📝

Salmon Sushi is not a Japanese invention - by Will Chung

Sushi is the single most popular Japanese dish across the world with salmon sushi being the global symbol of Sushi. But surprise surprise, salmon sushi isn’t even a Japanese invention. Wait a minute, what!? 🤯

This is the story of a large influencer-led marketing campaign championed by the Norwegian Govt to create a Japanese favourite - the salmon sushi.

In Japan, salmon was treated as a garbage dish in the 90s. It was never eaten raw because of the Pacific salmon’s propensity for infection by parasites. It was the Norwegians that came up with the concept of salmon sushi, and spent the better part of a decade marketing and selling it in Japan.

In fact, you could say salmon sushi is a Norwegian invention. It took the Norwegian government close to 10 years and almost $4M to change the minds of the average Japanese consumer to eat salmon sushi. Fascinating, isn’t it? 🙄

The Long Read 📜

The Four Horsemen of the Tech Recession - by Ben Thompson

Four Horsemen of the Apocalypse are figures in Christian scriptures first appearing in the Book of Revelation. Christianity sometimes interprets these four horsemen as harbingers of the Last Judgement before the end of the world.

While the tech world is in no danger of ending, there is a very real risk of a recession. As the global economy enjoys the fruits of CoVID recovery, tech companies (both public and private) have been hammered. Through the imagery of the four horsemen, this article tries to understand the key reasons behind the impending recession.

Reversion of e-commerce/ software demand to the long-term mean post-CoVID, limited appetite for hardware purchases, rising interest rates and the impact of Apple’s ATT changes on advertising are visualised as the four horsemen signalling the beginning of a tech recession. Whether or not it plays out is anyone’s guess but the story is definitely compelling.

Agree/ Disagree? Do let us know by hitting reply to this email.

Publisher’s Parmesan 🧀

The global world order is changing. Should Venture Capital change too?

For decades, the tech industry thrived based on a set of unique macroeconomic and geopolitical conditions. U.S. hegemony, globalization, and cheap money combined to allow tech startups to spread their products around the world. That era is ending and tech will have to change to keep up. In the new era, politics takes precedence over economics. But there will be new opportunities for tech in areas like health care, energy, and defence.

It looks like the time of American dominance is finally coming to an end, like an old Wild West gunslinger riding off into the sunset. But instead of being replaced by the next fearless cowboy, it's being taken over by a pack of strong nation-states and nationalist lions. And let us tell you, this transition is going to have some serious consequences for the global economy.

Think of it this way, the old ways of stimulating growth and progress are being thrown out the window, like a pair of old, worn-out cowboy boots. And in their place, we're going to need some new technologies, some creative problem-solving, and a whole lot of collaboration to tackle the increasingly complex challenges that lie ahead.

In short, to succeed in this new age, technologies and companies will need more funding, increased tolerance for risk, and stronger regulations. To construct and sustain the next wave of long-lasting businesses, it is necessary to create a novel method of building companies that exceed current norms and transform the traditional concept of venture capital.

The Return of Politics and Rise of Re-Globalization

So, back in the day when the Berlin Wall fell, it seemed like the world was finally figuring out the best way to run their countries. The US ended up being the big boss and everyone else followed their lead with free markets, democracy, and all that jazz.

This went on for almost 30 years and it was a pretty smooth ride with a lot of economic growth. Even China got in on the action, focusing more on making money than being all controlling.

This economic success allowed for new financial products to pop up and new industries like private equity and venture capital to thrive. Basically, people were making a ton of cash off of even small investments.

However, this "holiday from history" has come to an end. The rise of China and other countries like India and Brazil, combined with the impact of global crises, has led to a resurgence of great power competition and a re-prioritization of national political interests over just making money.

Now, these countries are trying to find a balance between making money and being self-sufficient in important industries like healthcare, defence, energy, manufacturing, and finance. It's going to take a lot of time and money to make this happen, but there is a feeling that it's necessary for the future.

And with all these changes and challenges, the way we build and fund companies is going to have to change too. The old way of doing things with venture capital won't cut it anymore.

Transcending Venture Capital

In the era of economics over politics, it seemed like we were moving towards a world without boundaries, where digital advancements dominated physical ones. These conditions allowed for the growth of new forms of financial planning that made capital more powerful and allowed for the predictions of Moore and Metcalfe to become reality.

The digitization of the world was the main focus of many companies, and venture capital was the key player in this transformation. The capital was cheap and easily accessible, making it easy for companies to take risks and experiment with new business models.

It was a time when you could "move fast and break things", and success in venture capital was determined by the ability to rapidly scale, achieve quick exits, deliver high returns, and operate with minimal governance.

But now, things are different. Technology will need to solve much more complex and high-stakes structural challenges. And this means venture capital needs to change too - larger capital commitments, longer investment horizons, greater levels of collaboration, and more significant degrees and depth of governance.

A New Era of Investment

The world has changed dramatically over the last three decades and with it the landscape of venture capital. The old model, characterized by short-term investments, high returns, and limited governance, may no longer be enough to address the complex challenges of the new era of re-globalization. The shift towards global resilience and interdependence demands a new approach that prioritizes collaboration, long-term thinking, and a deep understanding of the implications of innovation.

The good news is that this change offers an opportunity for venture capital to reinvent itself, to build a more robust and sustainable model, and to contribute to the creation of a better future for all. To do this, venture capitalists must embrace the new reality and adapt their practices to meet the demands of the times.

By making capital commitments for the long term, engaging in greater collaboration with other stakeholders, and embracing governance as an integral part of the investment process, venture capital can ensure its continued success and relevance in the years to come.

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Peeyush and Mohit

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