The PitchBook Economy 2021

One of the important trends over the past year has been financial market innovation. This is usually an interesting and ultimately dangerous phenomenon. The explosive growth in options market activity, non-traditional financial structures like SPAC (Special Purpose Acquisitions) have become traditional acquisition weapons, and the cryptocurrency/coin market is a formidable technology like FTX. It develops against the backdrop of the platform.

Two other things should be noted. First, innovation and speculation are still closely related. The Tesla price and the Bitcoin price follow the same parabolic climbing path (only the climb). This shows that the options market, innovation and animal passion are ambitiously linked. Second, showing promise for the broader economy, waves of innovation often start in financial markets and spread to other sectors.

Many of these financial innovations are defined as the “democratization of finance” giving people access to inexpensive trading platforms and a wide variety of assets (and leverage). Ultimately, it will likely be remembered as “democratization of risk”, the distribution of risk from large institutions and hedge funds to individual investors. The ones that sold out in the last few days speak for themselves.

While most of the financial media is dedicated to the “democratization of finance” and the memetic act that defines it, there is another, almost opposite, trend on the other side of the market: the deepening of private capital investment.

Not quoted by high-end asset managers, large family offices, financial investors well connected to companies at the heart of the tech sector (venture capital, pre-IPO shares, etc.). This is determined by the demand for access to investment. The contrast between the demand for private investment and the compulsion of retail trade in some respects, particularly in sociology and anthropology, reflects growing social inequality.

This can also be described by the difference in trading instruments. The rise and fortune of the stock market over the past two decades is largely illustrated by Bloomberg Terminal.

In the world of private capital, it is difficult to get Rorodex in the modern sense of the word because private capital operators rely heavily on reliable networks and details for private companies (financial circles, identities, etc.). Selected pitchbook information service. shareholder financial profile).

The phone book economy was born out of several factors. The first is an entrepreneurial epidemic that likely started in Israel and the United States and spread to Europe. In France, for example, the start-up culture is very much felt with the increasing number of business schools, incubator platforms such as Station F and state support institutions such as BPI.

The second change is the role of technology in accelerating business growth (and I must say, faster downtime). Impressed by Azim Azar’s incredible exponential age, who stated that it was rarely used when he started writing books and that it was the most downloaded app about 20 months later. Yes.

In the notebook economy, capital flows very quickly to companies that are believed to be able to gain a foothold in terms of going to market. In response, competition between venture capitalists, banks and new investors is intensifying (tiger management is becoming more common). With this in mind, the number of investors in unicorns ($1 billion startups) and big cones (30 out of $10 billion startups worldwide, nearly as many as in the last three years overall) is increasing. I said that.

In the relatively early stages of what I call the economics of this book, the growth of the private investment sector has had several consequences. The first is changing the way people work and think about work. Instead of being seduced by the security of big companies, every young person seems ready to try the entrepreneurial/business path that thrives. There is currently a treasurer associated with entrepreneurship and at this time there is a feeling that rewards can be important. Employment and pension structures have not been adjusted.

Second, accelerating the digitization and “greening” of the economy. It is unthinkable that a growing European private company will not be a part of either trend to some extent.

We also expect rapid integration between sectors. In my opinion, the new European banking market is overcrowded, some operators are not making money (N26 is quite withdrawn from the US market) and BOLT is becoming the dominant player in the mobility sector. It happened.

However, one of the factors linking private capital to public markets is financial liquidity. The overvaluation of the stock market corresponds to the very strict valuation of private companies. In this case, the “phone” economy can only be proven after a cycle of money scarcity and the knowledge of the survivors.