Friedberg reports venture-funded fusion companies grew from 7 three years ago to 70 today.
“So a couple of years ago, three years ago, was about seven venture funded fusion companies. As of the end of last year, Q3 of last year, count was 47.”
Friedberg argues Silicon Valley media coverage misses substantial hardware and biotech investment happening beyond software companies.
“There are many biotech companies. There are a number of kind of consumer hardware, there's also a number of kind of enterprise hardware, lab automation.”
Friedberg reports 40% of biotech companies now trade below cash due to shifted investor time horizons.
“40% of biotechs are trading below cash now, because historically you've bet on a biotech company, and then if they hit their mark, they go and raise more money, And then they hit that mark, they raise more money.”
Friedberg explains rising interest rates compressed VC time horizons from ten-fifteen years to under five years.
“When interest rates jump up to 4%, well, now I can invest my money and I can make 20% back on my money in four and a half years.”
Friedberg notes top NASDAQ stocks returned 10x over ten years while top 5% of venture funds only returned 3x.
“In the past ten years, if you bought the top 10 stocks on the NASDAQ, you would have made 10 x. Okay. It's a crazy statistic.”
Friedberg cites top VC firm data showing 40% of capital in down rounds lost money while up rounds generated returns.
“On the rest of the portfolio where things were up rounds and things were going well and they put more money in, they made a lot of money.”
Friedberg argues that capital diffusion into small software projects prevents concentration on transformative breakthroughs like semiconductors.
“And you could probably make 50,000,000 in return. That's a nice little 10 bagger. Great. Let's do that.”
Friedberg argues too much capital flows into small software projects seeking quick 10x returns.
“And you could probably make 50,000,000 in return. That's a nice little 10 bagger. Great. Let's do that. And then let's plow a trillion dollars into that concept.”
Friedberg argues ag tech's seasonal cycles fundamentally differ from enterprise software, causing multi-year return delays that frustrated investors.
“In ag tech, you have seasonal cycles that you're kind of stuck to, so you don't get the results for a while.”
Friedberg argues ag tech is innovating successfully despite poor VC returns from over-investment.
“that doesn't mean that ag tech isn't innovating and that we aren't improving productivity and bringing value to farmers and improving the quality of our food systems.”
Friedberg argues agtech is innovating despite poor investor returns, distinguishing between VC performance and farmer value creation.
“Everyone views the ag tech market negatively because the returns for the ag tech investor class isn't there. But that doesn't mean that ag tech isn't innovating and that we aren't improving productivity”
Friedberg argues AI enables small startups to pursue multi-billion dollar markets previously requiring much larger teams.
“I actually think the addressable economic opportunity for startups has actually grown. So startups that otherwise might not have been able with 50 or 100 people to go after a multi billion dollar seed market, which is kind of the market that we're in, can now do so because of the leverage they get with AI.”
Friedberg argues AI enables building deep tech companies with 100 to 200 people instead of thousand-plus person teams.
“there's the opportunity to build deep tech companies, to build technically difficult companies, to build businesses that historically may have been the realm of thousand plus person companies with a 100 to 200 people.”
Friedberg argues ag tech is innovating successfully despite poor VC returns, separating farmer value from investor outcomes.
“I think that the ag market is going through a lot of fantastic innovation cycles right now. Everyone views the ag tech market negatively because the returns for the ag tech investor class isn't there.”
Friedberg was rejected by all VCs he approached, including Mike Moritz and John Doerr from Google's board.
“And Danny's like, I'll introduce you to all the VCs in the Valley. I had met two of them from Google's board meetings, Mike Moritz and John Doors.”
Friedberg claims he could raise billions at a multi-billion dollar valuation based only on a presentation deck and his reputation.
“raise a couple billion dollars at a multi-billion-dollar pre-money with a PowerPoint deck because I'm the greatest in the world at doing this.”
Friedberg describes being able to raise billions at a multi-billion dollar valuation with just a presentation based on reputation.
“raise a couple billion dollars at a multi-billion-dollar pre-money with a PowerPoint deck because I'm the greatest in the world at doing this.”