Trusted Data. Better Markets.
This post is spurred by a quick conversation I recently had on Twitter with Graham McBain.
In the recent video put together by Garry Tan I talk about a vision of the future where markets are way more efficient because businesses are integrating trust into their operations. One thing that could really start today is allowing trusted business data to fuel more efficient equity investments in more businesses (think: democratized private equity without the negative connotations).
I’m hardly the first person to recognize this, but there’s a lot of capital floating around the world that doesn’t know what to do with itself. Countries are moving to negative interest rates and yet capital is still buying the debt. The traditional equity markets are over-funded and there’s a relentless search for yield. Turns out one of the purest ways to earn yield is to build or invest in new businesses. This has led to money pouring into the startup market as high growth tech companies are one of the last places you can earn 1000x your money. Software is eating the world and I imagine technology investments as a whole are going to do well for a long time coming.
The thing is, there are a lot of opportunities out there in businesses which don’t traditionally receive VC funding. Emerging markets offer incredible opportunity as they build out their own infrastructure. Everything from micro-loans to new software companies, new infrastructure companies, etc seem to be doing really well in these markets. Additionally there are a lot of businesses in the established markets that do well and generate free cash flow but aren’t hyper growth companies. It is difficult and expensive for these smaller businesses to get the loans and/or investment they need.
The hard part for the big pools of capital is that it’s difficult for them to get the amount of deal flow they need to make it interesting and also difficult for them to perform due diligence on lots of small investments. This is where trusted business data can really shine!
If businesses and individuals start putting trusted data into Tupelo they can start to build a history. This should be more than just bank statements, but customer satisfaction numbers, statements of customers, letters of intent. Even better if your customers *also* use Tupelo and you interact over trusted channels there. It all creates an amazing network of data that becomes increasingly difficult to fake, or represent in a fraudulent way.
Once your business (and ideally your business network) operate over trusted data channels then it becomes way easier for capital to understand the opportunity of investing in your part of the world economy. It drastically reduces the cost of doing due diligence and also decreases the risk of getting your due diligence wrong.
Bitcoin and Ethereum are laying the rails for frictionless payments across the globe and Tupelo is laying the groundwork for where to send those payments. Together they create a really powerful vision. It’s also a vision that doesn’t have to be years and years away. Business can get started today adding trusted data to Tupelo. Investors can build out their data wish lists and start building out the software and processes to collect that data.
This isn’t a small problem. There is about $90T sitting there looking for yield and yet we know that human productivity knows no bounds when it’s properly fueled. Like so many problems in the world, it’s not a supply problem but a distribution problem. Tupelo offers a chance to expose this massive pool of money to the long tail of investments it needs.