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Steve Harmon - Forget NASDAQ, Early Stage Is Where ROI Is

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At one point the top 50 Internet companies in the world COMBINED were valued LESS than Microsoft and
 

Steve Harmon

July 10 · Issue #7 · View online
Beyond the hype, inside the world of venture capital, tech, stocks and trends, from Silicon Valley to Shanghai, from veteran investor and entrepreneur Steve Harmon - followed by many leaders in finance and tech, see more: http://steveharmon.com

At one point the top 50 Internet companies in the world COMBINED were valued LESS than Microsoft and Intel. The billion $ era is here. But waiting until these companies hit NASDAQ may be too late to realize a lot of upside. We focus on early stage now.

Early Stage Investing Is The New Opportunity
Fast forward of 20 years of the Internet and here we are. Many of us recall the painful days of dialup and bulletin boards, pay by the minute access, no video, no audio, no real anything…but a dream.
In 1995 when I first jumped in and said the Internet would change everything, few thought the Internet was more than a geek’s fad. Nobody was looking at Amazon when I recommended it in 1996 when it went public. “That thing? Buying books online? There’s already Borders and Barnes & Noble!”
In 2000 when NASDAQ crashed most said “it’s over.” Suddenly CNBC was full of naysayers who had “predicted” the Internet was indeed a fad. Where are they now?
2001 I pointed to China and said this is going to be the next big market and wrote about it for Zacks. Those companies now define Chinese Internet in the multiple of billions. On the eve of the iPod in 2001 I recommended Apple (AAPL) when the company had lost its way…the seed had been plated however with iPod…now it’s $760 billion market cap.
And now the world is always connected. With that, valuations of public tech companies has soared…and now seems out of reach.
Along with this, what’s surprising now is that we have startups valued in the billions rather than millions…why?
Many different ‘laws’ at play, that’s how.

The Network Effect
Virality and sharing built in
Efficiency and ease
Connectivity speeds
Platforms and protocols
Acceptability 
Globality (hey, let’s make up a word here that describes it…)
Creativity (with platforms built entrepreneurs can create easier)
Mobility (there’s more power in my phone than my old 1996 Mac Classic)
Capital (like water it seeks fastest path to return)
Business contacts inter-connected 

All powered by the simple power of dreaming, combined with experience.
That’s how we get to bigger and faster-growing ventures than ever before. It’s how Spotify, Snapchat, Airbnb, Instagram, and Uber, for example, all grew users, revenue and valuations into the billion dollar range quickly.
Building and scaling a “connected” (beyond the Internet, this brings in mobile and the other factors) venture today has these inherent advantages.
Now the problem to me is on the INVESTMENT side of this equation. Retail investors DON’T get the upside. They pay “full price” for the benefits. Look at Google (GOOG), Amazon (AMZN), PayPal (PYPL) stocks today. Market caps in the billions. Will you see a 250% return from any of them? Even 100%? 50%? 25%? 
This is exactly the opposite of the mid 1990s Internet when early adopters essentially paid WHOLESALE and institutional investors paid RETAIL (full value).
The real outsized returns today in my opinion may come from early-stage investing…those who get in when a company starts or just got started. Imagine owning 1% of Airbnb or Spotify…These are multi-billion valued ventures. The investors who got in early on Twitter are happy. The public investors less so. 
That is why I created APPLESEED.WORKS (http://appleseed.works) to found and fund seed ventures. Now, this area is totally higher risk than later stage. But with risk comes reward for those ventures if they break through to the critical mass stage.
Fertile ground: On college campuses and small towns all over the world anyone can now plug into the connected platforms…what they lack is the “real world” knowledge about building a new venture. That’s what we bring to them with APPLESEED.
If you are qualified investor and want to know more then contact us. If you are an entrepreneur looking to plug into a global network contact us.
Every time I see the NASDAQ or Dow numbers it’s basically an institutional investor game now. Where do you fit in that?
Best regards,
-Steve
steve@appleseed.works

p.s. one of our first portfolio companies is in the works now and we believe could transform messaging and commerce. You get a preview first!
coming soon from appleseed ... a new way to message and more
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