Update: July 2022
While the public markets continue to scare investors all over the world, things are starting to heat up for us here at DQ. Here's our latest update.
Hi everyone - we just circulated a report to our investors, which means it's time for a wider update on what we've achieved and learned in the last few months.
In this update
DQventures update
We'll start with ourselves this time. When we got our shareholders together in Singapore last month, they agreed that things are getting exciting. Here's an excerpt from this week's investor update:
DQ is working. On paper, the value of DQinvestments [our fund] has already risen from US$700,000 to ~US$1.5m, which includes ~US$400,000 still sitting in cash. Meanwhile we have proven we can launch ventures, earning a 20% stake as cofounders by investing our time and expertise. We have invented a new sector, and recently signed our eighth venture. Our third, Zenn, just closed AU$800k in external funding at a valuation in excess of US$5m. As a result of this momentum, we believe we're almost ready to scale. Next year, we plan to raise $5m+ in order to accelerate.
If you come across any potential DQ founders (great operators, who know their sector backwards and would make an amazing founder, in your opinion, if only they could escape the need to earn a salary), we'd love an intro. Likewise, if you know investors who may be interested in participating in a $5m+ raise next year, or indeed anyone else you think is relevant, please get in touch.
Private investments
This is where we share some of the opportunities we're investing in personally. It's meant to help others learn from our mistakes, and get an insider's view on some of the things you may be able to access publicly. It is not investment advice, so please do your own research.
Startups
For now at least, if you're investing in early-stage companies, you may want to avoid companies that are going to burn a lot of cash and be dependent on venture capital. At DQ we're leaning towards those that can get to revenue and "default alive" quickly and without too much reliance on external funding.
Thinking macro
One could argue that most of the big success stories of the last decade focused on only a few verticals: advertising (Instagram, Snap, TikTok), convenience (Instacart, Uber, Grab), e-commerce (Amazon, Alibaba), and fintech (Stripe, Klarna, Adyen, Coinbase, Robinhood).
Yes, of course there are many more success stories, but the point is that the big trends of the next decade may be in completely different areas. What gets the most attention will depend on what the world is going to need most.
Where does the world need innovation, right now? Something tells us it's not more advertising. We've got our eyes on energy, healthcare, agriculture, robotics, and supply chains, among other areas.
As an example, James has a small investment in the Small Robot Company, which crosses over between agriculture and robotics. He says he may top up in their forthcoming crowdfunding round. Much of a company's ability to get really big depends on its capacity to raise large amounts of capital. Businesses solving large-scale, global problems will have a much better chance of that than those simply looking to make a profit.
Public markets
Given the nervousness in public markets, where does one find a safe haven right now? Niels Clemen Jensen, Founding Partner and Chief Investment Officer at Absolute Return Partners, writes a brilliant newsletter. He's not crazy about equities right now. On the back of numerous, ominous recessionary signals, he finished his most recent letter with the words:
"we have little appetite for much equity beta in our portfolios at present."
Wow. Does that mean he's avoiding equities entirely? Of course, opinions vary widely, and we're not experts. One thing we have learned, however, is to listen to people who know more than we do. We've mentioned Scott Osheroff before, and his belief in energy, commodities, and agriculture. Well, here's another person whose writing we enjoy. Also long commodities. If you want to dig deeper into what might be the next big investment theme, this podcast will also get you thinking.
Articles, posts, and podcasts
- The first founder we worked with was Rob Bryson. He is now enjoying life as an entrepreneur and business owner at WeNetwork in Singapore. Rob recently wrote about why he left his great job at Robert Walters to go it alone (spoiler alert: among other things he talks about us!).
- If you didn't hear or read Putin's speech, back in June, have a read. It might surprise you.
- Of all our shares in the last 3 months, this LinkedIn post from James, about investors thinking like sports coaches, prompted the most reshares.
- If you want a break from work and investing, and haven't heard it already, this episode of the ReplyAll podcast ("a show about the internet") has been touted as one of the best podcast episodes of all time. Enjoy!
Image credits
– Cap on the street by Alison Hedger.
– Cat photo by Thomas Bormans.
– Microphone photo by dlxmedia.