The Future of Venture Capital by Kay-Mok Ku

27 June 2019

In the past quarter century, we have witnessed two technological waves that drove venture investing:

Commercialization of the militay Internet in the US in the 90s heralded the dotcom era. The initial beneficiaries were B2B companies such as Oracle, Netscape and Sun Microsystems. Subsequently it spread to B2C companies such as Amazon, Google and Facebook, eclipsing the B2B sector.
Then came the mobile Internet, originally pioneered by the Japanese, through NTT DoCoMo’s iMode. Alas, their innovation on feature phones were trapped in the compact Kanji world of the Japanese. The rest of the world has to wait for Apple to show us the correct interface into the ASCII world: the Touchscreen. In an ironic twist to the PC saga, Android (acquired by Google), achieved what Windows Mobile failed to do, and became the de facto standard for non-Apple mobile devices.

Soon, hitherto unknown Chinese phone manufacturers took advantage of Android to create $100 smartphones, the equivalent of Low Cost PCs, originally envisioned by Nicholas Negroponte of MIT Lab. This globalized venture capital as it widened the addressable market to all emerging market consumers. Welcome to the age of Uber, Alipay and WeChat, made possible by the combination of American software and Chinese hardware.

Unfortunately, this is coming to an end…

Where are we headed next?

The confluence of Artificial Intelligence, IoT (Internet of Things) Sensors and 5G infrastructure will usher in the Robotic Age. Autonomous Driving is just the tip; Autonomous Manufacturing will be the iceberg. We are definitely staring at the next Industrial Revolution.

As predicted last year (Tech Crunch), the Trade War has morphed into a Tech War. While the Trade War may be averted, the Tech War cannot be diverted. In the world of two Number Ones, how should emerging markets choose? If you are not politically beholden to the Incumbent, and the Incoming offer you a cheaper and faster way to get a head start in the next Industrial Revolution, why not?