INVESTMENT THESIS

When Ronald Coase moved to America from Europe in the 1930’s he was surprised to find so many people working for large companies as opposed to starting their own companies. He asked the question “why does the firm exist at all, let alone in a variety of different sizes?”

He defined the idea of “transaction costs” associated with information flows in market interactions, ignored by most economists at the time. His key conclusion at the time was that the size of the firm is determined by the levels of these “transaction” costs.

He hypothesized that the industrial age would have high transaction costs and the next wave would see reductions and efficiencies in transaction costs.

He wrote “The Nature of the Firm” in 1937 and yes he won the Nobel Prize for Economics in 1991.

The industrial age was filled with intermediaries and higher transaction costs…

…whereas the new firm today is smaller and more nimble…

…and has a more direct relationship with the consumer which requires a new support infrastructure. We invest in Disruptive Ideas which enable the smaller and more nimble organisations of the future.

• The barriers to entry for innovation collapse
• Low cost cloud based infrastructure is freely available
• Anybody with an idea can take the idea to the global market
• Governments and companies will tap the nomadic entrepreneurial tribes for new sources of innovation