For more than 10 years, “software is eating the world” has been an article of faith among startup investors. Marc Andreessen — co-founder of both Netscape and venture capital firm Andreessen Horowitz (a16z) — wrote these famous words in a blog post in August 2011. And his thesis was pretty simple.
My own theory is that we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy.
More and more major businesses and industries are being run on software and delivered as online services — from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures. Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not.
Andreessen was right (well, he’s almost always right). Software companies were poised to take over the world. Twitter, Snapchat, Facebook, Uber, Snowflake, Alibaba and Spotify all went public after Andreessen wrote that piece. Zoom and Slack have made remote work possible. Calendly is the new way to book appointments. Figma and Canva are changing the way design works. People shop for homes on Zillow and Redfin now. Telemedicine is growing quickly. It’s all driven by software.
But as important as software has been for the last 20 years, an even bigger force is supplanting it: data. Data is (some would say finally) driving decision making processes throughout society.
Tesla uses the data collected from its cars to improve its product. Uber uses data to adjust prices and launch new business like Uber Eats and Uber Freight.
Netflix uses data to figure out which movies or TV shows viewers might be interested in. Starbucks uses the data it collects through its app and loyalty program to figure how to get coffee drinkers to spend even more money. I fall for its tailored offers all the time. Any offer that includes a flat white is guaranteed to get me into the store.
Wine startup Winc uses data to determine which wines to make and how to tweak its existing products to get more sales. Another startup, Cortex, uses data to help brands create more effective visual content.
Data has even changed sports. Teams and coaches are using data (analytics) to make in-game decisions and determine which players to draft.
Hedge funds have been using data for years to power algorithms that automatically trade stocks. These powerful algorithms can respond to the markets faster than any human can. They can move markets. And they can make their firms millions of dollars.
Data is eating the world. And there’s no stopping it.
That’s why in 2018, Chris Lustrino founded KingsCrowd. He believes that all investors can benefit from a data-driven approach to investing in startups. So KingsCrowd developed a ratings system that uses hundreds of data points to identify promising startup investment opportunities.
Using the lessons learned from developing the algorithm, KingsCrowd has launched a data-driven fund. (Full disclosure: Andy Gordon and I help the KingsCrowd team refine their algorithms.) You can learn more about the fund on this page and in this video.
Investors are responding enthusiastically. The fund is approaching $2 million in soft commitments after just a month of being live.
Unfortunately, only accredited investors may participate in KingsCrowd Capital Fund I due to SEC regulations. KingsCrowd hopes to open funds in the future that will be available to all investors.
KingsCrowd is hosting a free webinar on Thursday at 1 p.m. ET/10 a.m. PT to give investors a chance to ask KingsCrowd CEO Chris Lustrino and CIO Ahmad Takatkah questions about the fund.
If you are an accredited investor and you are interested in a data-driven fund with just half of the traditional management and performance fees, make sure you attend this webinar. Click here to register.