Dear Reader,
Earlier in the week, we had a look at the record levels of venture capital (VC) investment into the blockchain and cryptocurrency industry. When we see this kind of sharp ramp-up in investment, it’s always a strong indication of near-future growth and investment opportunity in a sector.
Today we’ll have a look at another area of venture capital – more specifically, corporate venture capital (CVC).
A decade ago, corporate venture capital investments were tepid. It just wasn’t seen as a critical, strategic initiative by most companies.
Today, things have changed. Many corporations are sitting on piles of cash and are looking for ways to strategically deploy that capital for their business. If they don’t, shareholders will demand that cash reserves be returned through share buybacks or dividends.
This year, CVC investment levels have already hit a record high. An incredible $79 billion has been deployed across 2,099 investments. That’s $5 billion more than the full-year amount invested in 2020.
In addition to these record levels, the average deal size grew 75% year-over-year to nearly $47 million. Increasing deal size is indicative of the large amount of capital that is flowing into the private markets.
More than ever, companies are investing capital into promising private companies to gain an insider’s view on new developments in industries and to proactively support smaller companies within their own ecosystem.
Interoperability and partnerships have become more important than ever in such a fast-moving environment of technological advancement. No one company can do it all, and it’s much better to have a lot of business partners than a bunch of competitors trying to cut your throat.
One company really stood out in the 2021 top rankings that I hadn’t seen before. Coinbase was the third most active corporate venture capital firm in the first half of 2021, with 37 deals right behind giants like Google Ventures and Salesforce Ventures. I suspect that the digital asset exchange giant will still be in the top three when the end-of-year totals come in.
Following Coinbase’s initial public offering (IPO) earlier this year, the company has $4 billion in reserves and is actively supporting the cryptocurrency and blockchain industry through these investments. This is smart. After all, the more digital assets there are, the more vibrant the industry will be.
And almost all blockchain projects that have their own cryptocurrency aspire to eventually list on Coinbase. Doing so is always an inflection point. It drives prices higher due to the easy accessibility of the cryptocurrency and the implied “stamp of approval” from Coinbase showing that the digital asset is ready for prime time.
The Coinbase IPO, while symbolic, is a major turning point in the cryptocurrency industry. It was something that I had been patiently waiting for, as it is a sign of maturation in the cryptocurrency markets. Transparency, for a custodian of digital assets and an exchange like Coinbase, is important for the industry.
And that day has come, which is why I launched my most exciting investment research product to date – Unchained Profits.
I’d encourage any Bleeding Edge readers who haven’t yet had the chance to learn more about what I’m recommending in this space to go right here to learn more. This is not an asset class for investors to miss. It really is a once-in-a generation window to participate in owning a part of the next generation of the internet.
There has been a remarkable development in nuclear fusion, and it’s not one that I was expecting this year.
As a reminder, nuclear fusion is essentially the power of the Sun. It involves taking two separate nuclei and combining them to form a new nucleus. This produces an enormous amount of energy.
And it is 100% clean. Unlike nuclear fission, forms of nuclear fusion produce no radioactive waste.
We have talked about several nuclear fusion projects here in The Bleeding Edge previously.
Each of those projects is employing a “magnetic confinement” approach. This involves using powerful magnets to control and contain the fusion plasma. The plasma itself produces the energy, but it must be held in check by the magnets. Otherwise, it would melt the metal around it and destroy the reactor entirely.
Using these kinds of powerful magnets across various types of nuclear fusion reactor designs has been the most common approach to producing energy from fusion. But there is another way to go about it.
And that brings us to the major breakthrough…
Scientists at the National Ignition Facility (NIF) have been working on “inertial confinement” fusion. This approach involves focusing 192 high-powered laser beams on a tiny capsule the size of a BB-gun pellet that contains two forms of hydrogen.
The focused laser beams compress the capsule to 100 times the density of lead. At the same time, they also heat the capsule up to 100 million degrees Celsius. That’s hotter than the center of the Sun. This causes the two forms of hydrogen to fuse and release massive amounts of energy relative to the capsule’s size.
In their most recent experiment a few weeks ago, scientists at the NIF conducted a fusion experiment that created 70% of the energy used by the lasers to produce the reaction. This is a big deal.
For nuclear fusion to become economical, it must produce more energy than what is used to maintain the reaction. In other words, 100% is the threshold.
70% may seem like it is far away, but what’s more important is how quickly the progress has been happening. This latest experiment produced eight times more energy than the one conducted back in the spring. And it produced 25 times more energy than the experiments conducted back in 2018.
This is exponential progress and indicates that we are not far away from breaking through that 100% threshold. I can’t wait to see where the experiments will be just six months from now.
Nuclear fusion is not a decade into the future. It may not even be five years into the future. In fact, I predicted back in 2019 that we would see the first nuclear fusion reaction capable of producing more energy than it consumes by 2024.
Most thought that was a ridiculous prediction… and now we may see it happen before then.
As soon as we cross that 100% threshold, it’s basically free, 100% clean energy. That will make nuclear fusion the most economical form of energy production on the planet and the key to removing carbon-based fuels from our base load electricity production.
It has the potential to radically reduce and even eliminate CO2 emissions, which is why I am so excited about this technology.
Yet another promising development around CRISPR genetic editing technology just caught my eye.
Feng Zhang and a team at the Broad Institute have developed a new therapeutic delivery technology called Selective Endogenous eNcapsidation for cellular Delivery, or SEND for short.
To bring newer readers up to speed, CRISPR is like software programming for DNA. It allows us to “edit” genetic mutations that cause many diseases.
And Feng Zhang was one of CRISPR’s original inventors. He had a hand in the rise of CRISPR-focused companies Editas Medicine (EDIT) and Beam Therapeutics (BEAM) as well.
We piggybacked on Zhang’s work and invested in both EDIT and BEAM in our Exponential Tech Investor portfolio. Right now, we are up 270% and 357% on these two positions, respectively. (If you’d like to learn more about joining us, you can go right here for the details.)
So the fact that Zhang is involved in developing this new SEND technology is worthy of our attention. And it is an attempt to solve a major problem in the space.
For genetic editing therapies to work, they must be delivered to the appropriate cells in the body. This requires a delivery mechanism.
However, the human immune system is designed to detect and attack foreign substances in the body – even those designed to be helpful. For this reason, the delivery mechanism must be able to “sneak past” the immune system.
To add another layer of complexity to this, there isn’t a single delivery mechanism that works for the whole body.
We have found that viral vectors work very well as a delivery mechanism for some parts of the body but not others. The same is true of lipid nanoparticles.
Yet there are other cells in the body that neither of these approaches has been able to reach. That’s why some diseases have been incredibly hard to treat.
And that’s where SEND comes in.
SEND uses the body’s natural proteins as a way to deliver genetic editing therapies “undercover.” With SEND, the immune system doesn’t realize a foreign substance is being transported in the body.
What’s exciting here is this opens the door to a host of new therapies that can go after diseases that have been untouchable up to this point. It’s a massive market opportunity. And, of course, it’s great for the patients who have no treatment options available to them currently.
Zhang and his colleagues have not decided whether they are going to spin up a new company to build a pipeline of therapies utilizing SEND technology yet.
But they have already filed a patent around the tech. That’s a dead giveaway that they intend to either license the technology or use the intellectual property within a newly formed company.
So this is something I’ll be watching closely in the coming months. We have already generated fantastic investment gains by following Zhang’s work, and I’m sure we will do so again once we know what they will do with SEND.
Bigger picture – this is yet another tool in our genetic editing tool belt. I’m fond of saying that we are no more than a decade or two away from curing all human disease of genetic origin, and this is another major step in that direction.
We have talked about fifth-generation wireless technology (5G), electric vehicles (EVs), and self-driving technology a lot here in The Bleeding Edge. But they’ve usually been independent topics.
That said, we are finally seeing signs that the three technologies are converging. And this convergence will open the door to some very exciting applications…
General Motors (GM) – the epitome of a legacy incumbent – just announced that it will integrate AT&T 5G connectivity into several vehicle models starting with the 2024 model year.
That may sound like a long time from now, but the 2024 models will roll out toward the end of 2023. That’s only two years away.
Plus, all car designs are locked in three or four years in advance. That means GM is selecting the components and working on the 5G integration right now.
And here’s the thing – companies like GM are almost always the last adopters. It’s a good bet that more forward-thinking companies in the industry are ahead of the game when it comes to 5G.
In fact, Tesla has already built 5G capabilities into some of its recent software releases. I suspect that all of Tesla’s models will be manufactured with 5G within the next year.
So there’s no doubt that by 2024 or 2025, the entire auto industry will have adopted 5G. And that lends itself to all kinds of exciting developments.
For starters, our car dashboards will start to look more and more like our smartphones and tablets. There will be all kinds of apps available to us that can do anything we could possibly think of in the car.
Bigger picture – 5G will take self-driving technology to the next level. 5G’s fast speeds and near-zero latency will enable cars to make intelligent split-second decisions in difficult circumstances. This is critical for navigating in cities with heavy traffic and complex street patterns.
What’s more, 5G connectivity will power fleets of shared autonomous vehicles. These are networks of self-driving cars that will shuttle passengers around all day just like Uber and Lyft do today.
Of course, Uber and Lyft will naturally operate their own shared autonomous vehicle networks. But they may have competition from Google’s self-driving division Waymo.
And that’s not all.
Tesla’s master plan is to become its own shared autonomous vehicle network. Tesla owners will “rent” their cars out to the network when not using them. In this way, each Tesla vehicle could make money for its owner. That’s an incredible incentive to buy a Tesla.
The key to it all is 5G connectivity. These shared autonomous vehicles will need to talk to each other continuously in real time. And that’s only possible with 5G.
Plus, 5G is critical if a remote operator needs to step in and take control of a vehicle to get it out of a tricky situation. This is particularly relevant for a shared autonomous vehicle service.
So the takeaway here is that these are still early days for 5G, EVs, and self-driving technology. All the technology is here today and very real, but the convergence of these technologies tells us that adoption is about to ramp up.
That means big investment gains are coming. (To learn how to invest in this trend now, simply go right here for the full story.)
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
