Often, when we think of the people involved in financial markets, images of old, stodgy men come to mind. But this is not usually the case, especially in today’s modern venture capital markets. Especially in the technology industry, venture capitalists hope to get in on the ground floor of startups that will become “the next Twitter or Facebook,” so to speak. But with so many new smart-phone applications and websites created each day, successfully determining which ones will “blow up” may be best achieved by using intuition, rather than crunching numbers.
The poster-boy for this trend is celebrity and comedic actor Ashton Kutcher. ((Katherine Rushton, Ashton Kutcher Reveals the Art of Technology Investment, Telegraph (Dec. 28, 2013, 6:30 PM), http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/digital-media/10540732/Ashton-Kutcher-reveals-the-art-of-technology-investment.html.)) Kutcher, is no stranger to large venture capital deals. In 2007, he founded A-Grade Investments, a fund that, as of 2013, had a value of 100 million dollars. ((David Zeiler, What Ashton Kutcher Can Teach You About Tech Investing, Money Morning (June 19, 2013), http://moneymorning.com/2013/06/19/what-ashton-kutcher-can-teach-you-about-tech-investing.)) The fund generally gives out early-stage investments of between 50,000 and 200,000 dollars to technology companies. ((Jenna Wortham, An Actor Who Knows Start-Ups, N.Y. Times (May 25, 2011), http://www.nytimes.com/2011/05/26/technology/26ashton.html)) Kutcher has also made investments outside of his fund that have brought him vast financial gains. ((Id.)) Kutcher was one of the first investors in FourSquare, an application that lets users check-in to real world locations. ((Id.)) In 2009, Kutcher made his greatest investment when he was a part of a group that invested 2.75 billion dollars into the Internet communication service, Skype. ((Id.)) The group sold Skype to Microsoft just two years later for over 8 billion dollars. ((Id.)) And Kutcher continues to have success, with his A-Grade fund investing in such up-and-coming companies as Chegg, Dwolla and Uber. ((Katherine Rushton, Ashton Kutcher Reveals the Art of Technology Investment, Telegraph (Dec. 28, 2013, 6:30 PM), http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/digital-media/10540732/Ashton-Kutcher-reveals-the-art-of-technology-investment.html.))
The question, then, is how does Kutcher do it? Is he simply a lucky guy? Or perhaps he is just riding the coattails of learned financial prognosticators who guide his every move. Kutcher, however, explains his success somewhat differently. Kutcher explains that he likes to invest in companies that fix inefficiencies and “accelerate our paths to happiness.” ((Id.)) As he explains, if an application makes it easier for people to find “love, or health or friendship, the dollar will chase that.” ((Id.)) But this isn’t exactly revolutionary ground that Ashton is breaking. This is just a restated theory of supply and demand. So is there a reason that Kutcher seems so adept at determining demand? Kutcher explains that instead of looking to financial data, he relies on his ability to deduce “what people want;” a skill he claims to have developed through his training as an actor. ((See id.)) He explains: “[w]hen we receive a script, we start breaking down every character by their want. Every character has an objective and a super objective. I look at technology the same way, . . . I’ll think, ‘I’m a user of this platform. What do I want and how badly do I want it?’.” ((Id.))
Kutcher is not the only person to apply his expertise in other areas to the venture capital field. David Robinson, a former NBA player and member of the basketball Hall of Fame, has teamed up with Daniel Bassichis, a former investment banker at Goldman Sachs, to form “Admiral Capital Group.” ((Nicel Jane Avellana, Former NBA Star David Robinson Starts Venture Capital Firm to Impact the Community – Report, Venture Capital Post (Jan. 22, 2014, 9:30 PM), http://www.vcpost.com/articles/21027/20140122/former-nba-star-david-robinson-starts-venture-capital-firm-impact.htm.)) Admiral largely focuses in real estate and private equity investments. The group manages 250 million dollars of real estate assets and has invested in various corporations such as Academy Sports and Outdoors. ((Dan Schawbel, David Robinson: His Voyage From the NBA to Venture Capital, Forbes (Jan. 22, 2014, 3:58 PM), http://www.forbes.com/sites/danschawbel/2014/01/22/david-robinson-his-voyage-from-the-nba-to-venture-capital.)) Admiral, of course, is a group whose goal is to raise profits. But Robinson told Forbes his purpose for creating a profitable financial business is to positively impact the community. ((Id.)) To support this goal, Robinson has contributed ten percent of Admiral’s profits to community projects. ((Scott Soshnick, NBA’s Robinson Jumps to Admiral as Dimon Calls Him Triple Threat, Bloomberg (June 13, 2013, 12:00 AM), http://www.bloomberg.com/news/2013-06-13/nba-s-robinson-jumps-to-admiral-as-dimon-calls-him-triple-threat.html.)) For example, in 2012 Admiral Capital invested 15 million dollars in the Texas Teachers Retirement System. ((See id.)) Despite his great success, Robinson hopes that his financial successes are not entirely dependent on his fame. “I don’t mind signing a couple of balls,” Robinson said, “but this is not who I am or what I want to get accomplished.” ((Id.)) But, like Kutcher, Robinson recognizes that his other career has given him the tools to be a successful investor. ((See Dan Schawbel, David Robinson: His Voyage From the NBA to Venture Capital, Forbes (Jan. 22, 2014, 3:58 PM), http://www.forbes.com/sites/danschawbel/2014/01/22/david-robinson-his-voyage-from-the-nba-to-venture-capital.)) Robinson acknowledged that his time at the Naval Academy for college and his professional basketball career helped him learn “how to work together and trust the people around you to accomplish a great goal.” ((Id.)) He also learned “how to help put people in the right positions to succeed.” ((Id.)) These concepts are now “ingrained in the work of Admiral Capital Group.” ((Id.)) David Robinson and Ashton Kutcher may not be the world’s most accomplished investors. But their success demonstrates the usefulness of a variety of skills in making good private equity and venture capital investments.
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