ARK Venture Commentary, 9/23/2022

ARK's Venture Commentary is meant to provide ARK's thoughts on the current state of the Venture Capital space.
by Brett Winton

ARK Venture Launches on Titan[1]

ARK Venture, an interval fund available on the Titan platform, opens venture investing to all, regardless of accreditation status.

ARK’s Take: We are in the midst of a new technological boom. The business opportunity for innovation platforms is measured in the hundreds of trillions over the course of this decade. Yet many individuals don’t have a ready mechanism to invest in earlier stage disruptive companies. ARK Venture seeks to democratize access.

Artificial Intelligence (AI) Goes Open Source

OpenAI released an open source best-in-class speech to text model called Whisper[2], following Stability.AI’s August release of its open source image-generation model, Stable Diffusion[3].

ARK’s Take: Stability.AI’s open source release has spun off a wild proliferation of apps, implementations, and modifications in the single month that it has been available. This distribution strategy stands in stark contrast to OpenAI’s text and image generation models, which have been carefully staged behind APIs. Though the business-model that underlies the open sourcing strategy is unclear, we believe the developer activity that Stablity.AI has catalyzed is clearly valuable. The company is reputedly raising a round at $1 billion post money[4].

Venture Funding 2022, Not So Dire?

Given the unprecedented amount of cash that venture funds have raised–$290 billion in undeployed capital in US funds according to NCVA[5]—it is unclear that venture funding will dry up to the extent that people fear in 2022. Basing his forecast on this undeployed capital pool, Jon Sakoda of Decibel Partners suggests that venture funding could hit $92 billion in 2022, only marginally down from 2021’s 96.2, itself an all time record.[6]

ARK’s Take: Though the macro-economic environment has put a strain on public equity market participants it has done little to restrict the pace of innovation and restrain the emergence of disruptive business platforms. If anything the innovation platforms that we follow have accelerated. We believe innovation assets can be funded relatively inexpensively, and there seems to be sufficient capital reserved to see longer term projects get to maturity.

The ARK Venture Fund will be distributed to RIAs, family offices, high net worth individuals and institutional investors through other distribution channels, but is available to retail investors exclusively on Titan.

Source: Techcrunch, 2022. OpenAI open-sources Whisper, a multilingual speech recognition system

Source: InfoQ News, 2022. Stability AI Open-Sources Image Generation Model Stable Diffusion

Source: Forbes, 2022. Startup Behind AI Image Generator Stable Diffusion Is In Talks To Raise At A Valuation Up To $1 Billion

Source: NVCA, 2022. U.S. Venture Capital Activity Soars to New Highs in 2021 as Deal Value Exceeds $300 Billion and Fundraising Tops $100 Billion

Source: Jon Sakoda via LinkedIn, 2022. Opening the Floodgates: The $290 Billion Venture Capital Reserve

ARK’s statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. ARK and its clients as well as its related persons may (but do not necessarily) have financial interests in securities or issuers that are discussed. Certain of the statements contained may be statements of future expectations and other forward-looking statements that are based on ARK’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements.

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