2023 investment trends I am focusing on | Seed To Harvest Ep56

So what does a 24-year-old investment firm manager at the early stage invest in? Today I'm going to talk a little bit about our portfolio at Behind Genius Ventures and also some of the industry trends I'm really excited about in 2023 and beyond. So for context, my name is Paige Doherty. I'm one of the youngest fund managers in the world. I founded Behind Genius Ventures in 2021. Our debut fund was $5 million. And we invest in pre-seed and seed stage companies building within the future of work and the future of play. That can mean many different things, but the topics we'll be talking about today are companies building within generative AI, creators as a business, the loneliness epidemic, the conscious consumer, and democratization of access. Some highlights from us include fulfilling my dream of having an office with a Breville coffee maker, a record player, and an ocean view, which I'll show you in a bit. But. Here are the trends that I see within our 5 main investment themes and what I believe will happen as we continue into 2023. Okay, so generative AI. What is it? So I studied computer science at San Diego State. I graduated in 2020. One of my capstone courses was taking a machine learning class, and in it I read a book called AI Superpowers, which is really interesting. I would recommend it. If you are interested in learning more about AI and the history of AI. But anyways, ChatGPT gained 1 million users after just 5 days. Put it into context, it took Instagram 2 months to gain a million users, and it took Facebook 10 months. It took Netflix 3.5 years. So incredibly rapid growth. And you may have read about it on TechCrunch or in Twitter or used it if you're a college student in your classes. I know my brothers do. So according to an article I read, Between 2020 and 2027, there will be a predicted 33% annual growth rate in AI. And since 2020, venture capitalists have raised their investment in generative AI by about 425%, representing $2.1 billion invested. In 2022 alone, investors invested around $1.37 billion in 78 deals involving generative AI. Which is approximately the number that they invested the entire 5 years before combined. So in our portfolio, we've invested in a handful of companies in the generative AI space. Honestly, when we made these investments, I'm definitely like a very founder-first investor, and so it was more of a bet on the founder. And then as generative AI became more of a buzzword and everyone was talking about on Twitter, I was looking back through our portfolio and I was like, oh, there's actually a handful of companies that fit into this. So. One of those is ProfGym. ProfGym transforms textbook text into quality educational content utilizing AI-generated avatars depicting some of the world's greatest influencers. Not these influencers, but people like Sacagawea, Aristotle. And one of the reasons why I think ProfGym is so interesting is the founder, Dr. Deepak Sakar, previously founded a company that was sold to DoorDash. He has over 200 patents to his name. So he's an incredible inventor and just a fantastic human. I've so enjoyed working with him. And I think a really, a cool fun fact is he sends all of his investor updates using their technology. So we'll get an update from Sacagawea, we'll get an update from Aristotle. Dr. Deepak has even gone so far as to make his own avatar. I think there are far-reaching impacts of being able to transform text into interactive video far beyond education, but it's an incredible beachhead to start. Intros AI is another tool that leverages AI. It's a community building tool to help create deeper connections via personalized matching technology, both in cohort-based learning or different corporate environments. And this is really powerful because companies suffer a lot from retention problems. And studies show that having one close friend at work can really extend the tenure of employees. The next is Capsule. So Capsule leverages generative AI. To produce stunning video for any audience with no expertise. So their latest beta launch allows users to create professional quality videos utilizing AI generated graphics, animations, and other creative editorial capabilities, which I think is really incredible. Future prediction, some of the research for this video that I'm recording right now actually used ChatGPT and QuillBot. QuillBot is not in our portfolio, but I think it's a really interesting technology. So yeah, that's a bit more about my thoughts on generative AI and what I'm excited about in that space. The next topic is very near and dear to my heart. Creator is a business. I joined Instagram in February of 2012 when I was 14, and I had— I used to run like Python bots on Instagram. I grew a following on Twitter, over 32,000 folks, which enabled me to write a children's book about venture and also to launch the venture firm. So I— and I also love making TikToks, so I'm no stranger to social media. I also worked at TBC Capital, which is a growth equity firm in San Diego, and they were involved in leading the Series A at CreatorIQ, which is an enterprise influencer CRM. I think that was when I first started to realize that my perspective as a Gen Z was really powerful because I deeply understood the motivations behind like what was going on in the creator space. Um, So here's some fun stats for you to back that up. So according to CMI data, for 67% of marketers, which is up 7% from the previous year, content marketing creates demand and leads. And according to 72% of marketers, which is a 2% rise, content marketing helps educate the audience, and 63% feel it fosters loyalty among current clients and customers. Um, a short video is preferred by 73% of respondents, which is a 4% rise from the previous year when learning about a product or service. And I think that one of the interesting stats was like one, basically there's 50 million creators to date and that number will continue to grow. I know, like, duh, you're watching me on YouTube right now, so. Or listening to me on a platform like Apple or Spotify. So I am a creator at heart and I feel it's an integral part of our business at Behind Genius Ventures. And I see that most of my friends are interested in creating content online. I think once you get over like the cringy aspect of talking to a camera by yourself in a room, it's really incredible and it's enabled me to take advantage of so many different opportunities. Like, I didn't really, I didn't come from family money, and leveraging Twitter as a creator enabled me to build a career, build the career of my dreams, and get to spend time with people I really enjoy and meet incredible founders who've had the opportunity to back. Speaking of incredible founders who've had the opportunity to back, Beacons is a link-in-bio tool for creators. I actually discovered Beacons while scrolling through TikTok because all my favorite creators had Beacons links and I was like, what is this? So I ended up DMing the founder on Twitter and I was like, hey, I think this is a really interesting platform. I'm seeing it blow up over TikTok. You know, are you guys raising a round? And then after that, we ended up participating in their seed round led by Andreessen Horowitz, and then also their Series A round led by Cora Management. Statusphere is a recent investment that I made out of Fund 2. It's an online platform connecting brands with carefully curated micro-influencers. I know I've heard this pitch like a thousand times, and I honestly kind of rolled my eyes when I heard about it. But Kristen is an amazing CEO. She comes from a background of being a YouTuber since 2012, and then she was also the CMO at a marketing agency that worked with a lot of public corporations. So she had trusted client relationships and they specialized in micro influencers. She's built an amazing team out of Orlando. A lot of our investments are outside of traditional tech hubs because I'm so focused on investing Investing in founders that I meet online. I feel like we have a very diverse portfolio in terms of geography. We've also backed many founders that are women and people of color. We don't have a diversity mandate, but I would say like, I just like, I love backing folks from diverse backgrounds. All right, so the loneliness epidemic is the next topic that I'll think about. I think this was like a massive one. Studies have shown that the rate of kids hanging out by themselves at home has risen Dramatically. And I see this within my own community. I've also seen the impacts that COVID has had on the— I would say just there's not a lack of play, but like people want to play more. And so the video game industry saw $98.7 billion worth of deals in Q1 of 2022, which is up from $87.4 billion in 2021. And $32.7 billion in 2020. So Microsoft's acquisition of Activision Blizzard for a record $68.7 billion was a highlight of that quarter. The New York Times reported that since its January 2022 acquisition of Wordle, an unprecedented tens of millions of new users had been brought to the paper, many of whom to stay, stayed to play other games. There's a lot of really incredible connected fitness applications. Basically, like, I know my dad used to joke because I went to SDSU. He was like, oh yeah, Paige's whole life was like play hard, work hard. And while that's a joke, I think it really rings true. And I think that having fun and being playful is so important. And so we've invested in a handful of gaming companies. So one is Aviron. They're a connected rowing machine that uses habit-forming psychology and game design to keep you motivated and excited. The founder, Andy, is an incredible martial artist. He's been based in Toronto. It was the first Canadian company that we've invested in, which was kind of an accident. And then I had to update our fund documentation so that we could invest in Canadian companies, and now we invest in Canadian companies. That's kind of like a fun fact on how one of our shifts in investment strategy as the, as the fund got built out. And the last game board is another one. It's the only social gaming console where you host concurrent play, use physical game pieces, and you can enjoy immersive game visuals and audio and play with other players worldwide. One of the things that really drew our fund to investing in Shail's company, The Last Gameboard, was her story. When she was a young girl in the '90s, her family moved to Manhattan, Kansas. She didn't speak any English, and she learned English through playing Chutes and Ladders with her neighbors. She went on to move to the other Manhattan in New York and built an incredible career in consulting and working at hedge funds. But never lost her love of gaming, would always host game nights, ended up moving to Denver and she was going to these gaming conferences. There would be like tens of thousands of people gathered in hotel conference areas to play board games with each other. And I'll still remember the first time she told me this story and it never gets old, but she walked into, um, the chief architect of the PlayStation, his office with a 6-pack of his favorite beer and was like, I have a vision to build this. Digital tabletop gaming platform because she wanted to be able to play games with her family in India. And I, it's so incredible to hear that story and see where they've gone from rolling out in GameStops. And yeah, I just, I recorded a podcast with Shail. So if you're curious, and Shail and Andy together from The Last Gameboard and Avron, so I can, I'll link that in the description. I think some major future predictions for this is I, I would say like the demographics of gamers include both the aging population, the middle-aged empty nesters, Gen Z and Alpha. I think that there is a market demand for products and services that support the balance of real-world and online relationships in the workplace and at home. So the next trend I'll talk about is the conscious consumer. So what is a conscious consumer? So I went to school in college from 2016 to 2020, and when I was in college, I was involved with This organization called Greenfest, and our values were sustainability, diversity, and Aztec pride. And I feel like I've kind of absorbed those as some of my own values. So Greenfest is an organization devoted to celebrating those values. So I ended up hosting a fashion show. We planned a music festival. We would plan recycling events and beach cleanups. And I think that, that what I saw was there was like this incredible drive to sustainable options. I think Gen Z has an incredible nose for BS when it comes to brand marketing, authenticity. They don't tolerate greenwashing. Um, according to the most recent U.S. Consumer Pulse poll by McKinsey& Co., 74% of consumers are altering their shopping habits to save money, which includes purchasing groceries in bulk, reducing the number of items they buy, and choosing a less expensive brand or private label. A lot of these dollars are also going into sustainable products. And so that's like conscious consumer on both a financial level and a sustainability level. A handful of companies within our portfolio that I love to highlight. The first is Biome. So we don't do many direct-to-consumer investments, but one of the reasons why we chose to invest in Biome is the founder, Will, has a background working at 2 Sequoia-backed edtech companies as the first higher in sales, incredible recruiter, incredible team builder. And he ended up randomly over COVID brokering a wipes deal. And so Biome is a subscription service for biodegradable wipes, decreasing plastic waste by over 85% compared to market leaders. I'm not going to mention any names, but anyways, so I think Biome is a really interesting example of Will, the CEO, took this incredible approach to understanding consumer sentiment, and he spoke with of the leaders at major wipes companies and grocery stores and different suppliers. I think one of the really interesting things that he learned was the consumer 99 times out of 100 times will pick the, the wipe container, the tube over the flat pack, even though the flat pack is like the thing with the, you know, little opening and it's in plastic, but the amount of plastic waste generated by those tubes is Insane. It could fill 3 football fields a year from the US alone, which is absolutely insane. And so they, him and his co-founder, who has a background in architectural design, came together and created Biome, and they have this really incredible dispenser. And I, yeah, I just, I really love them. Their company is awesome. And then also Ivy, which is a next-generation primary care provider, which reimagines the experience of patient care by bringing a complete suite of highly personalized health and wellness services directly into your home. I think Ivy's really interesting because they started out with like IV therapy in-home and expanded out to more concierge health services. They're in New York right now, so I think that's, that's a portfolio company I'm really excited about. The next trend that I'll talk about is the democratization of access, so In this, I really classify this as the expansion of financial opportunities to those who have traditionally not been able to benefit using financial instruments that have traditionally been available to wealthy people. And so if you do, some of the, some of the companies like within this zone for me include Roots Homes, which is, Roots is an amazing company. The founder Lauren founded Roots after her parents lost their family home in the 2008 crash in Vegas. And she basically devoted her life to making sure that no one else ever had to go through that process. And so Roots enables renters to build equity in the homes that they're living in, essentially making homeownership more accessible for the ever-changing lifestyles customers strive for. I think a really interesting insight that came up from her conversations with her members is that actually a lot of the folks that are looking to build equity in the homes they rent are higher income folks who don't wanna buy because they want flexibility of where they're living, but they do recognize the importance of building equity. So I think that's really interesting. The next one I'll mention is Aetaly. Aetaly is founded by Maggie Norris, and Aetaly qualifies caregivers for compensation through health insurance benefits, tax credits, and state programs, tapping the over $2 billion worth of unpaid tax benefits reserved every year. I think this company is really interesting. I feel like the caregiving economy will continue to grow as we have an aging population. And additionally, more and more folks want to live their last days at home versus in a nursing home. And so I think that this space is ripe for disruption. We're seeing a lot of really interesting companies. So that's an example of one. If you're interested in following my journey as a fund manager, please subscribe to my channel. I post videos every Monday, and then if you're interested in connecting about the topics that I mentioned in this video, feel free to follow me at Paige Finn with three Ns. But yeah, hopefully you all enjoyed this. I know this was a departure from our usual interview style, but I do want to focus on doing more original content. And also one of my students in my VCIC class was like, "What do you invest in?" And I was like, "Oh, I should definitely talk about this because we have." 35 incredible portfolio companies. So yeah, hopefully you enjoy this and I'll see you next time. Special thank you to producer Riley Jennings and podcast editor Tate Doherty for your help on this episode. If you're listening and you'd like to connect with me, follow me on Twitter or LinkedIn, Paige Finn with 3 N's. Thanks again for listening, I really appreciate it. You can look out for new We release new episodes every Monday at 5:00 PM PST. And if you'd like to learn more about the strategies and tactics of seasoned institutional investors and rising venture stars, check out our YouTube channel at Seed to Harvest. Also, my TikTok channel is Seed to Harvest, where I post a lot of behind the scenes. And if you like this episode, please rate and review this podcast wherever you get your podcasts, if that's on Apple or Spotify. Anyways, thank you so much for listening. I hope you have an awesome rest of your day. Bye.