Let’s unpack a clever way to invest in emerging technologies — ones that are privately held yet are perfectly within your reach.
When you buy shares of GSV, you’re actually buying a diversified basket of startups.
Positions range from companies ready to IPO to ones just getting started.
As of the latest data, GSV’s portfolio touts 39 private companies worth roughly $270 million.
A handful of these tiny companies have valuations ready to rocket higher, which demands your immediate attention.
Below you’ll find our three favorite companies in GSV’s portfolio.
Leading the Paradigm Shift in Music by Jonathan Rodriquez
To say that a lot has changed in the music industry in the last 30 years would be a massive understatement.
Remember purchasing albums of your favorite artist on CD, cassette tape — or even vinyl — at the music store?
Now you’d be lucky to find a CD at Walmart, let alone a music store.
Since the arrival of the peer-to-peer music downloading service Napster in 1999, the trend in music has shifted away from “physical” media to digital distribution.
Founded in 2006, Spotify is currently the most popular music-streaming app on the market.
They offer a free, ad-supported, shuffle-only subscription, as well as a paid subscription with no restrictions.
And its app is available on iPhones and Android devices.
In the last two years, Spotify’s paid subscriber base has exploded from 10 million worldwide users to 60 million.
Not even the mighty Apple — which launched its own music streaming service in June 2015 — could steal Spotify’s thunder…
Since it launched, Apple Music has only mustered 27 million users — less than half of Spotify’s base.
But here’s the catch…
Spotify’s revenue soared to $3.3 billion last year (up 52% from the previous period), but the company has yet to turn a profit since its launch.
Its music licensing fees are enormous.
For instance, it owes the record labels a minimum $2 billion over the next two years. And pending a lawsuit, the company could owe another $300 million in royalties to songwriters.
That said, Wall Street clearly believes in the company’s future, as Spotify has had no trouble securing funding thus far.
The company raised $1 billion in debt last year. And valued at $13 billion, Spotify is preparing for a direct stock listing on the NYSE next year.
Bottom line: Streaming music is here to stay, and Spotify is leading the pack. When this red-hot private firm goes public, GSV’s stake in Spotify is set to soar.
Revolutionizing Higher Education by Martin Hutchinson
U.S. higher education is a broken model that needs to be rebuilt from the ground up.
Students are forced to take courses they don’t want or need. And they’re taught by incapable junior instructors.
The cost of education is sky-high, thanks in part to administrative overhead that adds nothing of value. So a degree is among the worst bargains you’ll see during your lifetime.
Yet employers often refuse to accept highly qualified employees if they haven’t spent years in these time-wasting institutions.
Enter Coursera, an education technology company that completely revolutionizes higher education.
Coursera offers an a la carte approach to courses. So students acquire the knowledge they want from professors they trust.
As a result, students become professionally equipped far more quickly and efficiently than at a four-year college.
Plus, while a four-year degree quickly becomes obsolete, you can quickly acquire new knowledge and techniques through Coursera. So it’s easy to retrain yourself midcareer.
With that said, there are a number of obstacles to Coursera’s success.
Most important, there are some advantages to studying in a group with similar aspirations and capabilities that a computer-based education can’t replicate. The advantage of networking simply can’t be denied.
Coursera must also persuade employers to accept these online courses as sufficient substitutes for a four-year degree. This will take time, marketing resources and — above all — quality control in the production and design of the courses.
Still, the biggest obstacle to Coursera’s success will be monetization of its product so that they don’t have to provide courses for free.
But with a gigantic cost advantage over four-year colleges and potentially a quality advantage, I’m convinced that Coursera is sparking a long-term shift in higher education. One that will only accelerate in the coming months and years.
Big Data (and Profits) on Steroids by Louis Basenese
Big data analytics is a big deal. Research group IDC estimates the market will be worth $210 billion by 2025.
As it turns out, GSV owns a substantial stake in one of the most secretive, indispensable and valuable big data analytics companies in the world — Palantir.
Based on its last fundraising round, the company is worth $20 billion, making it the third-most-valuable Silicon Valley company. Only Airbnb and Uber are worth more.
So what does the company actually do?
Per its founders, which include PayPal’s Peter Thiel, Palantir was founded to create “the world’s best user experience for working with data, one that empowers people to ask and answer complex questions without requiring them to master querying languages, statistical modeling or the command line.”
Translation: Palantir is a data-mining company. It helps customers transform how they see and use their data.
(The company name “Palantir” actually refers to a magical “seeing stone” from the fantasy novel series by popular author J.R.R. Tolkien.)
The company helps organizations look at patterns and mine data from their networks — think of it as data mining on steroids. But it does much more than simply comb through an organization’s information networks.
You see, its technology and data applications benefit everyone from mega-cap multinationals and big governments to small municipalities, businesses and even private health organizations.
This can manifest itself through speeding up lifesaving drug research in pharmaceutical companies or tracing salmonella outbreaks across the globe. It can help detect cyberfraud and employee theft and even expose terror-financing networks.
Palantir has helped banks maximize their profits as they sell foreclosed homes, and it’s helped organizations identify fraud in the insurance industry, controlled case management and protected intellectual property.
The company helps government regulators and businesses alike detect insider trading, oversee market traders and equip law enforcement.
Palantir technology applications even helped recoup $8 of every $13 recovered in the Bernie Madoff scam — that’s over 60% of the total given back to victims.
It’s rumored that Palantir’s software also helped the U.S. government take down Osama bin Laden.
Since Palantir’s technology has so many cross-industry applications, its potential customer list is practically endless.
Many of the tech IPOs of the past decade went public with little more than a great idea and questionable profitability. But when Palantir goes public, it will have a huge client list and contracted income streams from some of the largest global organizations.
I predict that Palantir will quickly leapfrog into the S&P 500 and take its place alongside some of the top tech startups of the past few years.
Now you can understand why investors are clamoring to own a piece of its IPO. But there’s no reason to wait that long to invest in Palantir.
Palantir is GSV’s largest holding. It makes up 14.4% of the portfolio, which is double GSV’s position in Spotify.
Bottom line: In one single purchase, you can own a portfolio of the most compelling and potentially profitable venture capital-backed companies in the world. Don’t miss out!
Ahead of the tape,
Chief Investment Strategist, Wall Street Daily
Source: Wall Street Daily