The Vision for Access Ventures in 2019
Access Ventures exists to open doors that would otherwise be closed. By promoting a one-pocket investment mindset and inviting entrepreneurs, creators and investors to share in an active and vibrant vision for their communities, we are all enriched as we build something together.
As we start this new year off, we wanted to assess what’s worked and what didn’t go quite as planned – where we can improve and where we can push forward to catalyze more impact in our world.
2018 has been an interesting year, to say the least. The public equities market has hit all-time highs and experienced lows not seen since 2011 – all within the span of a couple months. Despite this market performance, we continue to see interest growing in value-aligned investing. The interest is driven in large part by millenials as they continue to assume control over family assets and are more interested than any other generation in the “how” of making money, not simply the fact it is growing and who have seen the demonstrated market performance of value-aligned investments and fund strategies.
Although the public markets have experienced volatility, the US economy as a whole has been strong. Today there are more job openings than there are people seeking employment with a nominal wage growth of 3%. The wage growth statistic feels especially encouraging, even though it’s barely above inflation, it means that American families are able to keep pace with their ever-growing expenses. These are great signs for the bulk of America that has not experienced the economic growth spoken about in the news.
2018 was also exciting for us as we launched our targeted early-stage investment strategy around blockchain technologies. Given this focus, it’s important to note the market for tokens experienced drastic selling in 2018. Jokingly described as a “crypto-winter”, assets such as Bitcoin, Ether, and other tokens have shed more than 80% from their all-time highs. This is due, in large part, to a speculative market early in the year and the delay in product shipments associated with those assets. Although we are investors in the underlying technologies, the impact of volatility in the token market does affect our portfolio as it may pause certain product strategies until a more friendly environment prevails. As investors we believe the “crypto-winter” is a perfect opportunity for technology advancement as opportunists leave and strong companies emerge.
One surprise in 2018 that had everyone scrambling to catch up, was the passage of the Investing in Opportunities Act in late 2017, otherwise known as the Opportunity Zone legislation. The Opportunity Zones represent one of the most significant economic development legislation in 20 years and it is trying to close a market gap that our nation has and It’s very obvious that our current institutions don’t have this capacity. We have been working for the better part of the last year to explore the development of a Qualified OZ Fund and we are looking forward to announcing some new developments in early 2019.
It’s impossible to predict with any real accuracy what public markets will do in 2019. With that caveat, we do anticipate a slumping equities market in 2019. Trade challenges with China and divergent federal reserve policies leave many investors looking for the doors after the longest bull market on record. Despite the circumstances, the economy has positive momentum going into to 2019 and it is our hope that employment and wage gains prevail again.
The crypto-market, nascent as it is with less than 10 years trading history, will continue to feel non-correlated to other public markets. Unfolding regulations have dramatic impact on the issuance and potential value of public tokens, and will likely continue to affect the market in 2019. On the private investment side of blockchain, infrastructure building will continue and earn more and more adoption along the way.
In 2018, we also saw a greater emphasis on investing in the creative economy – and at Access Ventures we could not be happier! We have always believed that the arts and the creative economy provide the depth of color for the monochrome of life. Traditionally, benefactors and philanthropists saw the value of the arts beyond profit and built iconic monuments and halls to showcase the grandeur of the arts. Yet, over that same time, and specifically in recent years, more people are realizing the creative economy has always had an opportunity for investment, with financial return. From entertainment to sustainable food to creative places; the creative economy has renewed interest for investment. In 2019, we hope to explore even more opportunities to align our mission of a more inclusive and creative economy with our larger endowment and non-concessionary investments and we are excited about year two of VSCO Voices to be announced in a couple of days!
As it relates to the availability of capital for businesses, our nation still remains at a 40 year low in entrepreneurship. Abysmal statistics, like that of the 80% of small businesses declined for a traditional loan, still exist. It’s far time to change the paradigm and look at non-equity models for investing solutions, like our Growth Loan that has been an experiment in no-collateral capital and “old school” community banking for the past 3 years and has now lent over $650K with a 97% repayment rate in Louisville, KY. It’s because of this success that we are excited to beta test a new SAAS product simplifying small business lending, called Lenderfit. We will be beta launching this in Louisville (April), Kansas City (May) and a yet to be announced city in June. Through a grant from the Ewing Marion Kauffman Foundation and the technology it will develop, we can hopefully see this expanded into many more cities in the second half of 2019.
Additionally, despite unprecedented low unemployment experienced in 2018, the chasm between those who can afford to live in America and those who cannot, continues to grow. More and more, people are electing (or not able) to have a bank account. More and more people are “working poor” and despite having a job, cannot afford the basic necessities of living, let alone work to find a path out. It’s time we recognize the wholistic value of more supportive employment and develop a culture and a society that places a higher emphasis on the intrinsic value of being human and build more compassionate places of work. Housing costs have also made living in America extremely expensive, but the total cost is often beyond the base-level cost of rent. It’s often these ancillary costs of insurance, utilities, and the limitations on food options and transportation that drastically impact the lowest wage earners in our communities.
As first-mover, risk capital, willing to beta test and experiment with new approaches, we see 2019 as a time to both expand our understanding of these issues and solutions as well as press deeper into our initiatives that we have developed over the past 2-3 years. What has remained the same at Access Ventures since the very beginning is our mission to build a more inclusive and creative economy – to open doors that would otherwise be closed. By promoting a one-pocket investment mindset and inviting entrepreneurs, creators and investors to share in an active and vibrant vision for their communities, we are all enriched as we build something together.
Let’s work together in order to create the world we all desire to live in.