In January 2025, I attended the World Economic Forum Annual Meeting in Davos and came away with salient takeaways relevant for the year ahead. My thoughts are below.
- Companies of the future must provide some tangible benefit to society beyond returns to shareholders
- Again, on the world stage, I encountered an undercurrent of dissatisfaction with economic growth as a primary measure of GDP. The underlying concept here is that a company that has success, in-part, due to the contributions of the larger society should provide some tangible benefit to society. The divergence between firm success and quality of life for the world’s inhabitants is one of the main drivers of this sentiment. The focus on impact has shown the ability to positively benefit society without sacrificing returns to LPs. This model will continue to resonate in conversations on new enclaves of growth amid a changing geopolitical landscape.
- Macroeconomic growth depends in part on continued innovation and transformation of scientific ideas into companies
- Capital markets in the U.S. provide means for innovative science ideas to become companies. Some other areas of the world struggle with this because of overregulation that stifles rapid deployment of capital. When investors see potential for additional returns beyond what the market can offer (alpha), they are more likely to contribute to asset classes that were constrained during inflationary economic cycles. This potential is buried in the story of excess returns from servicing enclaves of underrepresented founders across the U.S. With rates (supposedly) falling over the remainder of 2025, and regulatory climates becoming more friendly to strategic firm activities, there could be ample opportunity in early-stage funding for the foreseeable future.
- Technology companies’ role in shaping geopolitics will have outsized effects on domestic policy
- Countries are competing to position themselves as market leaders in frontier and deep technology. A participant noted that trillions of dollars of capex spend would be needed for countries to achieve tech sovereignty and a large majority of that focus is on data centers for A.I. Clean energy is also an area of focus as cleaner and more sustainable fuel sources dominate the discourse. The companies that provide products and services will find themselves at the center of multipolar global struggles for technology supremacy.
The backdrop of President Trump’s inauguration added an additional layer of complexity to the topics above. Attendees from every major region accepted the impending inflationary impact of tariffs on the U.S. markets. The 2 general consensuses regarding tariffs were 1) the inflationary impact won’t materialize until the 1st half of 2026, and 2) the tariffs themselves may be bargaining tools. President Trump expressed intent to increase oil production in part to decrease inflationary pressures on domestic prices, however, domestic oil producers would be disincentivized to produce beyond a point that would cause oil prices to come down (due to increased supply). Hopes of deregulation by the Trump administration is already driving efforts for investors looking to position themselves in the U.S. private markets once the initial frenzy of the first 12 months cools.
Transform VC is optimally positioned to continue taking advantage of these trends and I am excited to see what 2025 has in store!