Kaal claims by topic: innovation

232 atomic, individually citable claims from the published work of Wulf A. Kaal tagged innovation.

Independent administrators and valuation committees do not solve the independence problem for startup funds, because a majority of hedge funds in their startup phase try to keep overheads down and so may have independence problems precisely when independence is most crucial. 2009
Limiting the use of hard-to-value assets and complex financial products is very unlikely to have positive effects, because the implicit inhibition of financial innovation would probably limit investors' use of hedging products and interfere with economic expansion. 2009
The more a country leads in financial innovation, the more exposed its disclosure regime is to misrepresentation and fraud, which makes the U.S. regime more vulnerable than Germany's despite being formally stricter. 2010
The compliance burden has raised the minimum viable scale for launching a hedge fund: an adviser reports that the capital needed to start a fund in New York rose from roughly $25 to $50 million to at least $100 million because of the increased cost of compliance with the registration and disclosure requirements. 2012
Financial innovation, the globalization of markets, transnationalism, ethical challenges, and the bounded rationality of humans are likely to create and increase future challenges that require additional and more extensive governance adjustments. 2013
Dynamic elements built into the regulatory structure would allow regulators to continually adapt to new market environments, to financial innovation, and to changes in financial markets that are themselves caused by financial regulation. 2013
During and after crises, political entrepreneurs assume the transaction costs of organizing otherwise disinterested latent groups, which temporarily overcomes the predominance of special interest groups in rulemaking. 2013
An exogenous shock, often a fundamental technological advancement, starts the crisis sequence by creating conditions for optimism in the real and financial sectors of the economy. 2013
Future financial crises may be inevitable, because globalization, financial innovation, ethical challenges, suboptimal institutional designs, and the bounded rationality of decision makers create conditions that produce crises. 2013
The increasing volatility of financial markets combined with financial innovation parallels the pace of technological development in telecommunications, the industry where dynamic regulation has predominantly been applied. 2013
During and after crises, political entrepreneurs assume the transaction costs of organizing otherwise disinterested latent groups, temporarily overcoming the predominance of special interest groups in the rulemaking process. 2013
Before Title IV, launching a hedge fund could be accomplished by raising roughly $25 to $50 million, whereas after the Dodd-Frank Act the required initial amount may have risen to around $100 million. 2014
A disproportionate effect of Title IV on startup hedge funds and smaller advisers could create barriers to market entry and precipitate a trend toward consolidation among smaller hedge fund advisers. 2014
Based on these findings, there appears to be no immediate need for policy makers to address concerns over a possible effect of Title IV on startup hedge funds and smaller hedge fund advisers. 2014
The pacing problem arises from a two sided divergence: innovation driven by science and technology is accelerating at the same time that federal and state agencies' regulatory processes have slowed down and continue to slow down. 2016
Rulemakers rely almost exclusively on stable and presumptively optimal rules meant to be permanent solutions, and that reliance ignores the ever changing rule environment driven by exponential growth in technology and innovation. 2016
Formal rulemaking in the existing regulatory infrastructure is almost always too time consuming, because product innovation moves fast enough that regulations covering an innovative product are obsolete before they are finalized. 2016
An existing regulatory infrastructure built on stable and presumptively optimal rules is largely incapable of addressing the ever increasing unknown future contingencies associated with disruptive innovation. 2016
Introducing a regulatory update where genuine regulatory reform is needed can deteriorate the relationship between regulation and innovation, because innovation driven by changing values and societal norms calls for reform rather than incremental updating. 2016
The existing regulatory framework is sub optimally equipped to remedy both existing and future regulatory challenges associated with exponential innovation, which is the first premise for integrating dynamic elements into the regulation of innovation. 2016
The faster the cycle of disruptive innovation, the shorter the timeline for society to adapt and respond with a familiar pattern of laws, regulation, and frameworks, which gives disruptive exponential innovation a potentially destabilizing effect on society. 2016
Despite the consensus favoring it, early regulatory intervention in innovation is rare in practice, and regulation mostly fails to keep pace as the innovation evolves and as understanding and use of the technology spreads. 2016
In the later stages of more matured innovation it is often not possible to alter the regulatory status quo, which closes the window that early intervention proposals depend on. 2016
Deferred prosecution agreements and venture capital investment decisions increase the availability of relevant, decentralized, and timely information for rulemaking and give at least some estimate of where innovative trends exist and what regulatory challenges may accompany them. 2016
Rulemaking in the dynamic framework is an integral part of innovation that both supports innovation and curtails it, for innovation's own sake and for the maximization of societal welfare. 2016
Regulation is usually reactive because it responds to facts, but the current environment is one of data rather than settled facts; regulation must therefore become proactive and dynamically responsive to data and trends. 2016
Ex post facts-based, trial-and-error rulemaking combined with stable and presumptively optimal rules often produces suboptimal regulatory outcomes, and those outcomes are no longer sustainable in an environment of exponential disruptive innovation. 2016
In an environment of exponential disruptive innovation, the information rulemakers need is less likely to materialize soon enough for traditional rulemaking to be effective, regulatory issues become more complex, and unknown future contingencies increase substantially. 2016
Exponential disruptive innovation has the potential to overwhelm the existing regulatory process entirely, not merely to strain it. 2016
Data derived from venture capital investments can function as a dynamic regulatory supplement for disruptive innovation, because venture capital's financial allocations to innovative projects supply feedback for dynamic regulation. 2016
A market leader's failure to invest in disruptive technologies often results in an abrupt loss of market dominance and frequently in total replacement in that market. 2016
Market leaders, successful institutions, and managers fail specifically when they do not distinguish sustaining technologies from disruptive technologies. 2016
Incumbent firms facing a perceived threat from disruptive innovation may respond by using the existing regulatory process itself to create obstacles that prevent disruptive firms from competing. 2016
The political system is less likely to be able to resolve the challenges of disruptive innovation because the increasing complexity of innovation-driven regulatory issues causes confusion among political and policy makers about rapidly emerging change. 2016
The existing regulatory infrastructure cannot sufficiently distinguish beneficial innovation from harmful innovation and therefore cannot harness the beneficial kind. 2016
Rulemakers' inability to address disruptive innovation will generate high levels of legal uncertainty and inconsistency that inhibit innovation during technological transition, and technological transition is likely to become a permanent state, so the inhibiting effect becomes permanent too. 2016
The current regulatory framework lacks any mechanism that anticipatorily informs rulemakers of beneficial innovative ideas, and because the rulemaking process prohibits ex parte communications and integrates cross-industry brainstorming poorly, the process may actually undermine innovation. 2016
Regulatory timing under disruptive innovation is a two-sided failure: regulating too early risks inhibiting innovation, while withholding regulation too long risks harm to consumers and markets once regulatory inertia sets in around the disruptive product or service. 2016
Because formal rulemaking takes months and often years, regulators are still processing the previous product launch while new products reach the market, and new regulations pertaining to an innovative product can be obsolete before they are finalized. 2016
The current process of rule revisions, amendments, and repeals used to correct the inevitable shortcomings of stable rules is costly and time-consuming, and in the authors' estimation it cannot keep track of future innovations and their corresponding regulatory needs. 2016
Venture capital deal flow, meaning the totality of potential deals and business plans screened by venture capitalists, would provide the optimal assessment of innovation trends, but that data is not available, so realized investment allocations must be used as a second-best proxy. 2016
The study's evidence base is a PitchBook dataset of 77,508 United States venture capital deals involving 37,298 companies from 2005 through 2015, covering all venture capital deals and all venture capital stages. 2016
A more granular assessment of venture capital investments in Big Data and software as a service can provide regulators with much needed feedback on the regulatory needs associated with those areas. 2016
Although aggregate venture capital sector data arguably only confirms what media reporting already showed for 2005 to 2015, the venture capital data, especially examined granularly, may provide earlier signals for regulators to identify areas of prospective regulatory need. 2016
The dominance of later stage venture capital investments could be read as risk-averse follow-on behavior, but venture capital funds are unlikely to make later stage investments unless portfolio companies substantially fulfilled their contractual performance obligations, which preserves the signal value of the data. 2016
Venture capitalists' finance allocation and their implicit assessment of innovative products, businesses, and initiatives generate highly relevant institution-specific and industry-specific decentralized information on innovation trends. 2016
Regulation is mostly reactive and follows business cycles rather than being proactive; data on venture capital investments lets regulators see where innovation trends are heading and what risks they entail before the disruptive innovation actually materializes. 2016
Feedback effects from venture capitalists' finance allocations toward innovative products give rulemakers timely, decentralized, industry-specific and entity-specific information that allows them to adapt rules in anticipation of regulatory issues. 2016
The decline in later stage robotics and drone investment rounds in the United States does not indicate stalled technological development; companies relocate later stage development to other countries because of the regulatory disconnect that exists in the United States. 2016
The authors concede that the trend for venture-capital-financed technology companies to stay private and the market undervaluation of formerly venture-capital-financed companies mean the innovation potential identified by venture capital finance allocation may not always be shared by the market at large. 2016
Even if regulators could obtain the depth of information needed for anticipatory rulemaking, acting on venture capital signals risks wasting scarce regulatory resources, because venture capital funds make many investments that do not succeed and companies still incubating may raise no clear regulatory issues. 2016
Companies that received venture capital investments have outrun and continue to outrun regulation and regulatory efforts, and they drive innovation trends in the United States and abroad. 2016
Venture capital investment allocation data can help facilitate anticipatory regulation of disruptive innovation, but it is only one of several emerging data sources usable for signaling in regulatory process optimization. 2016
In the unprecedented low interest rate environment prevailing since 2005, investment managers responded to retail investors reaching for yield by offering unconstrained mutual funds, a product that authorizes absolute return strategies in the fixed income world. 2016
Ex post trial and error rulemaking built on stable and presumptively optimal rules produces suboptimal regulatory outcomes that are no longer sustainable once disruptive innovation grows exponentially. 2016
Exponential disruptive innovation has the potential to overwhelm the existing regulatory process outright, not merely to strain it. 2016
Venture capital can function as a dynamic regulatory supplement for disruptive innovation because venture capitalists' financial allocations to innovative projects generate feedback that regulators can use. 2016
The empirical base for the argument is a PitchBook dataset covering 77,508 completed United States venture capital deals involving 37,298 companies across all venture capital stages from 2005 to 2015. 2016
Disruptive innovative technology frequently does not fit the legal categories created by recalcitrant regulatory structures, so the classification problem itself is a source of regulatory failure. 2016
When disruptive firms do not comply with existing rules or write their own exemptions because no appropriate rules exist, consumer protection and public safety goals are undermined and incumbent firms still bound by the rules suffer severe competitive disadvantages. 2016
Incumbent firms facing the competitive disadvantage created by disruptive entrants respond by using the existing regulatory process itself to build obstacles to competition, which converts rulemaking into an instrument of incumbent protection. 2016
The rising complexity of innovation driven regulatory issues confuses political and policy makers about rapidly emerging disruptive change, which makes a coherent political and policy solution to those challenges less likely. 2016
Rulemakers' inability to address the regulatory issues raised by disruptive innovation will generate high levels of legal uncertainty and inconsistency, and that uncertainty inhibits innovation during technological transition periods. 2016
Technological transition will be a permanent state in the age of disruptive innovation, so the uncertainty and inconsistency caused by rulemakers' inability to react in time is a standing condition rather than a transitional cost. 2016
The existing rulemaking process prohibits ex parte communications and insufficiently integrates brainstorming and ideas across industries, and therefore may actually undermine innovation rather than merely lag behind it. 2016
Regulatory timing under disruptive innovation is a two sided risk: regulate too early and innovation is inhibited, withhold regulation too long and consumers and markets are harmed once regulatory inertia has formed around the disruptive product or service. 2016
New regulations aimed at an innovative product can be obsolete before they are finalized. 2016
Exponential innovation will intensify the frequency of the regulatory sine curve, because rulemakers are still trying to comprehend the regulatory demands of the last wave of innovation while the next wave is already in full force. 2016
The data analysis shows that venture capitalists' finance allocation, and the implicit assessment of innovative products and businesses it embodies, generates highly relevant institution specific and industry specific decentralized information on innovation trends. 2016
Data on venture capital investments lets regulators see where innovation trends are forming and what risks they entail before the disruptive innovation materializes, which is the specific remedy for regulation's reactive timing. 2016
Industry specific venture capital investment data allows regulators to anticipate regulatory needs in the industries carrying the highest levels of disruptive innovation, and the level of disruptive innovation can be quantified by the venture capital dollars flowing into those industries. 2016
By identifying possible contingencies and necessary rule revisions from venture capital investment data ex ante, before disruptive innovation creates problems, regulators could anticipate regulatory needs instead of reacting to them. 2016
The authors concede a limitation of their own proposal: the innovation potential identified by venture capital finance allocation may not always be shared by the market at large. 2016
Venture capital has outrun regulation and regulation is now too slow to react, and that lag itself damages the process. 2016
The notice and comment procedures of the SEC are too slow, and the SEC's outdated micromanagement of markets is itself slowing down venture capital. 2016
Private fund advisers' increasing use of blockchain technology, artificial intelligence, and big data is a distinct source of downward pressure on the traditional 2/20 fee structure that commentators have not examined. 2017
The threshold for change for bigger fund managers is dictated by the implementation cost of the new technologies. 2017
Larger managers will be incentivized to begin the innovation process if and when they realize that smaller competitors using these technologies gain substantial operational efficiencies and cost savings. 2017
Large managers will begin adopting blockchain and related technologies only once the long term benefits exceed implementation cost, and because implementation cost is much higher for large managers than for the small managers now experimenting, adoption is delayed at the top of the industry. 2017
Blockchain enables managers to charge per transaction fees, and that capability undermines the existing two and twenty fee model. 2017
In the study's dataset the clear majority of private investment funds using blockchain technology are engaged in venture capital rather than hedge fund or private equity strategies. 2017
Regulatory uncertainty in this transitional era actively frustrates blockchain innovation rather than supplying the secure framework in which blockchain applications could flourish. 2017
Private investment funds entered the blockchain sector earlier than other financial players, yet because of legacy systems in private fund infrastructure the proportion of funds investing in blockchain is still small. 2017
Larger fund managers will adopt blockchain only once the long term benefits exceed implementation cost, and because that cost is much larger for them than for the smaller managers now experimenting, the threshold is higher for larger managers. 2017
Because American funds lean on smart contracting, they have a better opportunity to launch disruptive blockchain implementations, but they may also experience a higher rate of failure from greater exposure to technological risk. 2017
Fund type composition diverges across regions: in the United States hedge funds dominate the blockchain using sample, while in Europe venture capital funds clearly predominate. 2017
Initial coin offerings have overtaken venture capital as a funding channel for blockchain start ups, raising 331 million dollars in twelve months, and may become an alternative funding method for traditional companies as well. 2017
Ledger-keeping legal services such as notary and registry services, legal motions practice in court, and legal title companies are likely to be among the first services to disappear. 2017
Facts-based, ex-post, trial-and-error rulemaking cannot anticipate the regulatory issues created by innovation, so rulemakers may not realize, or may realize far too late, what new regulatory demands a given innovation generates. 2017
Formal rulemaking in the existing regulatory infrastructure is too time consuming, and the speed of product innovation frequently renders regulations pertaining to an innovative product obsolete before those regulations are even finalized. 2017
The existing regulatory infrastructure, resting on stable and presumptively optimal rules, is largely incapable of addressing the unknown future contingencies associated with disruptive innovation. 2017
Because the pace of innovation continues to accelerate, future contingencies in rulemaking are likely to grow substantially, which makes the dynamic anticipation of those contingencies increasingly important for rulemaking. 2017
The issuance of contingent capital securities is a promising dynamic regulatory mechanism that can help address the suboptimal regulatory outcomes associated with disruptive innovation. 2017
Deferred prosecution agreements and venture capital investment decisions function as dynamic regulatory tools because they increase the availability of relevant, decentralized, and timely information for rulemaking and facilitate feedback effects. 2017
The disruption of venture capital by ICOs is in part self-inflicted: venture capital funds continuously invested in innovation while insufficiently innovating their own business model, leaving them exposed to a more efficient financing tool. 2017
In the second quarter of 2017 ICO issuances exceeded venture capital financing of start-ups for the first time, with $210 million invested in ICOs versus $180 million invested into start-ups via traditional venture capital funds. 2017
The trend of ICO issuance exceeding venture capital financing can be expected to continue, because ICOs allocate capital more efficiently and at lower cost. 2017
ICOs are preferable to venture capital funding for many start-ups first and foremost because ICO promoters and their developers are not forced to sacrifice equity in the project in exchange for the funds they raise. 2017
Given the advantages of ICOs, traditional regulated IPOs and venture capital funds increasingly fail to adequately capitalize crypto and legacy ventures driven by new economic paradigms. 2017
On bankruptcy or termination of the platform, token holders typically have no liquidity preference and no recourse at all once debt holders and outside creditors are satisfied, so unlike a venture capital seed investor with at least a simple liquidity preference, they typically lose everything they invested. 2017
The core lawyer characteristics and skillsets produced by the existing legal education and regulatory framework are incompatible with what the practice of law in the 21st century demands. 2017
Disruptive innovation in law renders obsolete many and probably most of the traditional legal skills and characteristics that law schools currently cultivate. 2017
Even the law firms that are best at finding innovative solutions for clients remain reluctant to fully adopt Legal Tech innovations, so quality of client service does not predict willingness to adopt. 2017
Law schools that invest early in artificial intelligence, machine learning, and blockchain will gain a comparative advantage over peer schools irrespective of ranking, because demand for lawyers trained in those technologies is likely to spike once law firm adoption crosses a threshold. 2017
Legal Tech startups will force the legal profession to innovate perpetually, a demand that overextended and cumbersome legal organizations which have lost the capacity for agile reinvention cannot easily meet. 2017
Venture capital investment in blockchain startups has grown exponentially since 2012, which the authors read as an indicator of the technology's commercial maturity. 2017
Once blockchain technology gains wider acceptance and its applications reach consumers, existing legal processes and structures will likely be among the first processes to become redundant. 2017
Exponentially increasing disruptive innovation will lead clients to routinely bring legal professionals problems that those lawyers cannot fully understand, inside a legal framework that does not always supply clear or helpful answers. 2017
Law schools should educate lawyers who add value by helping clients and society adjust to the technological environment rather than lawyers who impose unnecessary or unwise restrictions on it, since such restrictions will not stop technological development anyway. 2017
The traditional legal tool kit worked adequately when innovation cycles were long, but where innovation is exponential it is regularly out of touch with the radically different needs of a decentralized world and often produces disastrous outcomes. 2017
Most lawyers and law industry representatives underestimate the implications of emerging Legal Tech. 2017
The obstacles preventing consumers and entrepreneurs from accessing a workable new technology are frequently not technological limits but human choices embodied in law: legal and regulatory rules prohibit or limit commercial exploitation of, and public access to, new technology. 2017
Regulation is never grounded in the full set of facts about a technology; it is always premised on a prior selection of the facts that regulators themselves treat as relevant when deciding what, when, and how to intervene. 2017
The time frame for rulemaking in the existing regulatory infrastructure is largely inadequate to address the regulatory challenges created by disruptive innovation. 2017
The speed of product innovation allows a new product to reach the market while formal rulemaking, which takes months and often years of procedure, is still occupied with the previous product launch. 2017
New regulations addressed to an innovative product can be obsolete before they are even finalized. 2017
The existing regulatory infrastructure cannot sufficiently distinguish beneficial innovation from other innovation, and therefore cannot harness it. 2017
Because technological transition is becoming a permanent state rather than an episode, rulemakers' inability to address the regulatory issues created by disruptive innovation will generate high levels of legal uncertainty and inconsistency. 2017
The relevant facts on which regulation rests are never going to be obvious or settled, so the regulation of any disruptive new technology will always be reactive and built on an uncertain and politicized factual basis. 2017
Because regulators seek to avoid grounds for criticism, they inevitably adopt an overly cautious posture, which is what the precautionary principle amounts to in practice. 2017
Regulatory caution produces a systematic disconnect between the regulation of an innovation and the commercial and consumer ability to access it. 2017
Faced with disruptive innovation, regulators believe their only options are reckless action, meaning regulation without sufficient facts, or paralysis, meaning doing nothing; in that bind caution beats risk and the precautionary principle becomes the default. 2017
Regulatory caution is not neutral: it functions to reinforce the status quo, with the result that new technologies struggle to reach the market in a timely or efficient manner. 2017
A fact based approach to regulation worked relatively well only under a specific historical condition: innovation cycles were long and disruption unfolded over decades, giving regulators time to get their facts in order before intervening. 2017
The automobile illustrates how long the old disruption lag was: Benz's engine did not displace the horse and carriage industry, and mainstream adoption came only in 1908 when Ford began mass producing the Model T, decades after the 1879 patent. 2017
Lawmaking and regulatory design need to become more proactive, dynamic, and responsive. 2017
In companies that concentrate on established products, the executives who understand innovation and consumer experience, the very people responsible for the firm's initial success, are pushed to the margins of core decision making. 2017
Mobilizing investors as stewards leads managers to ask the wrong questions about sustainable success: rather than pushing firms toward innovation and relevancy, such measures simply reinforce the centralized shareholder primacy view they were meant to soften. 2017
A focus on dividends and share buybacks makes it extremely difficult for a company to fund the innovation investment on which long-term relevancy depends. 2017
Despite the obvious benefits of technology applications in corporate governance, the technological revolution has not yet produced wide acceptance of unmediated or decentralized corporate governance structures and practices. 2017
Traditional coordination through hierarchy, command, and control is suboptimal for generating the innovation a firm needs to survive. 2017
Critics who dismiss artificial intelligence on boards as science fiction not worth engaging are wrong: AI on boards is a real prospect, and technologies such as blockchain-based smart contracts will both disrupt corporate governance and supply solutions to it. 2017
ICOs lower barriers to entry for a diverse body of investors and thereby increase the diversity and heterogeneity of start-up funding. 2018
In early Silicon Valley the contractual mechanisms lawyers designed, together with the lawyer dominated market for reputation, reduced information asymmetries between entrepreneurs and investors and were necessary to bring the demand and supply sides of venture capital together effectively. 2018
A transaction engineer is a crucial intermediary who brings together, in a safe environment, parties holding different but mutually compatible interests and expertise. 2018
The most important consequence of legal startups is that the legal profession will be forced to innovate in perpetuity, a task that overextended and cumbersome legal organizations which have lost the capacity for rapid re-invention cannot easily accomplish. 2018
Many new innovation driven firms that replaced hierarchy with a best-idea-wins culture have struggled to maintain that governance model and to fulfill their initial promise. 2018
Internet based platform businesses and distributed ledger technology businesses have not reached their full potential, and the core factor holding them back is worldwide decreasing trust in the internet together with under developed trust in decentralized technology solutions. 2018
The paper's central claims are that digital technologies have already disrupted centralized corporate organizations by enabling platforms, that this disruption will continue as blockchain based technologies proliferate, and that regulators must attend to these changes. 2018
It is the decentralized character of the blockchain, that is the distribution of the ledger to countless nodes in peer-to-peer networks, rather than any other feature, that makes the technology potentially disruptive. 2018
The compliance burden attached to operating an alternative trading system, including fees, consumer protection, examination, and books and records requirements, is typically cost prohibitive for startups. 2019
Regulators' relative unsophistication about the technology is itself a risk driver, because a poorly informed regulator is likely to over-react and precipitate new or expanded regulation. 2019
Regulatory uncertainty produces a chilling effect: because early adopters must apply traditional law to novel instruments and cannot reach a comfortable level of certainty, legacy businesses hold back from adoption. 2019
Blockchain is not a disruptive technology but a foundational technology, and its transformational impact therefore takes decades rather than years. 2019
Blockchain use cases involve interdependent structures, so development of any one area alone cannot succeed without the simultaneous existence of multiple additional support structures. 2019
Government-sponsored organizational experimentation that enables new business models and new organizational structures is desirable and may be one of the few ways to facilitate the needed corporate governance reform. 2019
The ICO share of total blockchain startup fundraising collapsed from about 80% to roughly 35% by August 2018, recovered only marginally to 40% to 50% through February 2019, and then fell to 20% in March 2019. 2019
ICOs changed the venture funding market because they provide investors liquidity far faster than the traditional venture capital path to a late IPO or acquisition, letting venture funds capitalize on profits early. 2019
During the ICO boom years the venture capital market in the decentralized technology sector ground to a halt, and the later demise of the ICO market reversed the trend back toward venture funding. 2019
Every time decentralization emerges in a given industry, profit margins disappear, as demonstrated by Skype in telecommunications and by Napster and Emule in the music industry. 2019
Market leaders, successful institutions, and managers fail specifically when they do not distinguish sustaining technologies from disruptive technologies. 2019
A market leader's lack of investment in disruptive technologies often causes abrupt loss of market dominance and even total replacement, because market leaders shortsightedly refuse to cannibalize their own dominance through disruptive technologies. 2019
Nokia, Kodak, and Blackberry all collapsed after fast changes in their markets rendered their products and services irrelevant, illustrating that successful companies drift into obscurity when they fail to embrace change. 2019
RegLegalTech startups will force the legal profession to innovate, but that task is not easily accomplished by overextended and cumbersome legal organizations that have lost the capacity for agile reinvention. 2019
Historical evidence demonstrates that every time decentralization emerges in a given industry, profit margins disappear. 2019
The shift of the digital asset market back from the ICO model to the venture model since late 2017 has reduced, not increased, diversification for investors. 2019
ICO funding collapsed as a share of blockchain startup fundraising, falling from 80% to around 35% by August 2018, recovering only marginally to 40% to 50% between September 2018 and February 2019, and dropping to 20% in March 2019. 2019
The legacy private investment fund model delays liquidity: the investment process is long, complex and time intensive and leads up to a very late liquidity event in the form of an IPO or acquisition, which is why funds seek the early liquidity cryptocurrencies provide. 2019
Cryptocurrencies created by blockchain start-ups generate investment returns that legacy investments cannot match. 2019
Large managers will begin innovating only once the long-term benefits of the technologies exceed their implementation cost, and because that cost is much larger for large managers than for the smaller managers currently experimenting, the threshold for change is higher for them. 2019
Additional direct limitations on hedge funds spill over onto other private investment pools such as venture capital funds and structured financings, which do not present the same systemic risk concerns. 2019
Regulatory uncertainty is holding back both the development of DAOs and the optimization potential DAOs offer for digital assets. 2020
The funding sources for digital asset and blockchain startups cycled through four stages since 2016 and 2017: equity funding, then initial coin offerings, then equity offerings, then initial exchange offerings, and back to equity funding by the early 2020s. 2020
By 2019 the ICO market had lost its defining advantage over venture capital: because most ICOs between 2018 and 2019 imposed one to three year lockups, neither market offered early liquidity to investors or issuers, making the two substantively similar. 2020
ICO issuance exceeded venture capital financing of startups for the first time in the second quarter of 2017, with $210 million invested through ICOs against $180 million invested through traditional venture capital funds. 2020
Immature markets such as the market for digital assets in 2020 often cannot attract the institutional investors and venture capitalists who have sufficient operating experience in that market, which is a self reinforcing constraint on market development. 2020
Early stage investing in digital assets is a relationships business, and without access to a network of core industry expertise early stage investments in the digital asset industry are rarely successful. 2020
Regulatory uncertainty is holding back both the development of DAOs and the potential of DAOs to optimize digital assets. 2021
The sharing economy requires a reframing of legacy legal regimes, because the legal frameworks regulating disrupted and adjacent industries are often incompatible with the trends the sharing economy generates. 2021
The success of the open source movement itself creates a vulnerability: major corporations can pressure smaller projects to reveal their code, then take it and exploit the work more profitably than the startup can. 2021
State chartered special purpose depository institutions remove some of the legal hurdles that burden technological advances, notably the reluctance of the existing banking sector to tailor AML and BSA compliance processes to the global and censorship resistant nature of cryptocurrencies. 2021
Centralized custody solutions and decentralized non custodial deal platforms will run in parallel until both are more established, and existing DeFi trends suggest the decentralized non custodial deal platforms will produce more innovation and better deals. 2021
Peer review exacerbates publication bias and can produce a cartelization of knowledge, because non-conforming innovative ideas may not receive full recognition and new findings that threaten existing hierarchies are delayed or denied recognition. 2021
Regulatory sandboxes are an instance of regulatory decentralization: by lowering regulatory barriers and costs for testing disruptive technologies while protecting consumers, the regulator fosters innovation in increasingly decentralized products and services. 2021
Improved incentive design is necessary but not sufficient for decentralization: better decentralized incentive designs can accelerate adoption, yet design alone will not produce the decentralization of business and society, because adoption depends on society's acceptance and use of the technology. 2021
Habits formed by analog era socialization are a decentralization neutralizer: people raised in the analog age hold work and social habits that are very hard to change, and they attribute superiority to outdated technology formats even when the content is identical. 2021
People coins and the innovations they created were largely subject to regulatory uncertainty and evolved much slower or not at all, so government and corporate coins created their own path dependencies and engrained product deficiencies with suboptimal levels of decentralization. 2021
Market leaders fail against disruptive technologies because they shortsightedly refuse to cannibalize their own dominant position, and that refusal often produces abrupt loss of market dominance or total replacement. 2021
Courts expanded software patentability without proof that it would increase innovation, and the result was that corporations filed and acquired thousands of software patents used to strategically undermine competitor projects. 2021
The internet has become a network of vertically and horizontally integrated monopolies whose information silos constrain knowledge exchange, and the resulting lack of competition impedes innovation including at the protocol level while diminishing consumer protection and rights. 2021
The electrical revolution took more than a century to mature because uniform standards for production, transmission, storage, and utilization had to be developed first, and decentralization faces the same standards bottleneck. 2021
Geographical monopolies over traffic control create information silos and constrain knowledge exchange, and the resulting lack of competition and cooperation impedes innovation, including at the protocol level, while diminishing consumer protection and rights. 2021
As the CRDAO iterates on its design and moves into subsequent phases, the larger web3 community will continue to benefit from its key innovations. 2021
The lack of developer liberalization carries negative societal consequences: when developers are restrained from building what they see as cutting edge and socially beneficial, society's own capacity to experiment with new technology is severely hampered. 2021
In the proposed DAO investment club, members substitute reputation non fungible token staking for capital commitments on incoming deals, the public market supplies the funding for approved deals, and members are compensated through 20 percent of the public return on purchases minted into a fungible reputation token. 2021
The key difference from the traditional venture capital model is that the DAOIC only makes its investment choices public and never provides investment analysis, so public co purchases are entirely voluntary. 2021
The rapid growth of digital asset startups into billion dollar businesses with little or no venture capital funding demonstrates that the traditional venture capital model alone was not enough to meet the funding needs of technology startups. 2021
Decentralized reputation governance models in venture capital have the potential to upgrade the venture capital market. 2021
Lack of liquidity is one of the biggest problems in the traditional venture capital ecosystem, and the traditional VC model disincentivizes generating early profits because capital is locked in for an extended period of time. 2021
Early stage funding fell from thirty five to twenty seven percent of total VC funding as venture capitalists increasingly focused on funding later stage companies. 2021
Deal evaluation and risk assessment in traditional venture capital is fraught with inaccuracies and suboptimal incentives. 2021
A drawback of the traditional VC evaluation process is that perceptual, emotional, and cognitive processes affect the investment decision alongside financial considerations, because the evaluation criteria are applied through subjective human decision making. 2021
None of the standard VC deal evaluation criteria reflect how a prospective deal may correlate with a deal already held in the capitalist's investment portfolio. 2021
Significant information asymmetries in venture capital can lead portfolio company managers to engage in opportunistic behavior after an investment is made. 2021
Because venture capitalists typically want to cash out their gains five to ten years after the initial investment, they play an active role in directing portfolio companies toward a merger, acquisition, or public offering, which can carry significant downsides for those companies and their products. 2021
Because traditional VCs need to defend their investment choices to their own investors, they are often reluctant to invest in digital asset startups that have little history or sales records. 2021
As a rule of thumb in early investment rounds, the lower the information asymmetry the lower the payout, and below a certain threshold of established value venture capitalists will rarely invest at all. 2021
At its peak in the 2019 cycle the volume of initial coin offerings surpassed venture capital firms and business angels as a fundraising method for startups. 2021
Information asymmetries increase in traditional VC investment rounds because startups are incentivized to self censor when engaging with VCs, having little data to work with and being reluctant to overexpose themselves to prospective investors. 2021
The typical VC fee based compensation structure can lead to serious shortcomings, including excessive fundraising, suboptimal investments, misevaluation, and overfunding of portfolio companies during a fund's holding period. 2021