Archive for October, 2009



Trading Currency For Yield

Friday 30 October 2009 @ 6:51 pm

Most investors don't realize this but investing is a simple exercise is trading one currency for another. In the foreign exchange market in order to buy a currency you must sell another one in a pair. For example to buy the US Dollar you must sell another currency such as the Euro. The system is built this way because all markets are dynamic and all instruments are relative to each other.

The stock market is another example of this. In the US, we pay US dollars for a share of a public company's stock. In essence you must short the US Dollar and go long the equity of the company you are investing in.

Similarly, a purchase of private stock is the same transaction. Going long the private company's stock and short the US Dollar.

You can take this example on to Real Estate. If you prefer the cash flows of a building more than idle cash, you essentially are going long on Real Estate and short on the US Dollar sitting idle in a bank account.

The reason I am bringing this up is that investors need to understand that purchasing power and money flow to the highest yields. Forex investors know this all too well via carry trades (purchasing high yielding currency while selling low yielding currency).

Whatever it may be that you are selling (public stock, private stock, a product, a service) you need to understand that investors who buy what you are selling are essentially going long what they are buying. And they are going short dollars to make this transaction. They are investing because they expect and demand yield from their purchase.

Knowing this simple fact will enable you to structure transactions that are competitive with other yields available in the market. Similarly, you will be able to provide returns commensurate with expectations. If you want to take it a step further you can do what all investors love – underpromise and overdeliver.




The Hockey Stick Effect and getting to $50m

Friday 23 October 2009 @ 10:54 am

Christian Chabot has a timely – and sobering reminder on IPO Dashboards re. how long it takes for a start-up to achieve meaningful revenues at scale (Hat Tip: Guy Kawasaki).
As he says:
…growth conversations between VCs and management teams often cause angst. One of the reasons is that people from both groups tend to have unsubstantiated [...]




Links for 2009-10-18 [Digg]

Sunday 18 October 2009 @ 11:00 pm
  • New Amdocs initiative invests in Amobee and other startups

    Amdocs introduced its new Open Innovation program recently that will help it connect with startups that relate to its technology. Part of the initiative is Amdocs Venture, an investment fund that has already invested in the mobile technology companies, Amobee and Trivenet.




Getting out of Venture Capital…kind of

Thursday 1 October 2009 @ 1:19 pm
Dear All: For those of you who may not already know, I am leaving Amadeus at the end of eight long years – of what has been an amazingly rich and educative experience. I am leaving to spend more time in (and on) India and a few personal passions. I will continue to scout for interesting seed [...]