The Lossless Group · A primer

Networked Capital

The advantages of Open Innovation in Finance

Michael Staton · Made for Hypernova Capital

Key Pillars

01

Open Innovation

Leveraging external networks to drive innovation and collaboration.

02

Networked Capital

Building a network of loosely involved parties to support innovation and collaboration.

The belief

More value is created by the exchange of ideas and knowledge across different organizations, sectors, industries, and even countries, than by small teams of elite professionals working in relative isolation.

Relative isolation
Exchange across

Funds as instruments

Impact, Transformation, and Returns are hamstrung by a very siloed reality.

Fund managers only manage whatever kind of instrument or vehicle that they manage, they almost never have more than one fund structure instrument.

Why? It's the way the industry grew up. It has always been. No other reason.

We believe funds are instruments of change. And we need a symphony of instruments to create the change we need.

No single instrument can play every note.

It's not a normal distribution, it's a power law distribution.

For nearly two decades, data from organizations like Cambridge Associates and Pitchbook have shown that Venture Capital can dramatically outperform the market.

Allocating to venture broadly speaking will not outperform the market. Allocating to specific funds that generate those power-law, outsized returns will outperform the market.

Not to “average out,” but to “play to the best.”

Schematic shapes, not fund data. Dashed: normal. Solid: power law.

The “Fund of Funds” model has conundrums.

Plays to averages

A bet on “the average.”

Venture is a business of taking bold bets on potential outliers, and outliers are what drives returns.

Fees on fees

(2% + 20%) + (1% + 10%)

3% fees & 30% carry

Fees on Fees, Carry on Carry take a huge chunk off a decent return.

Made for Hypernova Capital

A Fund-with-Funds angle on Venture Capital

  • Moderate LP Commitments to the next generation of great fund managers.
  • Co-Investments and Direct Investments into high-potential, early stage companies.

Curate & Filter

We handpick alpha-generating fund managers.

Build Foresight Engines

We unite Hypernova’s investors with portfolio funds to foster collaboration.

Structure Aligned Opportunities

We don’t just invest in funds, we double down on their best performers.

hypernova.capital

Outside of press releases, media, and databases

Constant access to the latest market and technology development comes through deep, interpersonal relationships where information flows outside of press releases, media, and databases.

In private markets, all that matters is being “in the deal.”

Thank you

Networked Capital

Michael Staton · The Lossless Group · Made for Hypernova Capital

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