reality distortion // reality change

Admittedly, it felt like a disappointing reaction to my zeal for re-thinking and evolving the private markets investment process. 

‘Startup investing will never be entirely digital’.  

A clear statement from an experienced operator in the VC field whose opinion carries weight for me. Curb your enthusiasm. 

Then I thought about it. We observe and assess future possibilities from today’s realities. Very few engage in reality distortion and much, much fewer do so successfully. But that tiny group ends up changing the world. So far, so known and broadly discussed.  

One thing we tend to forget in this context:

Reality distortion is just one way. What if today’s reality actually changes?

Suddenly new ways to do things seem possible that were inconceivable before. 

This is what I see happening in the private market investment process today.  

Take due diligence as an example. In my conversations just 6 months ago, expert after expert confirmed that it will be practically impossible to properly assess a team and their company from a distance, regardless which advanced technology you may use. There need to be boots on the ground. Personal conversations, developing a feeling for the people, their body language and aura (yes, that was the term used); office and site visits, physical review of documents and tangible assets. It is a thorough list. One conversation partner expressed: even if we love to invest, if we don’t have time or budget to fly and visit the company for thorough due diligence on site, we’ll pass on the deal. Right there, the use case of digitising the investment process end-to-end collapses quickly, not reaching its full potential. 

Fast forward to today. 

Reality changed. 

You know what I am getting to. 

With all of us adapting to a remote-first setup in many lines of work, within months we have seen first a small and now increasingly sizeable movement to also digitise the un-digitisable: due diligence. The verdict: video is fine.

This seems to be happening particularly in earlier stage and venture capital investments. With mental blocks out of the way, creativity rises. What if we live streamed office visits, held ask-me-anything sessions, booked many distributed one on one conversations that can go deep, as an alternative to people flying around to have meetings and share generic presentations? Just look at analogue developments in IPO roadshows.  

Yes, I hear you. It is still not quite the same as a ‘meeting in person’. Agreed; and this is where things get interesting with the need to venture into philosophy and metaphysics. What exactly constitutes a meeting in person, and can we recreate that with connecting remotely? Is a video call not a meeting in person? How is it different and what exactly are the elements that make it less personal? I am fascinated by these questions and always keen to debate them. For here and now, it is safe to assume that lots of engineers in all corners of the world are working to completely redefine what a remote conversation is. While we are fiddling with virtual backgrounds, they are building new virtual realities.  

So, what does all of this really mean?  

It is an example, a reminder to keep going, trying to understand the underlying factors that prevent a change from happening—and realising that if you stay at it long enough, reality might shift to accelerate that needed change dramatically and make it all possible. 

And if not, you’ll always have reality distortion.