There is no better time to be an entrepreneur than now. The world is changing at a rapid pace, and the tools available to entrepreneurs are more powerful than ever before.

Abundance of Capital

Capital is the lifeblood of innovation: it smooths out the reality that the risk profile of any business can be priced, and from that, capital can be injected in to accelerate de-risking.

Access to capital is therefore upstream of all the change that innovators make: capital allocators— banks who give out loans, venture capital investors, non-profit donors. Where the market determines what experiments or business hypotheses succeed, capital allocators decide what experiments are even allowed to take place, by voting with their dollars.

Unfortunately, very little has been done to improve the way that this new form of capital— risk capital— forms. For example, venture capital investors’ standard “2 and 20” business model was a borrowed model from private equity, which borrowed from hedge funds dating as early as Alfred Winslow Jones’s 1949 hedge fund. Jones decided to charge a 20% profit share (carried interest) because he was inspired by Phoenician merchants charging one-fifth of profits from a successful journey. This has become the standard business model— based on an old tale.

Couple together the perverse incentive of capital allocators to optimize for short-term fee earning over assets that take too long to liquidate, and the fact that very few people, if at all, are able to participate in the industry of risk capital where wealth generation truly happens, and you have yourself a very bleak reality: capital allocators are largely in control the narrative of innovation.

Thankfully, this is changing at a rapid pace. There is a shift in mindset of how to re-think capital formation: instead of treating it as a valuable asset that only few can form, and only few can access, it can now be viewed as a form of infrastructure. By way of analogy, think of how the web has matured: there was a time not too long ago where you needed an ungodly amount of specific knowledge just to be able to have a website. You had to build entire organizations that could do the coding, networking, server rack design and maintenance, thermals, and load management just to spin up a website. Now, we call the majority of that labor “infrastructure” and make it widely available at low cost and high accessibility via services like Amazon Web Services.

Where is the AWS of risk capital? Where is the one-stop shop for founders to find funders, and funders to fund founders?

At Seed Labs, we hope to be building exactly that. Our investing infrastructure drops the cost of doing business by orders of magnitude, which has allowed for:

1. Investors who have never had high-enough check sizes to finally access the private markets, bringing net-new capital into the innovation economy
2. Founders who were too early or too un-networked to access institutional capital allocators to raise from their community, enabling a whole world of entrepreneurs to get early capital seeded.

Capital is en route to abundance. Capital will be treated as infrastructure, and soon, any business (or business idea) will be able to find funders that are willing to underwrite risk in exchange for equity in a frictionless manner.

Abundance of Leverage

Business is all about levering up. Whether you’re building a rocket-propulsion company, a software startup, your own private practice for your medical specialty, or a restaurant, the goal of a business owner is about finding greater points of leverage to operate their business. The donut shop owner starts their career making the donuts, brewing the coffee, and manning the register. As they grow, they reach a point of stability where the benefits of hiring someone to brew the coffee outweighs the risks of spending the cash of hiring them.

The labor equation is changing rapidly.

One of the most important graphs you could’ve looked at in the early 2000s to predict the future was the Moores Law graph: the observation that the number of transistors on a microchip doubles approximately every two years, leading to stronger compute at lower cost. The next graph to pay close attention to is LLM inference price:

Human-like intelligence is en route to commoditization: it will soon be as freely available as water and energy. In the same way we thought the telecommunications industry would eventually “stop” at developed countries, we saw the trend line continue, and now some of the most remote areas of the world have access to smart phones and 4G data. So too will the intelligence narrative follow a similar arc.

What happens in a world where intelligence is on tap? What happens when one individual who is able to wield these tools effectively has effectively a team of PhDs, interns, financial analysts, and engineers, working 24/7 for nearly-negligible cost?

In world where leverage changes, the way we assess the risk profile of all businesses will also need to change. And when the risk profile changes, entirely new opportunities emerge. Businesses that wouldn’t have ever made sense in the pre-AI era will suddenly now make a lot of sense.

Entrepreneurship: aligning incentives

In an accelerating world where disintermediation is the norm and disruption is a daily phenomena, what jobs will remain? What should people across all layers of the labor market do?

Like biological systems, socio-economic systems are dynamic environments that require adaption. Mutations that fail (humans don’t need a tail) only look foolish in the rear view mirror (humans needed bipedal movement). The uncertainty of the future is a feature, not a bug, of human progress.

Entrepreneurship and business ownership is the final frontier of employment: it is the only job where your incentives are aligned to keep disrupting yourself. When you have significant equity in your business, you have a stake in seeing an entity create massive value. When you are primarily just cash-compensated, the incentive lay in justifying your existence in its current shape within an organization.