The investment space can be challenging to navigate. It’s fast-paced, highly strategic, and allows little room for error. However, both experienced and new-to-the-scene investors will develop their understanding of venture capital by reading Sebastian Mallaby’s “The Power Law: Venture Capital and the Making of the New Future.”

Featuring the successes of venture capital’s finest — from Yuri Milner’s DST Global to Y Combinator — Mallaby reveals how the power law has worked for these firms.

Getting To Grips With the Power Law

According to the power law, most of a successful venture capitalist’s investments must fail. Investments with no return are characteristic of a venture capitalist who has invested in a range of high-risk companies.

Such companies are often tech startups that have the potential to become unicorns — private technology companies with valuations over $1 million. They’re also often companies that crash. While many will fail, a venture capitalist who invests in a future unicorn will see returns of at least 10x.

Mallaby explains that as only a few startups will provide high returns, venture capitalists must also develop strong exit strategies. They may achieve this by capitalizing on initial public offerings (IPOs) and acquisition opportunities.

Either way, the aim is to leverage liquidity opportunities so they can continue focusing on the startups showing the most potential.

Icons In Venture Capital

The power law has proven itself time and time again in venture capital. Take Y Combinator, which backs tech startups. In 2012, just 2 of its 280 investments generated three-quarters of its total profits. Similarly, the investment company Horsley Bridge generated 60% of its total returns between 1985 and 2014 from 5% of its capital.

Then there’s Arthur Rock. His early investments included funds for two significant companies: Intel and Apple. These investments alone helped establish Silicon Valley as a global technology hotspot.

Other examples include Peter Thiel, whose early $500,000 investment in Facebook helped modernize social media, and Reid Hoffman, who was one of the biggest players in Airbnb’s growth.

One of the most notable power law examples Mallaby includes is Yuri Milner, who made an infamous investment in Facebook that influenced the entire venture capital space.

Yuri Milner’s Proposal for Facebook

A high level of research went into Milner’s investment proposal for Facebook. He knew that many other investors thought the social media platform would soon flatline. However, his worldwide data collection suggested otherwise. For example, he could see that the platform had yet to tap into revenue-generating activities directly involving users.

He also knew that founder Mark Zuckerberg had turned down propositions from investors who wanted board seats. With this in mind, Milner drew up an offer that didn’t involve him holding any control over the company.

This, combined with an offer to buy employee stock on top of his shares, created an incredibly appealing proposal, which Zuckerberg accepted. A year and a half later, Facebook’s value had soared to $50 billion.

Yuri Milner’s Continued Investment and Philanthropic Success

Milner emerged profitable enough to continue building an enviable portfolio featuring companies like WhatsApp, Snapchat, JD, Alibaba, and Twitter (now X).

As his wealth grew, he shifted from venture capital into philanthropy, signing the Giving Pledge in 2012. Becoming a Giving Pledge signatory meant agreeing to donate most of his wealth to charitable causes.

Milner opened his Breakthrough Foundation, which funds his philanthropic efforts. He then wrote Eureka Manifesto: The Mission for Our Civilization, a short book detailing his vision for humanity’s shared goal: to explore and understand our Universe.

Read or download Eureka Manifesto online.

Are UK homeowners still wanting to move?

Press Release

Date: 19.07.2023

New Open Property Group research looks into where UK homeowners are moving to, and if there is a pattern between homeowners moving out of the city and into the countryside.

Out of 1.25 million homeowners surveyed:

• 357,244 stated that they ‘want to move’
• 251,705 stated that they ‘are moving soon’
• 242,711 stated that they ‘are settling in’
• 206,694 stated that they ‘just moved’
• 187,001 stated that they ‘are moving now’

Are homeowners still moving to the countryside since the surge in remote-working and the ever-growing desire for more green-space?

When surveyed, 39% of homeowners specified that wildlife and nature were “more important than ever” to their well-being, and 45% of adults are spending more time outside than they did pre-pandemic.

Despite this, recent data shows that people moving to sparse or remote villages actually dropped by 28%. Adding to this, from 2017 to 2023, the number of homeowners looking to move to remote or sparse settlements actually decreased by 13%

Open Property Group Managing Director, Jason Harris-Cohen said:

“The UK’s property market is undergoing another reset,” says Jason. “There is a definite shift in home moving activity, with the West of the country surging in popularity.

Historically, better value for money has been found outside of London, the South East and the big five cities, and I think that’s what is driving home movers towards Wales and the West coast.”

“The desire for affordability in a cost of living crisis is being compounded by the current relationship between inflation, the Bank of England base rate and mortgage rates.

The rates attached to new home loans, remortgages and additional finance are seriously squeezing buyers’ budgets but there is still a strong desire to move – people are just having to moderate where they look and what they buy.”

“Semi-rural and rural locations will continue to be cheaper places to buy than urban and inner city areas. This will be especially so in the coming months as more people return to offices for work and potentially relocate to reduce commuting times – aspects that will cause metropolitan house prices to rebound .

While the statistics show the trend for rural living has actually declined over the last six years – we may see a surge as purchasers pursue well priced properties.

We’ll also see borrowers taking out mortgages over 30 years – or even enquire about interest-only mortgages – to negate the effects of higher repayment rates.”

“Of course, there will be a large contingent of homeowners who are biding their time before they move – the 357,244 who have indicated they ‘want to move’. This group will be waiting for mortgage rates to fall and house prices to drop before they progress their plans.

In the meantime, they may choose to improve their properties – enhancing their living environment for the present and adding value at the same time. It’s not unimaginable that these delayed movers will fuel a property peak in late 2024/early 2025.”

For more information please visit www.openpropertygroup.com

About Open Property Group

Open Property Group are a professional house buying company who help people sell their properties quickly. They buy all types of properties (including vacant or let), throughout England and Wales.

Open Property Group specialise in buy to let property purchasing which suit landlords who want to cash in property quickly without disrupting the tenants.

Homeowners benefit from selling their house fast, with a completion date fixed to the owners’ requirements. By selling directly, you pay no agent fees, ‎and can plan ahead with certainty. We also pay your agreed legal costs too.

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How to Get the Best Market Value for Your Tenanted Property

Selling a tenanted property can be a smart move for buy-to-let investors looking to maximize their returns. By selling with tenants in place, landlords can attract a broader pool of potential buyers, maintain rental income during the sales process, and potentially achieve a higher market value for their property.

If you’re considering selling your tenanted property, here are some key strategies to help you get the best market value:

1. Showcase a Well-Maintained Property

First impressions matter, so it’s essential to present your tenanted property in the best possible light. Ensure that the property is well-maintained and in good condition.

Conduct a thorough inspection to identify any necessary repairs or improvements and address them before listing the property.

A well-presented property will attract more potential buyers and create a positive perception of its value.

2. Highlight the Rental Income Potential

One of the advantages of selling a tenanted property is the potential for immediate rental income for the buyer. Emphasize the property’s rental income history and highlight its attractiveness as an investment opportunity.

Provide potential buyers with detailed information about the rental agreement, current rental income, and any potential for rental growth. This will appeal to investors looking for income-generating properties and can positively impact the market value.

3. Offer Flexible Viewing Options

Allowing potential buyers to view the property at convenient times can help generate more interest and potentially lead to higher offers.

Coordinate with your tenants to establish a viewing schedule that accommodates both their needs and the prospective buyers.

Flexibility in arranging viewings demonstrates your commitment to a smooth sales process and encourages serious buyers to consider the property seriously.

4. Provide Detailed Documentation

To reassure potential buyers and help them make informed decisions, provide comprehensive documentation about the property. This includes the tenancy agreement, inventory reports, gas and electrical safety certificates, and any relevant building permissions or certifications.

Transparency and thoroughness in providing documentation will build trust and confidence in the property, potentially leading to higher offers.

5. Consider Selling to an Investor

When selling a tenanted property, consider targeting investors specifically. Investors are often more inclined to purchase tenanted properties as they recognize the benefits of an immediate rental income stream.

Approach local property investment companies or work with an estate agent experienced in selling to investors. By targeting the right buyer pool, you increase the likelihood of receiving offers closer to or even above the market value.

6. Seek Professional Advice

Selling a tenanted property can be complex, so it’s advisable to seek professional advice from an experienced estate agent or property consultant. They can guide you through the sales process, help you determine the optimal pricing strategy, and market your property effectively to attract potential buyers.

Their expertise and knowledge of the local market can be instrumental in achieving the best market value for your tenanted property.

In conclusion, selling a tenanted property can be a lucrative opportunity for buy-to-let investors to maximize their returns.

By showcasing a well-maintained property, highlighting the rental income potential, offering flexible viewing options, providing detailed documentation, targeting investors, and seeking professional advice, you can increase your chances of achieving the best market value.

Remember, a well-informed and strategic approach is key to successfully selling your tenanted property and reaping the rewards of your investment.