US vs BR, Marketing, Entertainment and Recommended Readings
Highlights of articles I've read lately and some thoughts on the market #53
Welcome to Notes by Letícia, a biweekly newsletter, in which I share my perspective about the Venture Capital market. My objective is to share my thoughts and bring up rich discussions about this ecossystem, from why it is how it is, to deep dive on some sectors.
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I’ve been reading a lot of great articles and researches lately, so I thought I would dedicate this week’s newsletter to share some highlights of what I’ve been reading for the last couple of weeks and also some thoughts regarding the overall market.
Marketing and entertainment Industry - how will that change in the next couple of years
I've been writing about this topic for some time (here and here), from different perspectives but with the same main point: the power of attention.
According to The Gauge study by Nielsen, in July 2024, YouTube had over 10% of total TV viewing, becoming the first streaming platform to reach this position
Cazé TV reached 41 million devices and over 5 billion views, with more than 80% of the audience under 44 years old
Even small things, like the increased presence of Hollywood artists doing promotions for new movies and non-native digital dicelebrities, are increasingly trying to position themselves where the most attention is focused
I'm quite bullish about the change in dynamics and the unlocking of value in new areas with the development of the creator economy, the differences between current and future generations and the rise of new technologies such as AI. We are at the beginning of the wave, and those who can ride it will achieve great success.
This movement has two perspectives: using this moment as the main driver for solving a problem and employing growth and relevance tactics in the current situation, such as creators as fans and possibly investors—"free" acquisition channels with aligned incentives (check this article by Jaryd, where he shares a case of a startup that brings on creators as investors).
If you want to deep-dive on the topic, check out this episode of Abreu Podcast, with Rapha Avellar (founder of Brandlovrs).
US vs BR - Can BR sustainably continue with this trend? (Spectra Investment Letter July 2024)
Spectra Investments brought up an interesting discussion about the prices in the Venture Capital market, particularly regarding growth over the years and a comparison with the US.
There are some interesting aspects about the rise in valuations of brazilian startups from 2017 until 2023, mostly due to (i) an increase in competition (due to the natural growth of the asset class and the number of new entrants around 2021), (ii) a natural rise in prices, and (iii) US VC market influence.
When comparing seed valuations between those in the US and in Brazil the discount is only at 13%, even with the possibility of an exit opportunity being higher in the US, mainly due to having a bigger market (see more about the math behind this here). Spectra explains that, in their view, this is primarily due to past returns in the VC market, which created a high interest in the asset class, and consequently, the rise in prices.
But what is important to remember is that past perfomance does not mean future returns. Also, as I mentioned previously, the scenario in the US is very different from Brazil, from culture, history and actual number of investors and attention the region receives changes the math behind maximum returns and entry valuations in Brazil. However, as Spectra mentions, the best funds are able to play the same game, though this is not true for the majority of the market.
Recommendations
⬛ The AI summer - Benedict Evans
⬛ Scoop: What former employees of OpenAI are worried about - Gary Marcus
⬛ Mo' Money, Mo' Problems - Kyle Harrison (Investing 101)
⬛ Why doesn't the USA have a Nubank scale Digital Bank? - Fintech Brainfood
⬛ PayPal: A Fintech OG rejoining the Fastlane - This Week in Fintech