M FoundationThematics | EuropeVenture Vision: Let's Put $7 Trillion in PerspectiveMorgan Stanley & Co. International plc+Edward StanleyEquity Strategist Edward.Stanley@morganstanley.com +44 20 7425-0840 Matias OvrumEquity Strategist Matias.Ovrum@morganstanley.com +44 20 7425-9902 Our Venture Vision weeklies look at (1) early-stage cross-theme funding patterns; (2) relative valuations between themes; (3) public versus private valuations; (4) the resulting anomalies within certain themes. Please let us know if you would like our excel database of >45,000 VC deals categorised by theme, country, value and date. We also send this file as a weekly distribution if you would like to receive it regularly. See here for our global market synopsis. See here for our longer analysis on the state of the VC market, particularly as it relates to non-US Venture and innovation acceleration. Even if only half of the mooted $7 trillion figure ends up being raised for AI chip output, the amount would exceed the value of all start-ups globally and all US venture funding...ever. Even if pie-in-the-sky, it reinforces our view that Security capex is a winning theme in a Multipolar tech worldJoin us for an expert call to discuss the improving private market cycle - Feb 23rd 2.30pm UKSee here for our original thesis - Seeking Security in a Multipolar World What's happened?: While not the first time, recent speculation in the press with regard to Sam Altman seeking to raise capital for vertically integrated AI through both consumer hardware and upstream chip capacity took an exponential turn last week. The WSJ reported investors being sounded out for between $5-$7trn for this chip endeavour. Clearly - or until more is announced - one cannot (1) ascribe particular weight to this figure, nor (2) the likelihood of whether it could even ease mid-term supply bottlenecks or (3) judge whether custom silicon backed by this degree of funding stands a chance of closing the quality gap to the best-in-class GPU hardware.What can $7 trillion buy you?: In the spirit of this series of reports, $7 trillion surpasses funding (in real $ terms) for >300,000 businesses across 850,000 global funding rounds back to 1980. It is therefore, comfortably more than all the US venture funding ever raised. The figure is >5x larger than Taiwan's PPP GDP. In fact even the reported lower end at $5trn could acquire every start-up on the planet with another $2trn in change. The number dwarfs annual Magnificent 7's capex outlays combined (...even the aggregate figure over the past decade). It is double the market value of NVIDIA, AMD, Intel and TSMC combined (shown above).Is this comparable to venture in any way? Venture is about power laws. Outlier IP backed by - historically - relatively small tickets leading to scale up anomalous exit valuations. It has typically been the domain of...
