Investing in the Next Generation of the Internet
It's hard to overstate the impact of the Internet. Interactive, instantaneous, ubiquitous, it has touched every facet of our world, becoming embedded in our daily routines and changing the way we live, work and communicate.
But not long ago, the scope of the Internet Revolution wasn't so obvious to everyone. Those who had the vision to invest in companies that led the early stages of Internet development have profited mightily. The success of The Internet Fund, founded in 1996, is a matter of record.
We believe that the early stage is over. The next generation has begun -- with vast but different opportunities. Companies that have already gone through "hyper-growth" now dominate their fields and are unlikely to duplicate those growth levels. Instead, new kinds of services and products have been made possible by the Internet's extensive infrastructural development. At the same time, familiar businesses are radically reinventing themselves and using the Internet's reach and efficiency to tap new markets.
The Fund focuses on the following five investment themes:
Undiscovered: We are finding companies that are reinventing their business models to take advantage of the economics and reach of the Internet... companies whose business models naturally lend themselves to the Internet... corporations positioning themselves to use the Internet as an unlimited pipeline for their products, services and ideas.
Proprietary Infrastructure: Building broadband infrastructure requires such a vast, long-term commitment of capital and technical expertise that competition is limited. Companies that show sustainable revenue streams through ownership of unique "channel access" therefore offer excellent long-term prospects.
Proprietary Content: Identifying companies that have demonstrated the ability to create content that is unique and therefore competition-resistant, and whose strong business models indicate that they can profit from delivering content well into the future.
Early Life Cycle: Getting in on the ground floor is clearly the way to participate in an Internet company's growth. Given the difficulty of acquiring a significant position in attractive IPO's, we are mainly investing in these firms indirectly -- through venture capital "incubator" firms. The Fund can also take advantage of rights offerings and private placements as available.
International: Many companies seek to capitalize on the global nature of the Internet. Those which can attain a leadership position in their markets will also capture an enormous opportunity. We invest in companies we believe have the potential to be dominant players in these expanding international markets.
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Because the Fund invests in a single industry, its shares do not represent a complete investment program. Internet stocks are subject to a rate of change in technology, obsolescence and competition which is generally higher than that of other industries, and have experienced extreme price and volume fluctuations. As a non-diversified and single industry fund, the value of its shares may fluctuate more than shares invested in a broader range of industries and companies
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