Introducing the ShitCo Index

Def. not investment advice

I’ve had a long held belief that the wipeout of pre-mature IPOs and SPACs have presented an interesting and unique opportunity for the public to invest in a style similar to mid to late stage VCs. After all, these companies have achieved the following: (1) crossed a certain threshold that lessens technology risk, (2) product market fit, (3) put together enough controls in place to run as a business.

Investing in any one of these companies would be dangerous, but when taken together as a portfolio, I do believe its possible to achieve above market returns. My goal is to track this over a 2-3 year horizon and see how they achieve against ARKK and the NASDAQ, starting date of March 17, 2023. To make this more tangible, I’ve allocated $200k of personal capital to this little experiment. Equal weighed across 38 companies.

For starters, lets be clear on the following:

• Many of these companies will not make it

• Many of these companies will need dilutive financing to continue

• Many of these companies have significant headwinds (mortgage, credit, etc.)

• Many of these companies risk, even if they stay afloat, might end up being Zombies that go no where

Having said that, many of these companies also have potential to be something big if their vision is realized. To give a few example:

• If SoundHound can gather broader adoption, it will be the only credible standalone voice recognition technology that exists outside of Amazon, Microsoft

• If Origin succeeds, it would become the leading de-carbonization platform

the portfolio also includes a set of companies that I consider to be deep value in tech where liquidity isnt an issue but the macro backdrop has caused them to re-rate to a level where they are cheap but doesn’t offer a compelling near-term reason to own individually (RNG, ZENV, etc.)

So how does the math work? To double my money over 5 years (roughly 15% CAGR) Here’s a few example scenarios below - my baseline is 30-40% mortality rates:

• Mortality rate of 60%: Need remaining to 6.5x over 5 years

• Mortality rate of 50%: 5x

• Mortality rate of 40%: 4x

• Mortality rate of 30%: ~3.3x

• Mortality rate of 20%: 2.75x

• Mortality rate of 10%: ~2.3x

• Mortality rate of 0%: 2x

Here is the list (EV values are from CapIQ so not precise and maybe wrong):