Dear investors,
There is one drawback to getting something for free: eventually, you get used to it.
For nearly 15 years, governments, companies and investors have lived in a world where money seemed almost endlessly available. Governments spent, companies invested, markets assigned value. Why choose when almost everything can be financed?
This era is coming to an end. Money has a price once again, and with it comes a discipline we may have been too quick to forget: the discipline of choice.
This shift is taking place at a time when capital needs have never been greater. The United States must simultaneously finance a staggering public debt and a technological revolution with an extraordinary appetite for investment. Data centres, semiconductors, digital memory, power generation: Augmented Intelligence requires infrastructure on a gargantuan scale. In my last letter, I discussed the upheavals it is set to bring. One question is now becoming more pressing: who will pay for it?
All of us, of course. Savers, investors and taxpayers are the ultimate providers of this capital. Governments and companies therefore find themselves competing for a finite pool of savings. There is nothing particularly new about this in economic terms, except that 15 years of easy money have almost made us forget that capital is scarce.
Europe must be careful not to cast itself as a victim of this new discipline. It needs to finance its defence, its energy independence and its infrastructure – and find the capital to plug its technological gap. After spending years regulating what it no longer knew how to produce, it will have to learn how to invest again. This awakening is welcome, but sovereignty is easier to proclaim than to finance.
How can we escape the formidable debt trap? If it proves lasting, the rise in interest rates – the scale of which we underestimated – would by itself increase interest costs by around 50% by 2030, both in the United States and France. At the same time, assuming budget deficits remain unchanged, public debt would rise from 100% to 110% in the United States and from 119% to 132% in France over the same period. These estimates do not even take into account the increase in pension costs resulting from demographic trends.
Easy money is a powerful anaesthetic. It allows governments to defer painful choices, keeps mediocre companies on life support and sustains the illusion among investors that all assets will eventually appreciate. When capital has a price again, projects must prove their worth and companies their ability to deliver a return on it.
Should this concern us? Scarcer money favours the most promising companies, particularly those harnessing Augmented Intelligence, while crowding out governments suffering from fiscal incontinence. Our role is to ensure you share in the success of companies that do not merely prosper in the world as it is but help shape the world to come. To date, we have backed Mistral, SpaceX, Revolut and Lovable in fundraising rounds ahead of their potential public listings – investing in what we believe could be tomorrow’s leaders and, where possible, giving our clients access to some of these opportunities through our funds. Augmented Intelligence, space exploration, new financial services, the software revolution: each, in its own way, is part of the profound transformation of our world.
When money was free, simply owning the market could be enough. When money becomes expensive again, choosing becomes essential. Choosing the companies to which we entrust your capital, with the conviction that they will continue to shape the future.
That should keep us busy.
Best regards,