(Almost) Daily Musings

Evening all,

Colossal Biosciences just raised $200M in a Series C. Someone, please remind the de-extinction company—set on bringing back mammoths and dodos—how Jurassic Park unfolded. While researching if I could outrun a T-Rex, I share today’s musings.

Cheers,
Phil

Today’s Takes

Futures vs. Future

Core CPI came in at 3.2% vs. 3.3% expected, and the market lost its mind. S&P futures ripped +85 points, adding $750B in implied market cap because... a tenth of a percent?

The deal:

• Core inflation’s still sticky, rent is up 4.8%, and wages aren’t catching up.

• Markets now think rate cuts are coming in July. Spoiler: Powell’s been clear—it’s higher for longer, not “cut at the first twitch.”

• This rally? Algo hopium.

Enjoy the pop. JPow is still the creator of reality (at least of mine). My expectation is not for sudden rate cuts.

Fertile Grounds: When the Future Can’t Afford to Be Born

Birth rates are dropping faster than productivity gains can patch up. McKinsey’s latest report paints a grim picture of economies grappling with shrinking working-age populations. Spoiler alert: AI isn’t the silver bullet here. Let’s break it down.

The world is steadily joining the “ultra-low fertility” club, and Europe is at the center of this demographic storm:

• Germany, Italy, Spain: Fertility rates hover around 1.3 births per woman, well below the replacement rate of 2.1.

• By 2050, 76% of countries globally (155 out of 204) will fall below replacement fertility levels. By 2100, this rises to a staggering 97% (198 out of 204).

McKinsey hits the nail on the head: "Our current social contracts—built on expanding populations—are at risk of collapse."

Ceteris Paribus, an economic fallout is unavoidable:

• Younger workers will inherit slower growth and skyrocketing costs to support retirees.

• Living standards will stagnate unless productivity growth doubles its pace from the past decade.

Even if more babies were born today, it would take 20 years for them to enter the workforce. Productivity, the Band-Aid solution, isn’t keeping up:

• The Eurozone’s GDP/hour productivity gap contributes to 72% of its GDP per capita gap with the US.

• The pandemic slump further deepened Europe’s exposure.

According to McKinsey, drastic measures are needed:

• The average German worker would need to work 5.2 extra hours weekly to maintain historical GDP per capita growth.

• Workforce participation must jump by 10%, which seems almost impossible without significant immigration or automation advances.

If there’s one silver lining here, it’s that the crisis is finally grabbing the attention of investors. I dug around some data: Funding disparities remain glaring

• Early-stage European startups raised ~50% less compared to their global peers.

Despite challenges, a wave of innovation is rising to tackle the fertility crisis. Some standout players include:

• Flo: Europe’s first unicorn in the space, starting as a period tracker and evolving into a fertility management tool. A clear example of market potential.

• Cue Health: At-home fertility tests designed for convenience.

• Parla: Offering fertility education and personalized guidance.

• Bea Fertility: Democratizing access with affordable at-home fertility treatments.

• Gaia: Revolutionizing IVF with outcome-based financing and support.

Bottom Line

Birth rates are plummeting, productivity growth is sputtering, and the fallout will be generational. The window to address these seismic shifts is narrowing. Innovation is critical—not just from policymakers, but from startups and investors ready to tackle this global challenge.

As McKinsey warns: This calculus no longer holds

Its happening now

Europe might be lagging in fertility, but when it comes to innovation, it’s catching up fast. The data is clear: after decades in the "kinderschuhe" of venture building, Europe is creating unicorns and fostering them with scale up capital. European enterprise value is happening now.

For startups founded after 2015, Europe’s share of global enterprise value has jumped to nearly 20%—leap compared to prior decades when it barely registered. European names like UiPath, Klarna, and Adyen setting new standards for the Made in Europe quality stamp.

• In the 1990s and 2000s, while the US churned out the Mag 7 Europe was just kicking off the local VC ecosystem

• Fast forward to 2020-2024, and European-founded companies are contributing 18% of global new enterprise value.

Europe is 30 years behind the US, but the trajectory is undeniable. If the 90s were America’s moment, 2024 is shaping up to be Europe’s breakout era. The Mag 7 dominated yesterday, but the next decade may belong to Europe’s next-gen titans.

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