July 30th News, Events, VC Reads, VNTR Capital Retreat
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VNTR CAPITAL COMMUNITY NEWS
We are two weeks away from VNTR Capital Summer Retreat in Algarve, Portugal, from Aug 15th to 19th, 2022. We will explore the region with active investors and enjoy the various unique experiences https://www.vntr.vc/camp. You can RSVP here, and we will send all the details on logistics and costs. We offer a flexible program for 1/2/3 or 5 days.
Thank you, CoinsPaid and CoinsPaid Media, for helping to produce the VC Camp.
We finalized our schedule of events for August:
Aug 4th - VNTR Capital Breakfast Bengaluru, India (1st edition) during Lets Ignite
Aug 4th - VNTR Capital Investment Committee to review deals (online)
Aug 10th - VNTR Capital Breakfast New Delhi, India (5th edition)
Aug 17th - VNTR Capital Breafast Algarve, Portuhal (1st edition)
Aug 17th - VNTR Capital Breakfast Los Angeles, USA (1st edition) during LA Tech Week
Aug 23rd - VNTR Capital Breakfast Belgrade, Serbia (1st edition) during AIBC Balkans
Aug 25th - VNTR Capital Growth Roundtable mastermind, online
Want to co-host VC-related events, partner, or sponsor? Please respond to this email or Telegram @byuric to discuss collaboration opportunities.
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We are launching a new advisory service for VC Fund managers who are raising their new funds. We have many active VC fund managers who reached out to us to help them with introductions to potential LPs: family offices, sovereign funds, and institutional investors, while LPs asked us if we have high-performing funds in the community where they should deploy their capital. We decided to expand our offering to the community and facilitate these introductions.
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UPCOMING VC EVENTS
Aug 5 - LetsIgnite, Bengaluru, India
Aug 7-14 - Korea Blockchain Week, Seoul, South Korea
Aug 9-10 - Febraban Tech, São Paulo, Brazil
Aug 15-19 - VNTR Capital Camp, Algarve, Portugal
Aug 15-21 - LA Tech Week, LA, USA
Aug 18-19 - World Blockchain Summit, Toronto, Canada
Aug 22-25 - AIBC Balkans, Belgrade, Serbia
Aug 24-26 - Startup Day 2022, Tartu, Estonia
Aug 25-26 - Coinfest Asia, Bali, Indonesia
Sep 6-7 - Pirate Summit, Cologne, Germany
Sep 7-8 - YC Demo Day Summer 2022
Sep 6-11 - XPO.CRYPTO, Medellín, Columbia
Sep 12-13 - MetaWeek 2022, Dubai, UAE
Sep 11-14 - NEARCON, Lisbon, Portugal
Sep 13 - VNTR Capital Breakfast, Dubai UAE
Sep 13-15 - SaaStr 2022, SF Bay, USA
Sep 14-15 - TechBBQ, Copenhagen, Denmark
Sep 26-Oct 2 - Asia Crypto Week, Singapore
Sep 26 - 29 - Oslo Innovation Week, Oslo, Norway
Sep 28 - VNTR Capital Breakfast, Singapore
Sep 28-29 - Token2049, Singapore
Oct 8-14 - Wow Summit, Dubai, UAE
Oct 11-13 - Take Off Istanbul, Turkey
Oct 5-6 - Sifted Summit, London, UK
Oct 18-20 - TechCrunch Disrupt, San Francisco, USA
Oct 20-21 - Future Innovation Summit, Dubai, UAE
Oct 21-22 - Wolves Summit, Vienna, Austria
Nov 1-4 - Web Summit, Lisbon, Portugal
Nov 1-3 - Wow Summit, Lisbon, Portugal
Nov 9-10 - Token2049, London, UK
Nov 10 - VNTR Capital Breakfast, London, UK
Nov 14-18 - AIBC Europe, Malta
Nov 15 - VNTR Capital Breakfast Malta
Nov 17-18 - SLUSH 202, Helsinki, Finland
Nov 23-24 - Next Block Expo, Berlin, Germany
Nov 24 - VNTR Capital Breakfast Berlin
Dec 6-7 - NOAH Zurich 2022, Switzerlan
Want to submit VC-related events, please respond to this email or Telegram @byuric
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VC READS
Germany pledges to unlock €30bn financial boost for its startups
Germany has pledged to mobilize €30bn of additional funding by 2030 to foster its startup scene, according to the country’s first comprehensive policy roadmap for startups.
The 32-page document, approved by the federal cabinet on Wednesday, details how the country’s coalition government wants to improve the startup ecosystem of Europe’s largest economy. The 10-point plan includes boosting financing for startups, reforming the taxation of employee stock options, facilitating spinouts at universities, and strengthening diversity.
“I want to make Germany a founding republic,” finance minister Christian Lindner said in a statement. “The startup strategy now presented serves this purpose. There is no lack of private capital for innovations. However, there is often a lack of the right framework conditions for investments in startups to be successful. As the federal minister of finance, I want to improve the financing options.”
Private equity's share of terminated M&A deals climbs
It is still too soon to say that turbulent macroeconomic conditions are making it harder for private equity to close deals, but it is something to keep an eye on, said Cameron Joyce, deputy head of research insights at Preqin, in an interview. "We've had this dislocation in valuations, and obviously that's going to lead to more GPs pulling out, and you would expect an increase in '22. But we don't see it so far," Joyce said. "If this is going to play out, it's more likely in VC and private equity because that's where we've seen the largest dislocations — primarily public market valuations and then concerns about what someone's just paid in the private market," Joyce said. Preqin is forecasting a "further slowdown in deal activity," as buyers and sellers come to terms with a reset in valuations. Since 2021, the environment for exits has deteriorated, which could encourage private equity general partners to prolong the life of their funds or move portfolio companies into secondary vehicles, Joyce said. Signs of macroeconomic stress can be seen in deals that avoid termination. One recent example is the proposed acquisition of Zendesk Inc. by an investor group that includes Permira Advisers LLC and Hellman & Friedman LLC in a deal announced in June. The $9.9 billion purchase price shaved 38% off the $16.05 billion take-private bid the software-as-a-service company rejected earlier this year.
VCs are flooded with unprecedented funds but in no rush to deploy capital
Venture capitalists are mostly gripped by the Fear of Missing Out (FOMO) and that sentiment peaks during boom periods like in 2021, but it takes only a few months for risk investors to change tack. Six months into the new year, despite raising a record $4.7 billion of dry powder compared to $2 billion last year, as per Venture Intelligence data, for investing in startups, over a dozen VC firms, including Lightspeed Venture Partners, Sequoia Capital, Elevation Capital, and a number of smaller sized funds, have closed fewer deals in the first half of this year versus the same period in 2021, data sourced from Tracxn and respective funds showed. While the pace of early-stage deals is still moderately higher, there is no rush to turn in a term sheet (an agreement sent by an investor before finalizing funding), indicating a reversal of sentiment from 2021 among the investor community. While Lightspeed completed 10 deals in the first half of this year compared to 16 in the first six months of last year, Elevation Capital closed 21 versus 37 in the same period.
Firms Keep Raising Huge Funds, Even As Venture Funding Slows
While venture capitalists may be pulling back on funding to startups, many seem to be redoubling their efforts when it comes to raising more dry powder—at least for now.
Just in recent weeks alone, several firms have announced monster new commitments to funds. On July 12, Menlo Park, California-based Lightspeed Venture Partners raised more than $7 billion for four funds to invest in early- and growth-stage companies. Two days later, Boston-based Battery Ventures locked up $3.8 billion across two funds. Others, such as CIBC Innovation Banking, Drive Capital, Telegraph Hill Partners, Crossplane Capital and Resolute Capital Partners, all have announced funds in recent weeks ranging from several hundreds of millions of dollars to more than a billion. In fact, even as venture funding to startups has slowed, firms raising investment funds are doing better than ever. Already this year, firms have publicly announced nearly $144 billion in funds being raised, according to Crunchbase data. That nearly matches the almost $149 billion announced for all of last year. Those in the business of advising on alternative assets say the numbers show a few different things. Raising funds can be a lagging indicator of the market, as well as the fact venture has proven to be a strong driver of return in the past decades.
Around 90 VC, PE, and debt funds ready to back Indian startups in 2022
The Indian startup ecosystem is going through a downturn after a blockbuster fundraising year in 2021. While the total investment in homegrown startups until the first half of 2022 is at par with the previous year, growth and late-stage companies are now finding it difficult to raise capital and are bound to see further correction in valuations.
But despite challenges and the cooling, around 90 startup investment firms, including venture capital (VC), private equity (PE), micro venture capital, angel investment firms, and debt firms, have launched or are in the final leg to announce their new fund as of July 25, 2022, according to data compiled by Fintrackr. This includes 63 VC firms, eight PE firms, and four debt firms.
In comparison, there were nearly 76 India-focused funds announcements in 2021. The size of funds is also up, from $8 billion in 2021 (excluding global funds of Accel and Tiger Global) to $16 billion in 2022 to date. To recall, the total investment inflow in Indian startups stood at $38 billion in 2021 and it was close to $20 billion in the first half of 2022.
World’s richest families are shifting investments to Gulf
Qatar’s World Cup, Saudi’s Vision 2030 and UAE’s dynamism are all helping attract wealthy family investors to the region, says UBS Investments in the Middle East by ultra-high-net-worth family offices will increase by at least 50 percent over the next decade, a senior executive at the Swiss global wealth manager UBS told AGBI. Family offices, or privately held companies that handle investment management and wealth management for a family, seek to effectively grow and transfer wealth across generations.
Europe's female founders feel the pinch from VC downturn
European venture dealmaking for female-founded startups dropped back to pre-2021 numbers in the first six months of 2022 as the economic downturn slows investment activity. In H1, European and Israeli startups with one or more female founders raised $6.6 billion across 765 deals, according to PitchBook data. This represents a year-over-year decline of 2.9% and 23.9%, respectively. For startups founded only by women, deal value was essentially flat YoY—but the number of rounds fell by 10%. The share for female founders of the overall amount raised by European startups dipped slightly in H1 compared to 2021's annual figures, with female-only founded companies accounting for 0.8% of the total capital raised compared with 1.1% last year. Startups with only male founders increased their share of total capital raised from 2021's 85.2% to 86.7% in H1 2022. They've also surpassed last year's halfway mark for total capital raised. By contrast, startups with only female founders are well behind the pace of 2021, with their H1 2022 total raised equivalent to 37% of last year's capital.
Financial tech continues to capture VC support, despite declining investments
Even as worldwide venture capital investment plunged to a six-quarter low in the second quarter of this year, emerging firms focused on financial technology managed to keep the money rolling in at the same pace, according to research from KPMG Private Enterprise. In its "Venture Pulse, Q2 2022," which analyzed the venture funding market globally and in specific regions for the past three-month period, KPMG found that the “ongoing crisis in Ukraine, high levels of inflation and rising interest rates” had distinctly impacted most regions and investment sectors. Indeed, the global consultancy predicted that, “With no end in sight to the uncertainty, VC investment could remain somewhat soft heading into Q3’22.” However, financial tech (fintech) and related sectors of financial industry security and cryptocurrency payments, particularly in the Americas, seem to be the exception to this trend, as VC investors reportedly move into a buyers’ market where they can expect more “focused” use of their funding.
WTF is a 409A? Why tech companies might actually want a lower valuation
In the past few months, both Stripe and Instacart have seen their internal valuations updated in a 409A appraisal process. The startups saw their valuations being slashed by 28% and 38%, respectively, as a result of the appraisals. What do these re-pricings signal to other late-stage, pandemic-spurred startups? And how seriously should we be taking them? We spoke to Carta, AngelList, EquityZen and others to better understand the 409A process, and why tech companies might actually want a lower valuation in this moment.
Recession or Not, the Recovery Has Ended
Whether a recession is eventually declared, the message from the latest economic data is just as sobering: The recovery is, effectively, over. To be sure, the second-quarter decline in inflation-adjusted gross domestic product was a bit misleading. Inventory destocking explains all of the decline, as it did for the first-quarter drop in GDP. Employment is still growing.
Even so, key indicators of activity have ground to a halt. Total spending by households and businesses didn’t grow in the second quarter after averaging 6% annualized growth in the prior six quarters. In fact, monthly data suggest consumer spending is flat or falling, especially on goods, and not just big-ticket durables. Spending on groceries is actually down over the last six months. Inflation has masked the scale of the slowdown. Consumer-goods companies such as Unilever are reporting higher revenue thanks to price increases, even as sales volumes drop. Indeed because of briskly rising prices, nominal GDP (that is unadjusted for inflation) grew a robust 8% annual rate in the second quarter.
VCs Squandered Billions On Scooter Startups. Markets Think They’re Worth A Pittance
Almost exactly five years ago, the scooters came. That’s when Bird, the first unicorn in this once sizzling startup sector, launched its inaugural scooter-sharing service.
No matter what you thought of scooters, by late 2019, their ubiquitous urban presence seemed a fait accompli. By that point, VCs had poured over $2 billion into so-called micromobility upstarts globally, most of which relied wholly or partly on electric scooters. Fast-forward a few years, and it’s apparent this bet hasn’t gone particularly well, with Bird now a penny stock, bringing broader scooter company valuations down for the ride. While scooters are still around, any expectations of solid returns from investments on the space are not.
First-time fundraising slows for European VCs
Fundraising activity for first-time venture funds in Europe has slowed significantly amid the economic downturn and macro headwinds. In H1 2022, a total of 26 first-time vehicles were closed in Europe with an aggregate value of €1.6 billion (about $1.63 billion), PitchBook data shows. This amount represents less than a third of the total raised and 34% of the fund count from last year. European VC fundraising has had a particularly rocky start this year in terms of fund count, which at its current pace would register the lowest annual total since 2013, according to our Q2 2022 European Venture Report. Total capital raised across all venture funds is on track to be largely in line with last year's figures as fund sizes trend upward, but this is not the case for first-time vehicles. In 2022, that category has seen its median size drop 52% year-over-year to €26.5 million.
The death of easy money: Why 20% annual returns are over in crypto lending
Celsius and Voyager Digital were once two of the biggest names in the crypto lending space, because they offered retail investors outrageous annual returns, sometimes approaching 20%. Now, both are bankrupt, as a crash in token prices — coupled with an erosion of liquidity following a series of rate hikes by the Federal Reserve — exposed these and other projects promising unsustainable yields. ″$3 trillion of liquidity will likely be taken out of markets globally by central banks over the next 18 months,” said Alkesh Shah, a global crypto and digital asset strategist at Bank of America. But the washout of easy money is being welcomed by some of the world’s top blockchain developers who say that leverage is a drug attracting people looking to make a quick buck — and it takes a system failure of this magnitude to clear out the bad actors. “If there’s something to learn from this implosion, it is that you should be very wary of people who are very arrogant,” Eylon Aviv told CNBC from the sidelines of EthCC, an annual conference that draws developers and cryptographers to Paris for a week.
Global robotics venture capital investment reaches $5.7 billion in 2021
Global robotics venture capital investments reached $5.7 billion in 2021, a 38 percent year-on-year growth, according to a report by ABI Research, a technology intelligence firm.
The growth was driven by successful startups from key markets such as the United States, China, the United Kingdom, and Israel. Leading startups demonstrated strong capabilities in three major domains: mobility, autonomy, and collaboration, specifically human-machine collaboration. The investment market worldwide was relatively muted in 2020, as fewer deals were concluded due to the Covid-19 pandemic. However, the current labor shortage induced by Covid-19 and the ongoing supply chain crunch are leading more businesses to look for ways to automate labor-intensive, repetitive, and hazardous tasks. Lian Jye Su, industrial, commercial, and collaborative robotics research director at ABI Research, says: “More precisely, businesses are looking for robotics solutions that are mobile, can navigate through obstacles in unstructured environments, and work alongside human employees without much supervision and control.”
The Week’s 10 Biggest Funding Rounds: Cleerly Pumps Up Large Round; Carmot Leads Biotech’s Big Week
Startups related to biotech and health care dominated the week, with five companies in that sector raising $50 million or more. Investors also continued to be enamored with the emerging Web3 space, minting a new unicorn while more than doubling the value of another.
Layoff Analysis: Companies Begin Second Rounds Of Cuts As Rough Employment Summer Drags On
While some tech companies have chosen to pause hiring or announce initial layoffs, others are gearing up for their second round of cuts. Private companies including Gemini, Gopuff and Hopin had a second round of layoffs in July, following staff cuts earlier in the year. The layoffs are among those that have affected more than 30,000 people working for U.S.-based tech companies (or companies based elsewhere with large workforces in the U.S., like Hopin and Klarna). While July wasn’t as active for layoffs as June (when tech layoffs peaked so far this year), the month proved to be popular for a second round, especially for late-stage companies. According to a Crunchbase News analysis, at least four companies at the Series C stage or beyond initiated layoffs this month. The company with perhaps the quickest back-to-back layoffs was Netflix, which laid off around 150 employees in May, and then around 300 employees in late June.
Senate finally passes a $280 billion bill boosting chip manufacturing
The Senate passage of the chip subsidy package paves the way for a House vote this week. President Biden has indicated support for returning chip manufacturing to the U.S.
The U.S. Senate voted 64-33 Wednesday to approve a $280 billion piece of legislation that will dole out a batch of chip manufacturing subsidies and research funding that’s designed to return chip production to the U.S. in some meaningful fashion.
Marriages and court cases can be held in the Metaverse
Legal marriage proceedings, court case disputes, and government services may one day be offered on the Metaverse, according to a Singaporean government minister. Speaking at the TechLaw Fest 2022 on July 20, Singapore’s Second Minister for Law Edwin Tong argued even highly personalized, intimate events such as the solemnization of marriages have taken place online in the Metaverse. On the subject of legal services in the Metaverse, the Minister added that there is “no reason why the same cannot be done for legal services.” “The pandemic has already shown us that even dispute resolution — once seen to be a physical, high-touch process can also be held almost entirely online.” Tong gave the example that a legal dispute involving an accident on a construction site for example, could be viewed in three dimensions via a “single virtual platform” using augmented reality (AR) technology.
Will the Bitcoin mining industry collapse? Analysts explain why crisis is really opportunity
Bitcoin mining involves a delicate balance between multiple moving parts. Miners already have to face capital and operational costs, unexpected repairs, product shipping delays, and unexpected regulation that can vary from country to country — and in the case of the United States, from state to state. On top of that, they also had to contend with Bitcoin’s precipitous drop from $69,000 to $17,600. Despite BTC price being 65% down from its all-time high, the general consensus among miners is to keep calm and carry on by just stacking sats, but that doesn't mean the market has reached a bottom just yet. In an exclusive Bitcoin miners panel hosted by Cointelegraph, Luxor CEO Nick Hansen said, “There’s going to definitely be a capital crunch in publicly listed companies or at least not even just publicly listed companies. There’s probably close to $4 billion worth of new ASICs that need to be paid for as they come out, and that capital is no longer available.”
In VC market slowdown, alternative financing emerges as a path to funding
The down market in VC dealmaking is proving to be a boom time for venture lenders. Until earlier this year, it was relatively easy for startup founders to obtain new capital at high valuations for their companies. But in today's bearish conditions, it's now commonplace for investors to assign them lower valuations alongside more stringent deal terms. The result has been that startups in need of extra cash are turning to less punitive funding sources such as venture debt and other forms of non-dilutive financing. "We have become one of the most attractive [financing] options," said Harry Hurst, co-founder, and co-CEO of Miami-based Pipe, a marketplace for selling and buying recurring revenue streams. "It's showtime for us now."
Revenue-based financing has emerged as an especially appealing capital alternative for startups with contractual or predictable sales models. Companies that lend upfront capital against startups' recurring revenue say they have seen a surge in demand since the beginning of the downturn.
The Threat Of A Down Round: How Startups Can Adapt To Protect Their Value
Over the past four weeks, The current funding environment was the main topic among VCs and founders. How do you address this tough situation? Do you cut costs or do you make a risky decision to keep spending and attempt to grow into the original valuation? Until the recent market turn, companies were raising money at all-time high valuations. Now the environment has fundamentally shifted, and everybody is thinking about the best path forward. If the public comparables have compressed 10x, the company will need to grow 10x more than it expected before the next round in order to maintain its valuation. Covering the basics: To get to a valuation we need a valuation multiple and ARR at the time of the round. How do you get to the final ARR at the time of the round? Final ARR = initial ARR + ARR increase. What are the different levers that impact your ARR increase? ARR increase = round size (cash in hand)/burn multiple. So a company can either increase cash in hand or decrease burn multiple.
Apple Is Stifling the Metaverse, Tech Expert Says
Apple may be stifling the development of the metaverse, according to Matthew Ball, managing partner of the venture capital firm Epyllion Co. and author of “The Metaverse and How It Will Revolutionize Everything.” While Apple appears to be in a position to “thrive in the next era” of more immersive computing, its control over distribution may be crimping the industry, Ball said.
“Apple does not allow for crypto-based virtual worlds,” Ball said on CoinDesk TV’s “First Mover” show on Thursday. “They're successfully stymieing a specific type of disruptive innovation and category.” By steering clear of complex virtual worlds, the tech giant is exerting undue influence over “what is available and what isn’t,” Ball said. The metaverse is an emerging category of computing, which some see as the next frontier of the internet. According to a Pew Research Center study, over 50% of tech innovators and developers predict the metaverse will be further integrated into people’s daily lives by 2040.
To Use or Hold? Solving the Classic Crypto Conundrum With a Dual Token Model
Are two tokens better than one? It’s a question that blockchain developers are increasingly wrestling with, even if the major networks aren’t likely to change their model anytime soon.
Although the traditional single-token system favored by Bitcoin and Ethereum undoubtedly has its merits – deep liquidity, simplicity – only a two-token model can solve blockchain's perennial economic conflict that stymies network growth by disincentivizing actual network use.
Ultimately, all blockchains share a common goal: to reliably record transactions, store economic value and engender network growth. Sure, they set about achieving these goals in various ways, and some have stronger privacy guarantees than others.
Meta's revenue shrank for the first time in its history
Facebook parent company Meta has just reported its earnings for the second quarter of 2022, and it was another quarter of shrinking profits. Total revenue of $28.8 billion was only down one percent compared to Q2 one year ago, but net income dropped 36 percent to $6.7 billion. Making almost $7 billion in profit is not a bad quarter for anyone, but the size of the decline compared to a year ago is pretty significant. And, according to the Wall Street Journal, this is the first-ever drop in revenue for Meta / Facebook — so even though we're only talking one percent, it's still noteworthy.
Unique Opportunities for Startups Amid the Global Supply Chain Crisis
When the coronavirus was first detected in China’s Wuhan province in late 2019, it triggered a worldwide supply chain crisis of an unprecedented magnitude. The pandemic caused logistics and transportation disruptions that resulted in sudden factory closures, depleted inventory levels, delivery delays, and production hiccups, among other jolts that cast a pall over the global economic landscape. Despite such turmoil, a good number of startups saw lucrative opportunities to revamp the broken supply chain. They built innovative solutions that pushed the boundaries for a sustainable future. Several startups were nimble enough to proactively identify supply chain vulnerabilities by engaging closely with suppliers, building inventories of crucial components, and investing in modern digital tools to ensure end-to-end transparency and trust in a complex global market. According to a recent forecast, digital technologies will play a key role in fixing the disrupted global supply chain in the next three to five years. By 2023, there would be an increase in real-time transportation visibility, and by 2024, 50 percent of supply chain organizations will support AI (Artificial Intelligence) and advanced analytics capabilities.