VNTR Capital News April 16, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - April 16 News, Events, and VC Reads
Hello friends,
Happy Sunday!
VNTR Capital Newsletter is delivered to 30k+ investors weekly to share the latest news, events, and articles from the global VC and startup ecosystem.
Scroll down for VNTR Capital Community News, Upcoming Events, and VC News/Reads.
VNTR CAPITAL COMMUNITY NEWS
Weekly Highlights
After a brief break, we're excited to announce a series of upcoming events taking place across four continents, following our successful investors' gathering in Hong Kong on March 30, which was held as a side event to the WOW Summit. Stay tuned for more details, and get ready to be part of an exciting journey around the world with us. Enjoy the photo from Hong Kong
Lisbon — We will gather this week at Investors Roundtable on April 18 at FinTech Hub with the support of Coho. Igor Ryabenkiy, Managing Partner at Altair Capital. He'll share his journey in the venture capital industry and shed light on his investment strategies for seed-stage companies, with a focus on identifying and nurturing future unicorns.
Silicon Valley — For those in Silicon Valley, we're thrilled to host VNTR Investors Roundtable on April 25th at Draper University in San Mateo.
Austin — If you're heading to Consensus by Coindesk in Austin, join us for our official side event, VNTR Investors Roundtable Austin, on April 27th where Chagex and Paypolitan will present their ventures. Apply here to present at the roundtable
Dubai — We will be back in Dubai to host Investors Roundtable Dubai on May 10 as a side event for Crypto Hunters Casting Dubai and Casting Party.
Belgrade — Our Second Investors Roundtable in Belgrade will occur during TMRW Conference in Belgrade on May 13.
Join us in May-June at the planned events in Miami, Bucharest, Marrakech, Madrid, Lisbon, London, Paris, and Toronto.
VNTR Weekend Summer Retreats — We're organizing 3-day weekend retreats in top European beach destinations so our community can come together and have some fun in the sun. Apply to join
VNTR Membership — This week, we are hosting our bi-weekly VNTR Mastermind Session, where VNTR PRO Members worldwide will meet to share their current activities, goals, and obstacles. VNTR Masterminds serve as a sounding board and place to get support from other investor peers. Join VNTR Membership and be part of the next Mastermind on April 18.
Thank you to our partners:
Crypto Hunters TV Show is an innovative adventure-reality series that uniquely explores cryptocurrency and the blockchain world. The show provides an exciting combination of action, education, and entertainment as contestants embark on a thrilling global adventure to uncover the secrets of the crypto world. With a focus on accessibility and entertainment, the show aims to make the excitement of cryptocurrency accessible to a broader audience. To complement their strategy for untapped markets, the Crypto Hunters Mobile Game App will also be available. The game will be directly connected to the Crypto Hunters TV show and advertised prominently. Learn more and contact HK.
Changex is a unique personal finance mobile app that connects crypto and DeFi to the real world via in-wallet banking. The company is building a swiss knife financial solution by providing access to multi-chain crypto trading, proprietary products such as Leveraged Staking to leverage any POS asset, and a Crypto Debit Card for unprecedented utility. Learn more and contact Gary.
Paypolitan is offering an all-in-one payment app: users can add various wallets or existing bank accounts to the app and pay. Paypolitan is a non-custodial solution aggregating existing sources of funding. The users’ funds stay where they are and the Paypolitan app simply initiates the payment from the source of funding to the destination account. Paypolitan is therefore using Open Banking APIs (EU directive PSD2 compliant) and is one of the first movers adopting it in Europe. Learn more and Contact Marco.
Upcoming VNTR Capital events:
Apr 27 VNTR Investors Roundtable Austin (During Consensus, 25% discount with C23VNTR code)
May 10 VNTR Investors Roundtable Dubai (During Crypto Hunters Casting Dubai)
May 13 VNTR Investors Roundtable Belgrade (During TMRW Belgrade)
May 19 VNTR Investors Roundtable Miami (During Bitcoin 2023 Miami)
May 28 VNTR Investors Roundtable Bucharest (During Bitcoin Bucharest 2023)
Jun 1 VNTR Investors Roundtable Marrakech (During GITEX Africa)
Jun 8 VNTR Investors Roundtable Madrid (During South Summit)
Jun 8 VNTR Investors Roundtable Lisbon (During Epic Web3 Conference)
Jun 13 VNTR Investors Roundtable London (During London Tech Week)
Jun 15 VNTR Investors Roundtable Paris (During Viva Technology)
Jun 27 VNTR Investors Roundtable Toronto (During Collision)
Jul - Aug VNTR Weekend Summer Retreats (exact dates and places to be announced)
RSVP to Upcoming VNTR Capital Events
Join a growing VNTR Capital Membership of investors actively investing in high-growth technology companies: VC/Crypto Fund managers, angel investors, and family offices.
Follow us on Social media: Instagram, LinkedIn, Facebook, and Twitter.
UPCOMING VC EVENTS
Apr 19-20 Bloomberg New Economy Gateway Europe, Dublin, Ireland
Apr 20-23 Emerge Americas, Miami, USA
Apr 26-28 Consensus by CoinDesk, Austin, USA (25% discount with C23VNTR code)
Apr 27-28 TechChill, Riga, Latvia
May 9-10 OMR Festival 2023, Hamburg, Germany
Ma 12-14 TMRW Belgrade, Serbia
May 15-19 AIBC Americas, Sao Paolo, Brazil
May 16-18 SALT New York
May 16-18 ACA 2023 - The Summit of Angel Investing
May 16-27 Cannes Film Sestival, Cannes, France
May 18-20 Bitcoin, Miami, USA
May 19-20 Glitch Korea, Seoul, South Korea
May 24-25 Next Block Expo, Warsaw, Poland
May 25-28 Monaco Grand Prix, Monaco
Mat 27-28 Bitcoin Bucharest 2023
May 28-29 Emerge Dubai, UAE
May 30-Jun 4 Tech Week San Francisco, US
May 30-Jun 2 Innovex, Taipei, Taiwan
May 31-Jun 2 GITEX Africa, Morocco
Jun 5-Jun 11 LA Tech Week, Los Angeles, US
Jun 7-9 South Summit, Madrid, Spain
Jun 14-17 Viva Technology, Paris
Jun 25-25 Silicon Valley Comes to Tel-Aviv
Jun 26-29 Collision, Toronto, Canada
July 6-7 Block3000, Lisbon, Portugal
July 19-22 AIBC Manila, Phillipines
Oct 7-8 DeGameFi, Tbilisi, Georgia
Oct 15-18 Expand North Star Dubai Harbour, UAE
Oct 16-20 GITEX Global, Dubai, UAE
If you would like to submit VC-related events, please respond to this email or Telegram @byuric
Follow us on Social media: Instagram, LinkedIn, Facebook, and Twitter.
Check out VNTR Capital upcoming events
VC READS
Y Combinator’s Most Recent Winter 2023 Batch Shows A Shift To AI, DevTools And B2B
In the current downturn, the most recent batch out of Y Combinator signals a shift to B2B and DevTools as AI dominates the conversation. From the companies launched at demo day on April 5th and 6th we find smatterings of LLM, coding assistants, data entry help, data pipeline management, customer service automation, text to voice, video generation and more. Many of these tools are targeting businesses that would benefit from task automation.
Sectors that lost out are consumer, which is down from 13% to 5% of companies when comparing the winter 2022 batch to 2023; fintech from 24% to 12%; and health care from 11% to 7%. Verticals below 5% are climate and energy, proptech, aerospace and education. These sectors were flat or down year over year, with education not even reaching 1% of startups in this past batch.
New Book - Sticking to My Story: The Alchemy of Storytelling for Startups
It is the dream of every founder. You are standing in front of a group of investors pitching your startup while they shower you with money and praise.
The reality, unfortunately, is vastly different as most founders fail to raise capital from venture capital firms or angel investors. A lot of this is down to an underwhelming pitch in a crowded sea of startups.
Now imagine having an unfair advantage. What if you had the tools and knowledge to create a pitch that is both compelling, motivating and, most importantly, gets results?
That is where Donna Griffit’s book ‘Sticking to My Story: The Alchemy of Storytelling for Startups’ comes in.
Series A funding for startups: What VCs want to see from founders in 2023
After raising pre-seed and seed funding your attention will turn towards Series A — a key part of the startup process which helps ensure continued growth, sustain improvement of product and attract new talent.
But what exactly is Series A funding? And what are the best practices for founders raising from VCs in 2023?
SoftBank, Tiger Global drop out of top 20 of the world’s most active VCs
The pecking order of the world’s most active venture capital (VC) investors has changed in 2023. Two of the most deep-pocketed VC firms, SoftBank Vision Fund and Tiger Global Management, have dropped out of the top 20 list in the first quarter of the year, according to Crunchbase. Both firms “are taking a breather” and they continue to scale down investments across markets. Andreessen Horowitz (a16z) and General Catalyst, meanwhile, emerged as the most active and speediest lead investors in the first quarter (Q1 2023). Lightspeed Venture Partners and Sequoia Capital India were ranked 6th and 8th on the list, respectively. Both VCs have substantial investments in India.
Asia Venture Funding Drops 57% Year Over Year, With Late Stage Posting Largest Decline
Venture funding in Asia got off to a brutal start in 2023, declining 33% from the previous quarter and a massive 57% from the first quarter of last year. Total venture funding in the region fell to $15.2 billion — the lowest in at least the past three years, Crunchbase data shows. A year ago, first-quarter funding in Asia hit $35.5 billion and was $22.4 billion in Q4 2022. Just as dollar figures plummeted, so did deal flow. The first quarter saw only 1,358 funding deals, a 5% drop from Q4, and a huge 42% dip from a year ago when 2,329 deals were announced. The biggest drop among all rounds year to year was in late-stage and growth rounds — both in terms of dollars and percentage. Late-stage and growth rounds only saw $7 billion in investment — a 64% drop from Q1 2022, which saw $19.7 billion, Crunchbase data shows.
Silicon Valley VCs tour Middle East in hunt for funding
Silicon Valley investors are touring the Middle East, seeking to build long-term ties with sovereign wealth funds during the worst funding crunch for venture capital firms in almost a decade. Top technology VCs such as Andreessen Horowitz, Tiger Global and IVP have jetted teams of executives to Saudi Arabia, the United Arab Emirates and Qatar in recent weeks, according to people with knowledge of the trips. These visits come after their traditional North American and European backers contend with an economic downturn that has forced them to rein in private investments. VCs are, in turn, being encouraged to come to the region, as Gulf officials and young royals seek to diversify their economy away from oil with investments into hot tech sectors such as artificial intelligence. That has also meant that some VCs have quietly reversed earlier decisions to refuse meetings with, or cash from, Saudi Arabia over concerns about its human rights record following the 2018 murder of journalist Jamal Khashoggi.
That sound you hear is VCs shutting wallets, tucking them back into Patagucci vests
Year-over-year global VC funding dropped precipitously in Q1 2023, with at least $76 billion (£61 billion) doled out to companies at all startup stages. That may sound like a lot but it's a 53 percent drop from the same time last year, reports funding tracker Crunchbase. And bear in mind, that $76 billion includes $10 billion Microsoft gave to OpenAI and $6.5 billion in funding awarded to Stripe, meaning the rest of the VC funding pool in the first three months of the year was closer to a measly $60 billion, Crunchbase said. While part of the decline can be attributed to the collapse of Silicon Valley Bank in early March, Crunchbase said the bank run was more like adding insult to injury, as the funding environment was weakening throughout 2022. That's no surprise given the outlooks and forecasts for the tech industry of late. Venerable Silicon Valley incubator Y Combinator's summer 2022 cohort was 40 percent smaller than the prior winter round, which the firm told us was an intentional move due to the state of the economy.
Saudi Arabia's PIF reveals VC ties as influence grows
The venture arm of PIF, Saudi Arabia's $650 billion sovereign wealth fund, has ramped up its dealmaking in recent years, but the extent of its influence in Silicon Valley was a matter of speculation—until now. Sanabil Investments, which commits around $2 billion annually in VC, growth and buyout investments, recently publicized firms to which it has committed, as well as direct investments, on its website. The disclosures, first reported by The Information, reveal a greater scope of participation by PIF's venture arm in US startups and VCs than previously known. The roster of firms spans dozens of US VC and PE investors, including Andreessen Horowitz, 500 Global, Coatue and KKR. The list of companies that Sanabil has backed includes e-scooter provider Bird, banking startup Varo and Oura, the maker of a wearable health-monitoring device.
Tech Funding Falls by 55% Amid Banking Crisis
Funding to U.S. tech startups reportedly plummeted 55% during the first quarter of 2023.
Those companies raised $37 billion in venture capital (VC) in the first three months of the year, the lowest level in 13 quarters, Bloomberg News reported Thursday (April 6), citing data from PitchBook and the National Venture Capital Association. According to the report, VC firms have scaled back the number of investments they’re making and the size of those investments, with the quarter seeing under 3,000 deals, the lowest in more than five years. “The whole market is taking much more caution toward investment,” Kyle Stanford, a Pitchbook venture capital analyst, told Bloomberg. “It’s not going to be easy for companies to raise capital even if they’re growing at a pace they set in their last round.”
Tiger Global Was Looking To Siphon Off VC Fund Stakes
It looks like one of the most prolific investors in tech is feeling less confident about its pandemic-era investments. Tiger Global Management has been working with banks to sell off VC fund investments in the secondary market, The Information reported. It’s unclear what stakes the firm tried to sell, or if it was successful. Tiger Global was an incredibly active investor in the tech ecosystem during the pandemic-era funding boom, and it also contributed investments to several VC firms during this time period. According to Crunchbase data, the firm invested in 139 startups in the first quarter of 2022 alone. But following a dramatic dip in the stock market in 2022, and its ripples in the private market, Tiger Global reported in fundraising documents that its portfolio companies slashed their valuations by billions. Tiger Global, one of the largest investors in tech at the time, quickly stopped its investment streak. Per Crunchbase data, the company only invested in 45 startups in the latter half of 2022.
Venture debt gaining prominence amidst funding winter: Report
Despite the Venture debt industry being at a very nascent stage, the amount disbursed has increased thrice in the last 4 years. Stride Venture’s report on venture debt throws the spotlight on the landscape of venture debt investing in India, and its outlook in 2023. Startups and funding have become a buzzword in the country today. However, in today’s uncertain global macroeconomic environment and the ecosystem gripped by a funding winter, founders are resorting to unconventional methods to raise funds for extending the cash runway of their business.
SoftBank Ventures Asia sale reflects Masayoshi Son's pivot towards caution
SoftBank's Asia-focused VC arm is the latest casualty of a strategic shift at the Japanese conglomerate, which has slashed costs and scaled investments to buy time after overextending itself while valuations were flying high. Taizo Son, the youngest brother of SoftBank CEO Masayoshi Son and the founder of Japanese-Singaporean incubator Mistletoe, has bought the investment giant's early-stage Asia-focused VC arm for his entity, The Edgeof. The terms of the deal were not disclosed. Early reporting of the deal back in August 2022 by the Korea Economic Daily suggested a price tag of around $150 million.
SoftBank Ventures Asia, founded in 2000, manages $2 billion and has been a heavyweight in emerging Asian markets for years. The Edgeof, Taizo Son's firm in partnership with startup investor Atsushi Taira, is acquiring 100% of the shares of SoftBank Ventures Asia, with an aim to cultivate a "pan-Asian ecosystem" for new startups.
Masayoshi Son’s SoftBank Sells Venture Capital Arm To Younger Brother’s Singapore-Based Investment Firm
Japanese billionaire Masayoshi Son’s SoftBank Group will sell its early-stage venture capital arm SoftBank Ventures Asia to The Edgeof, a newly formed investment firm helmed by Son’s youngest brother, Taizo Son, as the tech conglomerate grapples with steep losses.
The deal, for an undisclosed sum, is slated to be completed later this year, pending regulatory approval, SoftBank Group and The Edgeof announced Wednesday. The Singapore-based firm was cofounded in March by Taizo Son, founder of Japanese venture capital firm Mistletoe, and chairman Atsushi Taira, a former SoftBank executive and managing director at Mistletoe.
Why Do Health Care Startups Have The Same Names As My Human Friends?
In my notes app, sandwiched between a brainstorm of ice cream ideas and instructions from my physical therapist, is a list of names I began keeping since I started covering health care: Maven, Renee, Ruth, Alma, Lyra, Paige, Olive, Sami. The original goal was to collect companies that share names with my friends. But it quickly grew beyond that. It’s a peculiar pattern I’m seeing in health care startup names. Many of these companies share plenty of similarities: they started between 2014 and 2021. Many of them work in niche parts of the health care system, like fertility or postpartum care. I almost wonder if this naming strategy by so many health care startups is aimed at making those companies seem more approachable to younger people trying to navigate the health system — people who want tech-enabled care, who have experience with bias or discrimination in the health care system, or who are tired of navigating disparate, siloed entities to be treated.
Venture capital funding in start-ups halves as tech downturn bites
Venture capital funding of start-ups has plunged by more than 50 per cent in the past 12 months, as an economic downturn weighs on valuations at nascent tech groups. Globally, venture funds invested $76bn into start-ups in the first three months of 2023, less than half the $162bn they deployed in the same period a year ago, according to data provider Crunchbase. That sharp drop is despite two large fundraising rounds for tech companies taking place this year. In January, Microsoft invested $10bn into generative artificial intelligence company OpenAI, and last month payments company Stripe raised $6.5bn from investors. Without the Microsoft transaction with OpenAI, the first quarter of 2023 would have been the worst quarter for venture investment in more than five years.
Most Active US Investors: Angel And Seed Lead The Way In Slow March
The changes in venture from just 12 months ago are becoming more pronounced.
In March of last year, five different venture firms participated in 20 or more funding rounds.
Last month, only three venture firms took part in at least 10 rounds — and two of those firms specialize in angel and seed. That is not necessarily surprising since it was March 2022 when many in venture were coming to the reality that a significant slowdown was well underway. Nevertheless, it is still interesting to look at some of the numbers from big-name investors. In March 2022, Tiger Global participated in 19 rounds. New York-based Insight Partners participated in 17 rounds in that same month. Similarly, Lightspeed Venture Partners took part in 13 deals. However, last month each of those firms participated in only three rounds apiece. But for now, let’s focus on those who invested in the most rounds for the month of March.
Crypto VC funding hits 2-year low, US firms still favorite: Galaxy Research
Venture capitalist investment into crypto firms continued to fall in the first quarter of 2023 — andespite the current regulatory turbulence for crypto in the United States, the country is still first for the number of firms raising capital, according to a new report. An April 11 report from Galaxy Research, the research arm of crypto investment firm Galaxy Digital, said the $2.4 billion invested by VCs throughout Q1 2023 was the lowest sum invested since the last quarter of 2020. VC investments have been falling since peaking at nearly $13 billion in Q1 2022, with the latest quarter's results representing a decline of over 80% compared to the same to last year. The report noted that data on venture deals is often reported at a later time, meaning the $2.4 billion figure quoted may be revised in the future.
‘Humbled’ VCs Turn to Middle East For Funding
As funding evaporates, venture capital firms are seeking an oasis in the Middle East.
Groups like Andreessen Horowitz, Tiger Global and IVP have in the past weeks sent teams to Qatar, the United Arab Emirates and Saudi Arabia, the Financial Times (FT) reported Wednesday (April 12), citing people with knowledge of the visits. With traditional backers facing a downturn, these venture capital (VC) firms are hoping the Middle East’s massive sovereign wealth funds can come to the rescue. Officials in the gulf, meanwhile, are looking for a way to diversify their economy, the FT notes. It means some VCs have had to walk back their decision to shun Saudi Arabia over worries about the kingdom’s human rights record, the report said.
VCs still think work software is a wise investment
Work software is seeing significant investments from VCs, reflecting the continued trend toward digital transformation and remote work. In its Road to Next report released Tuesday, Deloitte found that even though overall investment in work software companies is down from the lofty heights it reached in 2021, the segment still accounted for 15% of total expansion-stage deal value in 2022 (per PitchBook). Venture-growth work software deals remained steady, barely dipping from $35.4 million in 2021 to $35 million in 2022. “As market trends remain relatively dynamic, qualitative data shows the appetite for innovation among workforces is strong,” the Deloitte co-authors wrote. The drivers of the resilience are “numerous,” according to the co-authors, but they highlight a few of the major ones in the report. First, VCs haven’t given up on the idea, right or wrong, that work software can enhance productivity to increase overall return on investment — an attractive prospect during a period of economic malaise.
North American Startup Funding Weakens Further In Q1
After four consecutive down quarters, North American startup investors haven’t staged a definitive comeback yet. However, first-quarter numbers do show pockets of resilience, even as the general funding climate remains constrained. North American funding in the first quarter reached $46.3 billion — a decline of 46% from the same period last year. That’s even including a reported $10 billion investment into OpenAI — largely from Microsoft — and a $6.5 billion round for payments giant Stripe. Without those two large deals, Q1 venture funding would have been down even more dramatically, with a more than 60% decline from the same period last year. For a sense of how the just-ended quarter compares across all stages, we charted funding totals for the past nine quarters below.
Here’s why Web2.5 could be the missing piece of the puzzle in daily digital lives
According to the latest data released by Statista, the number of internet users around the world reached 5.16 billion in January 2023, representing a staggering 64.4% of the worldwide population.Undoubtedly, the world is consistently digitizing while technology continues to advance in parallel, bringing about significant changes in the way we interact with the internet. With each evolution of the internet, we continue to witness substantial changes in functionality and user experience. The launch of Web1, also known as the first iteration of the internet, was depicted by static web pages that provided limited interactivity and predominantly served as a knowledge distribution platform. The rise of Web2, on the other hand, marked a pivotal shift in the digital landscape, proving that social interaction was borderless, and further enabling unprecedented levels of user-generated content and online collaboration as a whole.
U.S. Treasury Warns DeFi Is Used by North Korea, Scammers to Launder Dirty Money
Decentralized finance (DeFi) services that aren’t compliant with anti-money laundering and terrorist financing rules pose “the most significant current illicit finance risk” in that corner of the crypto sector, according to the U.S. Department of the Treasury’s first analysis of hazards from the technology. In an expected risk assessment, published Thursday, the Treasury Department said thieves, scammers, ransomware cyber criminals and actors for the Democratic People’s Republic of Korea (DPRK) are using DeFi to launder proceeds from crime. On the basis of its findings, the department recommends an assessment of “possible enhancements” to U.S. anti-money laundering (AML) requirements and the rules for countering the financing of terrorism (CFT) as they should be applied to DeFi services. It also calls for input from the private sector to inform the next steps.
EU Early-Stage Startups Benefit From VC Dry Powder
In a challenging macroeconomic market that has led to a sharpened focus on belt-tightening, FinTech firms are under mounting pressure from investors to pivot from growth to profitability. It’s a shift in strategy justified by some investors as a way to win back increasingly cautious investors. But Zeynep Yavuz, FinTech partner at early-stage venture capital (VC) firm General Catalyst, is of a different view. “I don’t think any venture investor wants profitability,” Yavuz, whose firm has backed fast-growing companies like Stripe, Airbnb and Instacart, told PYMNTS in a recent interview, adding, “The quality of the business model, the scale needed to generate positive contribution margins and gross profit margins — that’s what investors really care about now.” A narrow focus on profitability instead of efficient growth also risks stifling creative thinking and founders’ ability to innovate, she added: “If you’re profitable, it means you’re not really investing in growing and [as a result], you’re not innovating enough.”
KKR raises $8B for Europe fund—the biggest of any US firm
KKR has reached an $8 billion close on its sixth European fund—the biggest by a US firm to target the region—as it looks to further target digitization and demographic trends in the region. The New York-headquartered firm is the most active European investor among the biggest US PE firms, having launched its first Europe-dedicated vehicle in 1999. This latest vehicle is 20% bigger than its predecessor, which closed at the end of 2019, and more than double the size of European Fund IV, which closed in 2015. The fund close comes a month after London-based Permira's Fund VIII reached a $17.6 billion final close on its latest flagship fund, the second-largest buyout fund by a European manager. Unlike Permira's fund, which has a global mandate, KKR's latest vehicle will focus on Western Europe, targeting companies trading on a significant discount to the US on an EV/EBITDA multiples basis.
Worried investors drive VC financing for startups down 55%
American companies garnered $37 billion from venture capitalists in the first quarter of this year,The lowest sum in 13 straight quarters, according to statistics from research company PitchBook and the National VC Venture Capital Association. Investors have lowered both the amount and quantity of checks they write. The first quarter had the lowest number of agreements, less than 3,000, in more than five years. VC financing to startups plunged by more than half in the first quarter from the year before, a clear sign of the toll that a downturn in the IT sector has placed on emerging enterprises. American companies garnered $37 billion from venture capitalists in the first quarter of this year, the lowest sum in 13 straight quarters, according to statistics from research company PitchBook and the National Venture Capital Association. Investors have lowered both the amount and quantity of checks they write. The first quarter had the lowest number of agreements, less than 3,000, in more than five years.
Global VC Funding Falls Dramatically Across All Stages In Rocky Q1, Despite Massive OpenAI And Stripe Deals
Venture and growth investors in private companies continued to scale back their investment pace in the first quarter of 2023, Crunchbase data shows. Global funding in the first quarter reached $76 billion — marking a 53% decline year over year from $162 billion in the first quarter of 2022. That’s even including a reported $10 billion investment into OpenAI — largely from Microsoft — and a $6.5 billion round for payments giant Stripe. Without those two large deals, Q1 venture funding would have been down even more dramatically, close to $60 billion. Every funding stage last quarter was down 44%-54% year over year, a clear signal that the slowdown is not confined to late-stage funding. Investors across each stage scaled back as they took time to assess new investment opportunities while guiding existing portfolio companies.
Binance.US unable to find bank partners in the United States: Report
The United States arm of global crypto exchange Binance has been facing challenges in establishing a new bank partner to serve as a fiat on-ramp and off-ramps for its clients in the country, according to a Wall Street Journal report on April 8. The recent failures of Silvergate and Signature Bank left Binance.US without banking services, depending on middleman's banks to store funds on its behalf, according to the WSJ, citing "people familiar with the matter". The regulatory crackdown on banks with crypto clients is also another factor contributing to the exchange's struggles. In March, the U.S. Commodity Futures Trading Commission (CFTC) sued Binance Holdings and its CEO Changpeng “CZ” Zhao for allegedly trading violations. The cryptocurrency exchange has been the focus of a CFTC investigation since 2021.
If you’ve raised venture capital, you have to pay yourself
Forgive me, but this post will likely be a bit of a rant. I had a call with a founder I’m advising this morning. He is out there raising money, and he received a term sheet from an investor (yay!), but the investor suggested that the founder and his co-founder shouldn’t be taking a salary. The investor argued that the founders were “working for equity,” and that his investment shouldn’t go to the founding team. That, ladies and gentlemen, is absolute hogwash. Now, if this were an isolated incident, I might write it off as a clueless investor. As the fundraising climate is shifting, however, I’m hearing more investors suggesting things like “to extend your runway, you should raise from us, but not pay yourself.”
Venture capital-backed startups face tighter credit, but not ‘the end of the world’
Silicon Valley Bank’s epic collapse further tightens the environment for venture capital-backed companies planning to raise additional and larger capital rounds in the near future, local investors say. The Santa Clara, Calif.-based bank’s failure leaves a gaping hole in the ability of companies seeking later-stage investments to secure debt financing that often accompanies venture capital rounds beyond the seed and early stages. That potentially may make fundraising for growth capital an even more difficult proposition for companies. The fundraising environment was already getting harder a year ago when interest rates began to rise and concerns picked up about a potential recession, said Tim Streit, co-founder and managing partner at Grand Rapids-based Grand Ventures. Tighter credit for venture capital deals following Silicon Valley Bank’s collapse will put liquidity “at an even higher premium,” although there remains “a ton” of dry powder in the venture capital in the U.S. that firms are seeking to deploy after record-breaking years in 2021 and 2022, Streit said.’’
The 20 most active LPs in direct PE investments
Attracted by the opportunity to bet on companies and bypass the hefty fees charged by commingled private equity funds, institutional investors have been clamoring for direct and co-investments in recent years. By doing deals on their own or co-investing in a deal originated by a PE fund manager, limited partners can juice returns and gain greater control over their portfolios in exchange for taking on more risk. The LPs that completed the most buyout and growth investments outside of a fund last year were sovereign wealth fund managers and pension plans based in the Middle East, Europe and Asia. According to PitchBook data, Singapore wealth fund GIC completed 148 such deals last year—the same number as French state bank Bpifrance. Other active LPs include Abu Dhabi's sovereign wealth managers Mubadala Investment Company and Abu Dhabi Investment Authority, as well as Canadian pension fund CPP Investments.
The 10 most active PE investors in European energy
London-listed Foresight Group has topped a list of most active private equity investors in Europe's energy sector as the drive for renewable solutions comes to the fore. Foresight has a focus on renewable energy such as solar and wind as well as next-generation fuels like clean hydrogen. Last year, the firm invested in a hydro energy storage plant in Glenmuckloch, Scotland—one of only four such units in the UK. While sustainability and ESG might be popular with investors and firms trying to show their green credentials, HitecVision and Eni's IPO of oil and gas company Var Energi was one of the largest deals of that type last year. In 2021, there was a spike in European energy deal volume and value, with the latter around two-thirds greater than 2019's total at €50.3 billion (about $54.7 billion). Last year saw an even greater total deal value at €51 billion, although this came from 234 completed deals compared to 2021's 270 transactions.
Without the Stripe and OpenAI deals, global VC results would have been even worse in Q1 2023
Even as Y Combinator reveals the latest startups in its cohort for this winter, we have poor news for founders: The global venture capital market shrank in Q1 2023, and it would have been even worse if it were not for a few mega deals, according to Crunchbase (disclosure: my former employer) and PitchBook reports. And here in the United States, things are looking grim. Startups are not the only ones suffering, either. Venture capitalists are also seeing their ability to fundraise being hampered as they digest a raft of mismarked startup deals from the last boom and a dearth of exit volume. This dip in funding for venture investors implies that the current startup investing downturn may not turn course anytime soon. The Exchange will have notes soon on what appears to be an expanding cohort of startups that may be the first companies to pursue IPOs when the market reopens. But for now, we’re stuck looking at money flowing into startup land, not the other way around.
Thanks Sam! How FTX Led to World’s Worst Crypto Policy
When watching Washington policymaking, it’s worth remembering that governments, like all human organizations, are made up of, well, humans – complicated creatures whose emotions often undermine their capacity for rational decision-making. Last week, I warned of a dangerous politicization trend in U.S. crypto policy following a barrage of regulatory enforcement actions taken against this industry. I remain concerned about that trend but my view is now slightly more nuanced thanks to the insights of two people with very good D.C. connections. They explained how emotions – specifically anger and embarrassment – played a huge role in driving those policy actions. It reminded me of the importance of clear, inviolable rules of governance, whether they’re baked into democratic institutions such as the U.S. Constitution, or forged into consensus mechanisms used by open-source software communities, like those attached to blockchain protocols.
Are venture capital funds about to lift off?
Whether you like it or not, venture capital has become ever more widely available as an opportunity — albeit a risky one — for private investors. Until just a few years ago, those who put their money to work in early-stage private businesses did so through tax-efficient venture capital trusts (VCTs) where they benefited from an immediate tax subsidy to help compensate for the higher risks implicit in these assets. Venture capital has since worked its way into more mainstream investing via investment trusts. The most high-profile example is the venerable UK listed fund, Scottish Mortgage, which recently attracted attention after a boardroom bust up — much of it centred on that burgeoning private assets book of VC investments.
VC Funding Drops 66% As Seed Takes A Hit, US Investors Pull Back
This year is off to a bleak start for the startup ecosystem in Europe. Startups raised $10.6 billion in funding, down 18% quarter over quarter and a whopping 66% year over year, per Crunchbase data, as American investors pulled back. Europe’s funding downturn is on par with most of the world. Global funding was down 53% year over year, per Crunchbase data, a sign that the tech industry is still reeling from 2022’s high interest rates and broader economic uncertainty. But we’re starting to see the long-term effects of this uncertainty. European seed funding saw a dramatic 25% collapse last quarter — a signal that VCs aren’t confident in making long-term commitments right now. While late-stage startups experienced the worst funding pullback year over year, early-stage funding performed the best of the three stages (though funding was still down 7%).
‘We have to move fast’: US looks to establish rules for artificial intelligence
The US government is taking its first tentative steps toward establishing rules for artificial intelligence tools, as the frenzy over generative AI and chatbots reach a fever pitch. The US commerce department on Tuesday announced it is officially requesting public comment on how to create accountability measures for AI, seeking help on how to advise US policymakers to approach the technology. “In the same way that financial audits created trust in the accuracy of financial statements for businesses, accountability mechanisms for AI can help assure that an AI system is trustworthy,” said Alan Davidson, the head of the National Telecommunications and Information Administration (NTIA), at a press conference at the University of Pittsburgh.