VNTR Capital News April 30, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - April 30 News, Events, and VC Reads
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
Silicon Valley — On April 25, we organized successful VNTR Investor Roundtables in Silicon Valley, featuring a captivating keynote by Donna Griffit on the art of storytelling. As a special treat, guests received signed copies of her book, "Sticking to My Story: The Alchemy of Storytelling for Startups.". Thanks to Hero City and Draper University for generously providing Hero City Theater as the venue for our event. Please take a look at the event photos.
Austin — Our third event in Austin was a blast, thanks to 70 investors and our distinguished keynote speaker, Miko Matsumura. Miko shared his valuable insights on the current state of the Web3 investment market and provided his perspective on where the ecosystem is headed.
Crypto Hunters Casting — Get ready for an adventure of a lifetime with Crypto Hunters adventure reality TV show, as they launch the casting tour in Dubai on May 4th-5th. Apply now to join the reality adventure show and compete for the grand prize of $1m. Join the Crypto Hunters Telegram community to follow the casting, side events, and show production.
Dubai — As part of the Crypto Hunters Casting Dubai on May 4-5, we are delighted to announce two investor-side events. On May 9, we will host VNTR Investors Breakfast to bring together active investment decision-makers for a networking and knowledge-sharing session. Then, on May 10, we will throw an unforgettable VNTR Investors Party within the VVIP zone of the Crypto Hunters Casting Party Dubai.
Belgrade — Our Second Investors Roundtable in Belgrade will occur during TMRW Conference in Belgrade on May 13. TMRW team is producing a big show and after-party, hosting DJ Paul Kalkbrenner at Stark Arena.
Marrakesh — We are excited to announce our first VNTR Investors Roundtable in Africa on June 1- an official side event to Gitex Africa. Approved VNTR Investors will get a complimentary investor pass to Gitex.
May-June events — Join us at 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 fun. Apply to join
Featured new VNTR members:
Sai Poorna — Early-stage Investor, Founder of Meta V Cafe, Startup Mentor CV Labs
Manmeet Singh Bhasin — Founder & Managing Partner Punja Global Ventures, a serial entrepreneur with successful exits.
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. You can 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 non-custodial wallet is live and the company continues building a swiss knife financial solutions by providing access to multi-chain crypto trading, fiat on/off ramp, proprietary products such as Leveraged Staking to leverage any POS asset, an IBAN account, and a Crypto Debit Card for unprecedented utility. You can learn more and contact Gary.
Paypolitan offers 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 initiates the payment from the funding source to the destination account. Paypolitan uses 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:
May 9 VNTR Investors Roundtable Dubai (During Crypto Hunters Casting Dubai)
May 10 VNTR Investors Party Dubai (During Crypto Hunters Casting Party 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
Follow us on Social media: Instagram, LinkedIn, Facebook, and Twitter.
UPCOMING VC EVENTS
May 8-9 Dubai Fintech Summit, Dubai, UAE
May 8-10 AIM Congress, Abu Dhabi, UAE
May 9 Bloomberg Wealth Asia Summit, Hong Kong (with VNTR Members access)
May 9-10 OMR Festival 2023, Hamburg, Germany
May 10 CryptoVSummit, Dubai, UAE
Ma 12-14 TMRW Belgrade, Serbia
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
May 31-Jun 1 Dublin Tech Summit, Dublin, Ireland
Jun 5-Jun 11 LA Tech Week, Los Angeles, US
Jun 7-9 South Summit, Madrid, Spain
Jun 14-17 Viva Technology, Paris (30% discount with FP3UHDUJ4)
Jun 25-25 Silicon Valley Comes to Tel-Aviv
Jun 26-29 Collision, Toronto, Canada
July 6-7 Block3000, Lisbon, Portugal
July 10-12 Block Down Portugal 2023, Algarve, Portugal
July 26 Bloomberg Sustainable Business Summit, Singapore (with VNTR Members access)
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
Why Startups May Soon Be Buying More Startups
If you’re a startup, it’s likely your exit won’t be going public or selling to a big-name acquirer. Instead, there’s a good chance you or your assets will end up in the hands of another startup. Stats back up this presumption. Each year, in the U.S. alone, hundreds of funded startups get acquired by private, venture-backed companies. This year is shaping up as no exception. So far in 2023, at least 99 U.S. startups have been acquired by other startups, per Crunchbase data. As the chart below illustrates, reported counts for these kinds of deals are actually down a bit from last year’s highs. But there’s reason to think that may be temporary.
ChatGPT, Midjourney, other AI tools to make their way into EU legislation
Controversies around artificial intelligence (AI) and its use of copyrighted material have arisen in various scenarios after a major uptick in the use of the technology in content creation. Legislators in the European Union have responded to the growing usage of AI in a vote on April 27, which pushed forward a draft of a new bill designed to keep the technology and companies developing it in check. Details of the bill will be finalized in the next round of deliberations among legislatures and member states. Though, as it currently stands, AI tools will soon be classified according to their risk level. The risk levels range from minimal and limited to unacceptable.
With LBOs scarce, leverage in syndicated US loan market sinks to 7-year low
The debt/EBITDA ratio of new-issue US leveraged loans has fallen below 5x for the first time in seven years as LBOs, a traditional staple of the broadly syndicated market, remain largely absent. Loans issued during the first quarter of 2023 had an average debt/EBITDA ratio of 4.7x, based on pro forma adjusted EBITDA, according to LCD, matching 2015 as the lowest reading in the last 10 years. Overall leverage ratios reached their 5.3x peak in 2021, as demand for floating-rate debt skyrocketed and M&A activity crushed even pre-Global Financial Crisis levels.
Capital efficiency is the new VC filter for startups
The VC landscape has undergone a tectonic shift in the past year. A year ago, 90% of VC meetings with startups would have been about growth with little regard for how that growth would be achieved. It didn’t matter whether you were burning money left and right: As long as you had chubby growth numbers, a strong story and charisma, your round was pretty much guaranteed. But as cash becomes more expensive, investors are giving more and more attention to resource-focused, shrewd founders who can handle the hard times ahead. In 2023, most VC meetings focus on whether a business can deliver sustainable, efficient growth during the downturn. As far as our anecdotal evidence is concerned, most founders haven’t quite adjusted to the change.
How the Crypto Venture Capital Space Turned Risk Averse in the Bear Market
Venture capital (VC) has played a crucial role in the growth of the digital asset industry over the past two years. According to data from Pitchbook, VC investments in crypto skyrocketed in 2021, reaching $25.1 billion, which is a sevenfold increase compared to 2020’s $3.4 billion. And while 2022 in crypto was not for the faint of heart, crypto VC’s still managed to deploy a record high of $26.2 billion. Across the board, valuations on practically all projects rose significantly during the 2020-2021 bull market, but as the market contracted throughout 2022, VC’s also started to see valuations of investments taking a heavy nosedive. This was of course fuelled by the changes happening in the surrounding macroeconomic picture where a shift in economic and fiscal policy started to greatly influence the economy. And to top things up, the crypto domain suffered greatly in the wake of the industry-specific implosions happening with FTX and TerraLuna.
Chinese VCs dominate as most-active semiconductor investors
The US has been investing an unprecedented amount into the semiconductor industry. With the passage of legislation to invest in design and manufacturing domestically, the US has spurred on a new race with its rivals to ensure access to the best silicon on the market. But it's a race that, at least from a venture capital perspective, the US is losing. The majority of prolific venture capital investors in the semiconductor vertical are Chinese firms investing in startups in their country, according to PitchBook data. Besides Intel's corporate venture capital arm Intel Capital and longstanding firm Walden International, all other entries in this top-10 ranking are based in China.
M&A for venture-backed startups has fallen to the lowest quarterly level in a decade
As venture capital dealmaking moves in slow motion in the first quarter of 2023, some of the biggest and brightest are being left in limbo.
Back in the good old days for Silicon Valley in 2021, unicorns, private companies worth over a billion, became more abundant and bigger than ever before. But with the IPO market largely shuttered, M&A was expected to take off in early 2023. But that hasn’t happened. With high inflation, tech companies cutting costs, and a crackdown by antitrust regulators, M&A activity across stages and sectors has nosedived—meaning yet another exit ramp is blocked off for many startups. According to PitchBook-NVCA Monitor, acquisitions of venture-backed startups saw their lowest quarterly level in a decade.
SVB Collapse ‘A Textbook Case Of Mismanagement’ — Fed Report
The spectacular fall of Silicon Valley Bank was due to the bank management’s inability to manage risk properly and lax Fed supervision and regulation, according to a report by the Federal Reserve Board released Friday. “Following Silicon Valley Bank’s failure, we must strengthen the Federal Reserve’s supervision and regulation based on what we have learned,” said Vice Chair for Supervision Michael Barr, who led the probe into the failure of the nation’s 17th largest bank. “This review represents a first step in that process—a self-assessment that takes an unflinching look at the conditions that led to the bank’s failure, including the role of Federal Reserve supervision and regulation,” Barr continued in a release.
How would a US debt default impact Bitcoin?
The risks of a United States debt default are the first topic of this week’s show, which comes from none other than Treasury Secretary Janet Yellen. Yellen warned of potential mass unemployment, payment failures and broad economic weakness if the U.S. failed to pay its debts. This issue emerges every couple of years, creating some tension within Congress, but at some point, they agree to raise the debt limit. So, no harm done, right? That’s partially true because if the government doesn’t have a majority, which happens to be the case, the opposition has the upper hand to bargain their demands. In this case, Republicans want President Joe Biden to drop $4.5 trillion in unsound projects, such as letting go of some of the student debt or hiring thousands of Internal Revenue Service employees.
VC firms create $60 billion-plus climate tech alliance with backing from the UN
A group of venture capital firms including Tiger Global and Union Square Ventures on Tuesday set up an alliance aimed at making private tech investing more climate-friendly. Called the Venture Climate Alliance (VCA), the coalition of more than 20 climate tech and generalist funds seeks to get the VC industry to increase its commitments to climate tech, a branch of technology devoted to finding solutions to the climate crisis. The alliance lays out guidance that its VC members and their portfolio companies must follow to ensure they meet the requirements to achieve net-zero emissions by 2050. According to a statement, the VCA’s stated aim is to “ensure that methodology and metrics are at the heart of how we determine what is a good climate investment, and what investment will have the greatest positive effect on the mission to build tech for a regenerative world.”
The Fintech Funding Crunch In 4 Charts
Few sectors illustrate the massive runup in venture funding that occurred in 2021 as well as financial services and the fintech industry. In that year, billion-dollar venture fundings went to neobanks, wealth management providers, buy now, pay later startups, cryptocurrency exchanges and insurance brokers.
Some 20% of the total $681 billion in global venture funding in 2021 went to the fintech sector alone.
But only a small handful of these companies — including Robinhood and Nubank — successfully went public. The majority of the highly funded fintechs from 2021 are still private and face cost cutting in a tougher sales environment, all while waiting for the public markets to turn favorable again.
Skin in the game: Why GPs are putting more money into their own funds
When KKR closed its sixth European buyout vehicle on $8 billion earlier this month, it did so with around $1 billion of its own capital contributing to the fund corpus. The New York-based firm is one of many GPs pumping more of their own money into their funds. PE firms have always invested in their own funds to reassure their limited partners that their interests are aligned. But KKR's 12.5% commitment is far beyond the industry standard, which has traditionally been around 1% to 2% but, according to financial services group Investec, is now closer to 5%. Jonathan Harvey, a member of Investec's fund solutions team, said that formal GP commitments have been on the rise out of a desire among many PE firms to demonstrate to their investors that they bear the same level of risk. When informal commitments are included, a GP contribution can rise beyond 10%, Harvey added.
How to pitch me: 5 investors discuss what they’re looking for in April 2023
After attending TechCrunch Early Stage last week, I was cheered to meet so many first-time founders and experienced investors who are looking for opportunities. Based on my conversations, VCs are very open to working with novices who can show that they understand the market in which they hope to compete. But deal-making is idiosyncratic: A few investors might be content to make a deal over coffee, but early-stage teams still need a sturdy pitch deck or memo they can leave behind. Similarly, one VC may encourage newly minted CEOs to eat ramen and ride the bus, while another might suggest a salary in the low six figures, depending on geography. I asked five early-stage investors to share frank advice for first-timers, and I’m going to save you some time: Many (if not most) of you are probably not ready to pitch an investor.
The Case for Regulating, Not Banning, Crypto
American University professor Hilary Allen, who recently wrote an article titled “The Case for Banning Crypto" in the influential publication Foreign Affairs, is part of a very small cohort of “crypto banners” working toward that end. In addition to engaging the media, Allen and her peers are pushing the argument that crypto does more harm than good while speaking with federal agencies. She is testifying before the congressional hearing on "the future of digital assets" Thursday afternoon. American University professor Hilary Allen, who recently wrote an article titled “The Case for Banning Crypto" in the influential publication Foreign Affairs, is part of a very small cohort of “crypto banners” working toward that end. In addition to engaging the media, Allen and her peers are pushing the argument that crypto does more harm than good while speaking with federal agencies. She is testifying before the congressional hearing on "the future of digital assets" Thursday afternoon. The case for banning crypto is a pipe dream. It won't happen. By Allen’s own admission, blockchain is a general purpose “database” technology that supports a trillion-dollar industry employing thousands globally. Nonetheless, the efforts to ban, rather than regulate, crypto have only backfired and harmed Americans.
India’s early-stage start-ups are overvalued due to VC seed programmes & angel syndicates, claims report
Following the funding slowdown of 2022, and one that has continued this year, start-up valuations have become a topic of debate. More than half (55 per cent) of domestic investors believe that early-stage start-ups in India are overvalued, and a lot of it could be because of seed-stage cohorts and programmes initiated by Tier 1 VCs (like Sequoia, Accel, Lightspeed, others). Additionally, the mushrooming of “angel syndicates have led to many founders skipping institutional seed rounds, crashing of deal/diligence timelines and a higher entry valuation”, found InnoVen Capital in its ‘Early-Stage Investment Insights Report 2023’.
These Lead VCs Have The Most Acquisitive Startups
For a startup, buying another startup may make strategic sense. But it isn’t easy to do.
The list of decisions is long. How much to pay? Is it about acquiring assets, bringing in talent, or both? How should one compensate key people and keep the team motivated? Should you retire the acquiree’s brand or keep it? The complexities around completing an M&A deal go a long way to explaining why some venture investors consider it their job to help shepherd portfolio companies through the process. It also points to why some firms have much more acquisitive startup companies in their portfolios. “There’s a bit of a Goldilocks play that has to happen,” said Whit Bouck, a longtime software executive who joined Insight Partners last year as managing director. She works with portfolio companies as an operating partner, with a particular focus on navigating decision-making around M&A.
Global VC investments shrink annually to $57.3 bn from over $200 bn in March quarter: Report
Global VC investment slowed down to $57.3 billion in first quarter FY23, from above $200 billion during the same period a year ago, according to KPMG’s Venture Pulse Report. There have been multiple factors affecting global venture capital funding. These include: Geopolitical uncertainties, Global banking crisis, Elevated inflation, Rising interest rates The quarter witnessed significant interest in generative AI led by ChatGPT. With Google and Microsoft throwing their hat in the ring with respect to the deployment of generative AI, this space is expected to witness continued VC interest in the second quarter, according to the report.
Could J&J’s IPO Kick Off A Wave Of IPOs?
Johnson & Johnson could be leading the pack of a wave of IPOs, ending a drought that has lasted a little more than a year. The pharmaceutical and medical device company that owns popular drugstore brands like Tylenol, Band-Aid and Neutrogena announced on Tuesday it would spin off its consumer health division, Kenvue, and launch it on the public markets after raising $3.5 billion. The company would be valued at $40 billion. We’ve heard rumblings from the private market that IPOs may be back after being abandoned for more than a year. Fast-fashion unicorn Shein was supposedly in talks to consider an IPO this year, and payments platform Stripe explored going public in 2024 to address expiring shares.
The Mother of All Pivots
The name of the podcast I co-host with Kara Swisher is “Pivot.” I don’t like the name, but I’ve had my hands on the wheel for so long at my own companies, I’m down with sitting in the backseat and occasionally asking, “Are we there yet?” Besides, Kara does most of the work and has a better feel for pods than me. But that’s not what this post is about.
A “pivot” is a strategic change in business model, direction, or target market. Think Netflix’s shift from DVDs to streaming, Adobe’s move to subscription, or Amazon’s launch of AWS. Sounds easy, but real transitions require a staggering investment and a leap of faith that make shareholders queasy. And, most of the time, they don’t work. Meta’s stock doubling in the last six months is a function of the market’s belief that The Zuck is waking up from his Big Gulp, Venti Grande Ayahuasca hallucination re a $20 billion-per-year investment in the metaverse. Meta’s earnings this week revealed Reality Labs (its opium den posing as a business unit) saw revenue decline to $350 million while losing $4 billion in the last 3 months. This means the birth control known as Oculus is pacing to lose the combined profits of Honda, BMW, and General Motors in ’23.
How market turmoil is filtering the waters of private real estate
When I was six, my parents bought me a fish tank full of minnows. They didn't last long. Over time, the water grew stagnant and clogged with algae, the fish hovering zombie-like at the bottom of the tank. What it needed was a good cleaning from an ultra-powerful aquarium filter. Instead, it was dumped in the backyard. A challenging economic environment can work like one of these filters, sifting through the markets and discarding weak or toxic elements. This cleaning process has been particularly conspicuous in the world of private real estate investing, where a confluence of crises—a pandemic followed by a war and a banking crisis—has worked much like the Fluval FX4 Canister Filter, a multichambered, $200 aquarium filter my parents probably should've bought from PetSmart.
Governance first: Top VCs focus on dos and don’ts for start-ups
Concerned about the growing cases of governance lapses in their portfolio companies, some of the top venture capital (VC) firms have begun putting in place clear systems to ensure such lapses do not take place in future. The VCs are putting in place clear dos and don’ts for portfolio companies and also keeping a close watch on whether they are being adhered to. Top VC sources told Business Today that some clear ground rules are being ensured at portfolio firms, and founders are being sensitised on those. “There are some clear don’t we are ensuring. For instance, no related party transactions are to be undertaken. Also, relatives should not be the appointed as CFO,” a top executive at one of the leading VCs said on condition of anonymity.
These 4 Charts Show That Slowly But Surely, Startup Funding Deal Sizes Are Shrinking
After rising for more than a decade, the typical funding deal size for a U.S.-based startup is falling. Average and median deal sizes have dipped since the latter half of 2022, Crunchbase data shows. That follows a systematic rise over the previous decade for U.S.-based startups. Within that decade-long rise, there was a noticeable upward inflection in recent years. In 2021, round size from seed to Series B leapt up between 25% and 59% year over year — even more than in prior years. For Series C, the initial surge took place a year earlier in 2020, based on an analysis of Crunchbase data. But starting in the second half of last year, average and median round sizes have flattened or shifted down. The downward shift is noticeable but gradual, with more mature companies from Series C onward hit the hardest for now. For the past quarter, seed through Series B fundings hovered above 2020 average and median size, while Series C fundings remained below.
The Crypto Miner Reckoning: No Fate but What We Make
Remember the days when bitcoin (BTC) mining difficulty was still in the single-digit billions, there were almost as many bitcoins to be mined as there were in circulation and you could run a massively profitable operation with a rig of off-the-shelf [graphics processing units] and a civilian power outlet without so much as a yawn from regulators? Yeah, those days feel like ancient history, even though they were less than a decade ago. Remember the days when bitcoin (BTC) mining difficulty was still in the single-digit billions, there were almost as many bitcoins to be mined as there were in circulation and you could run a massively profitable operation with a rig of off-the-shelf [graphics processing units] and a civilian power outlet without so much as a yawn from regulators? Yeah, those days feel like ancient history, even though they were less than a decade ago. Samir Tabar is the CEO of Bit Digital. Everything is harder about bitcoin mining today, from overhead cost to competition to the looming scrutiny of lawmakers and ire of climate activists. But there are still good days ahead if the industry revolutionizing finance can adapt to a new environment.
US pensioners benefit most from German start-up successes, German pensioners go largely empty-handed
Germany and Europe continue to produce very successful technology companies. This is shown, among other things, by the fact that the cumulative value of companies founded within the last 30 years has increased by approximately EUR 2.5 trillion since 2012. This development speaks for the attractiveness of the European start-up ecosystem. Despite the positive development, German pensioners hardly benefit from this dynamic.