VNTR Capital News Aug 14th, 2022 - News, Events, VC Reads
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VNTR CAPITAL COMMUNITY NEWS
On Friday, we moved our HQ to Lisbon/Cascais and will build our hub in Portugal. You can see many investor-focused events planned in Portugal in the coming months and during the Web Summit 2022 www.vntr.vc/events.
This week we start with the initial community-building events for local investors:
Aug 15th - VNTR Capital Dinner Lisbon, Portugal
Aug 17th - VNTR Capital Breafast Algarve, Portugal
Aug 19th - VNTR Capital Breakfast Cascais, Portugal
Thank you, CoinsPaid and CoinsPaid Media, for helping us to host these events.
Join us at the upcoming VNTR Capital Events globally:
Aug 17th - VNTR Capital Breakfast Los Angeles, USA, during LA Tech Week
Aug 23rd - VNTR Capital Breakfast Belgrade, Serbia, during AIBC Balkans
Aug 25th - VNTR Capital Growth Roundtable mastermind, online
Sep 8th - VNTR Capital Breakfast Lisbon, Portugal
Sep 13th - VNTR Capital Breakfast Dubai, UAE, during Metaweek
Sep 19th - VNTR Capital Breakfast Tel-Aviv, Israel
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Want to host a VNTR Capital event in your city, partner, sponsor or join as a Venture Partner? Please respond to this email or message on Telegram @byuric to discuss collaboration opportunities.
We got a lot of requests for our new service to connect LPs with seasoned VC Fund managers raising their new funds (3rd and up). If you are a VC fund manager or LP into VC funds, please get in touch with us so we can make connections happen.
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UPCOMING VC EVENTS
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 12-18 - Blockchain Week Berlin, Germany
Sep 12-13 - MetaWeek 2022, Dubai, UAE
Sep 11-14 - NEARCON, Lisbon, Portugal
Sep 13-15 - SaaStr 2022, SF Bay, USA
Sep 14-15 - TechBBQ, Copenhagen, Denmark
Sep 22 - VNTR Capital Breakfast Mumbai, India
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
Oct 22-23 - DEGAMEFI, Tbilisi, Georgia
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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Check out VNTR Capital upcoming events
VC READS
Venture capital’s cash stockpile swells amid slowdown
Venture-capital firms are sitting on a record cash pile. Their so-called dry powder—money raised but not deployed—has increased by more than $100 billion worldwide since the end of last year, reaching almost $539 billion in July, according to data firm Preqin Ltd. The buildup comes as many venture firms have slowed deal making amid the market pullback, a signal that investors ranging from stalwart firms to niche crypto investors are hoarding capital as they grow more picky about which startups to back. The rising stockpile is in part the result of investors preparing for an extended bear market fueled by economic uncertainties including inflation and higher interest rates, venture capitalists say. The reserves will likely be crucial in helping startups survive what many venture capitalists say will be a long period in which funding is hard to come by. With initial public offerings essentially at a standstill, firms may draw on the capital to help mature portfolio companies as they put off public share sales.
While July’s list of most active investors in the U.S. includes familiar names such as Y Combinator and Andreessen Horowitz, some of the other large firms that normally populate this list seemed to take the long summer month off. Big-name firms such as Tiger Global, Insight Partners, General Catalyst, Accel, and Sequoia Capital all were significantly lower on the list than normal. In fact, Tiger made only six U.S.-based investments in July—the hedge funds giant took part in 16 deals in July 2021. But as we are often reminded, this is not 2021 anymore.
Now let’s take a closer look at the most active investors in U.S.-based startups last month and some interesting rounds they took part in.
Visualizing Major Layoffs At U.S. Corporations
Hiring freezes and layoffs are becoming more common in 2022, as U.S. businesses look to slash costs ahead of a possible recession. Understandably, this has a lot of people worried. In June 2022, Insight Global found that 78% of American workers fear they will lose their job in the next recession. Additionally, 56% said they aren’t financially prepared, and 54% said they would take a pay cut to avoid being laid off. In this infographic, we’ve visualized major layoffs announced in 2022 by publicly-traded U.S. corporations.
Ethereum Is Getting Cheaper to Use, Even Before the Merge
Ethereum fees are at their lowest level in two years. This has happened ahead of a much-anticipated event known as the Merge, which is widely seen to be driving up the price of its cryptocurrency, ether (ETH). The average cost for a transaction is under 12.5 gwei, a unit of account that represents a fraction of an ETH used to measure the gas (or transaction fees) needed to run Ethereum. That’s less than half the gwei needed to use Ethereum at the end of July. This is good news for Ethereum users, who have long and rightfully complained about the network’s fees. However, there are fewer users around to benefit. Costs are down because demand is, too. Despite declining use, Ethereum itself is increasingly seen as a bullish bet. Developers have formalized a timeline to transition the network to proof-of-stake (PoS) next month, which will radically change its cost structure – making it theoretically more efficient and cheaper to use. There are some who also anticipate Ethereum’s transition could make the network deflationary – in that it might eventually burn more tokens than it prints, thereby increasing the value of any ETH you hold. Right now, no one knows Ethereum’s total supply, which is not fixed like Bitcoin’s.
Meet The 14 New Unicorns That Joined The Board In July 2022
Fourteen companies joined The Crunchbase Unicorn Board in July 2022, the lowest count since August 2020 when nine companies joined the board. As a sector, Web3 led with the largest count of new unicorn companies this past month, followed by financial services and health care.
The companies that became unicorns at the earliest stages are Web3 companies 5ire and Unstoppable Domains. Each was valued at $1 billion in their Series A. 5ire was founded in 2021 and Unstoppable Domains in 2018. Across these companies, SV Angel was the most active investor with three portfolio companies. And the following each have two portfolio companies; seed investor Start Fund, venture investors New Enterprise Associates and General Catalyst, deep tech investor DCVC and Singapore wealth fund GIC. Cloud database company SingleStore has the highest number of investors across this cohort with 34 investors, which include Accel, GV, and Insight Partners.
Fundraising, capital deployment are bright spots for PE firms navigating weak Q2
Publicly traded private equity firms saw net income losses mount in Q2, while fundraising and deployed capital figures acted as a silver lining in a quarter filled with global market turbulence. Economic conditions and public market performance could shape the sector's strategy and performance for the rest of the year, said PitchBook analyst James Ulan. If markets continue to rebound from their mid-June lows, Ulan expects PE firms could have more success in monetizing assets and fundraising for firms; alternatively, a weaker market could lead PE firms to try to deploy capital into portfolio companies, strengthen lending terms and acquire other GPs. Four of the six asset managers tracked in our PE earnings dashboard reported a loss in the second quarter, with only The Carlyle Group and Blue Owl reporting a net profit in the period. Carlyle's PE portfolio outperformed other public firms in the quarter, even as its holdings remained flat. Blackstone's PE portfolio fell 6.7% in the quarter, while Apollo Global Management's PE holdings fell 4.9% in the period.
Tennis to VC: Serena Williams’ investing career has already taken off
Serena Williams is giving up tennis to focus on, in her words, “expanding” her family and growing her other career– startup investing. While the 23-time Grand Slam champion’s — arguably the greatest in the Open era - exit from the tennis arena can easily be termed the end of an era, her keen interest in tech and venture capital is worth cultivating. Williams has gone on record to say that that is what had got her talking to her husband and Reddit Co-founder Alexis Ohanian back in the days. “I’ve always been fascinated with technology, and I’ve always loved how it really shapes our lives,” she had told NYT earlier this year. Serena Ventures, the micro-VC fund she co-founded in 2014 with Alison Rapaport Stillman (ex-JPMorgan), already has more than 60 portfolio companies, including 16 unicorns. Williams, in fact, wrote one of the first cheques for EdTech giant MasterClass. Both Williams and Stillman serve as founding partners of the San Francisco-based company.
Will Crypto Winter & New Tax Rules Kill VC Funding For Indian Crypto Startups?
It never rains, but it pours. And it is never a sedate scenario when retail investors or venture capitalists put their money into any crypto business. In the past eight months, the cryptocurrency market cap has sunk below the $1 Tn mark, wiping off $2 Tn of investor money. Popular cryptos like bitcoin and ether could not escape the downward push, either. Bitcoin dipped to $17.6K in June 2022 but managed to reach $22K, down from $70K in November 2021. Ether, from the Ethereum network, also breached its key support level of $1K on June 18, dropping from $1,076 to $986 in less than two hours. It was all about a chain reaction across the ecosystem. Every block worked in sync, following the meltdown of TerraUSD/UST, an algorithmic stablecoin, and its sister currency LUNA. As prices fell, some crypto startups and funds like Coinbase-backed Vauld, Three Arrows Capital, and Voyager Digital have gone bankrupt.
Why emerging managers are a critical part of a well rounded venture portfolio
A critical characteristic of healthy asset categories is the flow of new entrants. New entrants bring new ideas, models, and necessary competition. In the mid-2000s, advances in technology infrastructure made it possible for software development to happen inexpensively, and software companies started to address problems across nearly all industry verticals. During that period, we saw the formation of Y Combinator (2005), a new model of 'startup accelerator' to further fuel technology company formation and growth.
Edtech isn’t special anymore, and that’s a good thing
Edtech’s day in the sun wasn’t too long ago. As the pandemic struck, consumers became hungry for new virtual-first tools, Zoom school turned into a reality for millions, and it felt like every late-stage company was getting a chance to become a unicorn. Fast-forward to today, and while the sector is still enjoying a boom in venture capital, Owl Ventures closed a $1 billion fund at the beginning of the year. Surprisingly, Edtech isn’t special anymore, and that’s a good thing. Edtech is facing a reality check in the form of discipline. Investors explained that while the whole startup ecosystem is slower this year, Edtech hasn’t escaped that trend.
Total value locked in DeFi dropped by 66%, but multiple metrics reflect steady growth
The aggregate total value locked (TVL) in the crypto market measures the amount of funds deposited in smart contracts and this figure declined from $160 billion in mid-April to the current $70 billion, which is the lowest level since March 2021. While this 66% contraction is worrying, a great deal of data suggests that the decentralized finance (DeFi) sector is resilient. The issue with using TVL as a broad metric is the lack of detail that is not shown. For example, the number of DeFi transactions, growth of layer-2 scaling solutions and venture capital inflows in the ecosystem are not reflected in the metric. In DappRadar's July 29 Crypto adoption report, data shows that the DeFi 2Q transaction count closed down by 15% versus the previous quarter. This figure is far less concerning than the devastating TVL decline and is corroborated by a 12% drop in the number of unique active wallets in the same period.
SoftBank Vision Fund Dashboard
After a bruising Q2, SoftBank is looking to cut staff at its iconic Vision Fund group. The Japanese conglomerate reported a loss of 2.93 trillion yen (about $21.7 billion) at the Vision Fund, following a similarly large loss in Q1. Some of the companies that appeared to be SoftBank's biggest winners more than a year ago—such as South Korean eCommerce company Coupang and food delivery leader DoorDash—have seen their share prices plunge. "Vision Fund headcount may need to be reduced dramatically," said CEO Masayoshi Son during a press conference. The firm has yet to decide on the scope of the cuts, which will also impact the broader SoftBank. Both the Vision Fund 2 and the Latin America funds have now lost money on a cumulative basis. The Vision Funds' bright spots for the most recent quarter included the public listings of two delivery companies: Indonesia's GoTo and India's Delhivery.
Why SoftBank’s Mea Culpa Is Rare Among Startup Investors
It took a $22.7 billion loss to do it, but finally SoftBank has offered something conspicuously absent from the current boom-to-bust cycle of unicorn investment: An actual mea culpa from an investor acknowledging that maybe they let FOMO and valuations get ahead of themselves.
On Monday, SoftBank CEO Masayoshi Son uttered such an admission following the release of the company’s latest quarterly results, which were the worst in its history. “When we were turning out big profits, I became somewhat delirious, and looking back at myself now, I am quite embarrassed and remorseful,” Son said at a news conference. The longtime startup high-roller pledged to pare operational costs and increase discipline for new investments. Certainly the numbers were bad enough to warrant some reflection. SoftBank Vision Fund 1 posted a realized net loss of $22.7 billion, as many of its most iconic holdings, including Uber, WeWork and DoorDash, suffered sharp quarter-over-quarter declines on public markets. For its newer Vision Fund 2, SoftBank observed that “the fair value of many privately invested companies has decreased due to the decline in stock valuations.” A case in point is Klarna, the buy now, pay later platform that recently closed on new funding after cutting its valuation a whopping 85% from last year.
PE/VC investments plummet 69% to touch $3 billion in July: IVCA-EY report
Private equity and venture capital (PE/VC) investments for July touched $3 billion across 74 deals, down 69 per cent from the same period last year, according to IVCA-EY’s monthly PE/VC round-up. “As interest rates harden, we are witnessing a revival of PE/VC investments in hard assets after a gap of almost two years. Infrastructure was the top sector in July 2022 with $1.4 billion in PE/VC investments across four deals, followed by the real estate sector with five deals worth $411 million,” Vivek Soni, Partner and National Leader, Private Equity Services, EY added.
Zoom investor tells startup founders: ‘Forget the past three years’ and accept 50% valuation hit
Eugene Zhang, a veteran Silicon Valley investor, recalls the exact moment the market for young startups peaked this year. The firehose of money from venture capital firms, hedge funds and wealthy families pouring into seed-stage companies was reaching absurd levels, he said. A company that helps startups raise money had an oversubscribed round at a preposterous $80 million valuation. In another case, a tiny software firm with barely $50,000 in revenue got a $35 million valuation. But that was before the turmoil that hammered publicly traded tech giants in late 2021 began to reach the smallest and most speculative of startups. The red-hot market suddenly cooled, with investors dropping out in the middle of funding rounds, leaving founders high and dry, Zhang said. As the balance of power in the startup world shifts back to those holding the purse strings, the industry has settled on a new math that founders need to accept, according to Zhang and others. “The first thing you need to do is forget about your classmates at Stanford who raised money at [2021] valuations,” Zhang says to founders, he told CNBC in a recent Zoom interview.
How DeFi Can Deliver Value for Artists and Musicians
When the crypto community discusses DeFi (decentralized finance), the term is often pigeonholed to finance. What was once a space for creatives, engineers and tinkerers has instead become a battleground for venture capital firms and hedge funds who use DeFi to take on unprecedented volumes of leverage at the expense of retail investors (as we saw with the collapse of Terra and Celsius). Even non-fungible tokens (NFTs) are starting to be treated as their own separate category within Web3, belonging more to the art and entertainment industries – as institutions like Sotheby’s and Universal enter – than the original ecosystem of smart contracts they emerged from. Blockchain founders need to return to the space’s roots of decentralization, while using “DeFi” as a guiding ethos to introduce smart contracts and new incentive structures into legacy industries.
VC interest in European pet tech ebbs
Venture capital deal activity in European pet tech has dropped after a surge in investment fueled by the pandemic. In the past few years, pet care has undergone significant digitalization, with new startups emerging to help owners manage their animals' lives—from finding sitters and scheduling online vet appointments to arranging deliveries of healthier pet food. So far this year, €64.4 billion has been invested in European pet tech startups across 20 deals, according to PitchBook data. Deal count is pacing slightly behind last year's record, but the amount of capital spent has fallen significantly in 2022, currently standing at just over a quarter of the total amount raised in 2021. With COVID-19, Europe saw a surge in pet adoption and spending. However, with the cost of living becoming more expensive and investors turning more cautious with their investments, deals for pet tech have slowed. Startups offering hyper-premium pet products are the most likely to be affected as a recession becomes a greater possibility. Ongoing supply chain issues also continue to impact companies in the sector.
Mena region expected to create 45 'billion-dollar' start-ups by 2030
More than 45 start-ups valued at a minimum of $1 billion are expected to emerge from the Middle East and North Africa by 2030, led by Saudi Arabia, a report from STV showed. The acceleration of the start-up ecosystem is being driven by a growing talent pool, technology infrastructure and consumer adoption, as well as broad macroeconomic and regulatory reforms, all catering to Mena's growing technology-driven population, the Saudi technology venture capital fund said in the study released on Tuesday.
Startups Tackle Keeping Cool (Or Warm) Without Heating The Planet
Amid a summer of relentless heat waves, we’re putting more resources than ever into keeping cool. The trouble is that lowering the room temp by a few degrees invariably involves technologies that contribute to making our planet hotter. Same holds true for heating. And when you add in rising oil and gas prices, this winter promises to bring much greater economic demand to find greener ways to keep warm. These are pressing market needs that haven’t been missed by venture investors and startup founders. Companies funded over the past couple years with a focus on energy-efficient heating and cooling have collectively raised over $1.1 billion, according to a Crunchbase sampling. On the cooling front, investment comes with a sense of urgency. With record highs this summer hitting normally chill places like Britain and the Pacific Northwest, demand for cooling technologies is rising in places that didn’t see a need before. At the same time, we’re seeing intensifying heat across India and other heavily populated places that were already famously hot.
DIFC launches first global family business and private wealth centre
Dubai International Financial Centre (DIFC), the leading global financial centre in the Middle East, Africa and South Asia (MEASA) region, on Monday announced the launch of the first Global Family Business and Private Wealth Centre (Centre) in the region and worldwide.
DIFC is the first financial centre in the world to create a unique offering at a time when an estimated Dh3.67 trillion ($1 trillion) in assets will be transferred to the next generation in the Middle East during the next decade.
Bessemer explores where the private cloud economy is headed, and uncovers the successful strategies that drove top private cloud companies, such as ServiceTitan, Calendly, and LaunchDarkly, to $100 million ARR.
Why new VC funds offer the greatest opportunities in Venture Capital
Three reasons why young venture capital firms are often more successful according to an investment platform that focuses on the asset class. Emerging VC funds offer high return opportunities, a new research shows. But interested investors also have to take into account major risks.
A new ‘institutional angel’ fund is an example of the UK’s continuing ability to innovate in venture
The U.K.’s Enterprise Investment Scheme has been a powerhouse for startups out of the U.K. because it allowed angel investors to invest in a very tax-efficient manner. Launched in 1994, it was designed to encourage investments in small unquoted companies. As Wikipedia will tell you, by the end of the 2014-15 tax year, a cumulative total of £14.2 billion had been invested under the scheme into approximately 25,000 companies, for example. The policy has been aped and copied by several European governments since. But with the U.K.’s cultural and historic appetite for risk and investing in assets beyond property, EIS has been a boon to technology companies as the tech industry in the U.K. has greatly expanded. Although not always perfect - plenty of entrepreneurs sometimes find issues with the whole thing - EIS and SEIS have at least put a great deal of seed money into the tech ecosystem of the years since it was first launched. The result has meant many startups getting their first break and going on to attract institutional investment from venture capital. A good example is Portfolio Ventures (PV), which has closed its second angel fund (which they claim was oversubscribed), where many investing angels do so under EIS.
S&P Global downgrades Coinbase credit rating for weak Q2 earnings, competitive pressures
Major American cryptocurrency exchange Coinbase saw its long-term issuer credit rating downgraded from BB+ to BB status by rating agency S&P Global following its latest earnings report this year. The agency confirmed the downgrade in a note on Aug. 11, pointing toward Coinbase’s weaker performance in the second quarter of 2022 as a driving factor. Intensified competitive risk in the cryptocurrency exchange sector was also highlighted, with Coinbase losing market share to competitors this year. The downgrade also reflected the potential for ‘further market share deterioration’ driven by the competitive landscape and regulatory risk. The rating agency noted that total trading volume at Coinbase declined 30% quarter on quarter, while total cryptocurrency spot trading volume across all venues declined only 3%, leading to a lower market share. The note conceded that spot trading has become more concentrated among market-makers and high-frequency trading firms, of which Coinbase has a far smaller market share.
The 10 most active fintech VC investors
Despite the ongoing market turmoil and crypto market meltdown, long-term transformational trends in the fintech sector such as mobile trading apps and digitized financial services have continued to attract strong venture investment in 2022. Fintech startups collected $53.5 billion in VC funding in the first half of the year, behind 2021's pace but already surpassing 2020 totals, according to PitchBook data. While some areas of fintech—such as neobanks and real estate lending platforms—are maturing and attracting more late-stage capital, other areas—such as decentralized finance and autonomous finance—have just begun raising early-stage institutional capital, according to PitchBook's Q2 2022 Fintech Report. The rapid valuation growth that defined late-stage fintech in 2021 is now leveling out following steep declines in publicly traded fintech stocks.