VNTR Capital News Aug 21st, 2022 - News, Events, VC Reads
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VNTR CAPITAL COMMUNITY NEWS
We successfully hosted three events in Portugal and a breakfast event during LA Tech Week, where we learned about the local investment ecosystems and enabled new connections between participating investors. We will host recurring events in Portugal and LA from now on www.vntr.vc/events.
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Aug 23rd - VNTR Capital Breakfast Belgrade, Serbia, during AIBC Balkans
Aug 25th - VNTR Capital Growth Roundtable mastermind, online session for community members
Sep 8th - VNTR Capital Breakfast Lisbon, Portugal
Sep 13th - VNTR Capital Breakfast Dubai, UAE, during Metaweek
Sep 19th - VNTR Capital Breakfast Tel-Aviv, Israel
Sep 22nd - VNTR Capital Breakfast Mumbai, India
Sep 28th - VNTR Capital Breakfast Singapore
Oct 4th - VNTR Capital Breakfast London, UK
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UPCOMING VC EVENTS
Aug 22-25 - AIBC Balkans, Belgrade, Serbia
Aug 24 - Web3Go, Lisbon, Portugal
Aug 24-26 - Startup Day 2022, Tartu, Estonia
Aug 25-26 - Coinfest Asia, Bali, Indonesia
Sep 1-4 - Deep Tech Momentum, Berlin, Germany
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 26-Oct 2 - Asia Crypto Week, Singapore
Sep 26 - 29 - Oslo Innovation Week, Oslo, Norway
Sep 28-29 - Token2049, Singapore
Oct 8-14 - Wow Summit, Dubai, UAE
Oct 10-14 - GITEX Global, 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
Oct 23-25 - Money2020, Las Vegas, USA
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
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VC READS
‘Tourist’ investors are still paying high prices for early-stage startups
As the momentum for late-stage companies falters, nontraditional venture capital firms like corporate VCs and mutual funds continue to have an appetite for high-priced, early-stage startups. The median valuation of early-stage companies in the US with nontraditional investor participation has hit a record $75 million through the first half of the year, according to the latest PitchBook US VC Valuations Report. While median valuations at the early stage showed signs of contractions in Q2, the first half of the year still marks the highest gap between median valuations of companies with nontraditional investor participation than without—a sign that nontraditional investors value early-stage startups more highly than other kinds of investors might. This is due in part to their large size relative to other venture firms, which makes them less sensitive to prices or market conditions.
Global private equity, venture capital deal value falls 63% in July
Global private equity and venture capital entries in July slipped to the lowest monthly totals of the year, slowed by soaring inflation and rising interest rates. Deal value worldwide was down 63% in July to $43.05 billion from $116.47 billion during the same month a year ago, according to S&P Global Market Intelligence data. The month saw a total of 1,579 transactions, a 29.2% decline from the 2,231 deals booked in July 2021. The total transaction value year-to-date was $519.12 billion, down 25.7% year over year. The number of deals announced in 2022 also fell behind the pace set in the previous year, with 14,411 entries recorded between Jan. 1 and July 31, compared to 14,946 transactions in the same period in 202. Asia-Pacific accounted for most of the deals in July, leading with 554 deals worth a combined $17.28 billion. The U.S. and Canada came in next with 516 deals totaling $12.34 billion. Firms in Europe tallied 432 deals with a total value of $7.14 billion.
Mergers & Money: Security or Commodity? Crypto Would Just Like To Know
Although crypto historically has tried to shirk some labels—like those of “trend” or “fad”—the industry seems ready for one from the U.S. government. While most people are fixated on the big declines cryptocurrencies have seen during the current “crypto winter,” perhaps the most interesting turn in the industry happened last month when the U.S. Securities and Exchange Commission filed an insider trading case against a Coinbase manager and two others who declared nine digital assets on the exchange platform were securities. Why does that matter? Because it made what was murky even more opaque in terms of how the U.S. will categorize crypto and which agency will regulate it. It’s probably important to have a cursory understanding of the differences between commodities and securities before delving too much further into why it’s important to crypto. In layman’s terms, a security produces return from a common enterprise or company. Commodities are typically a “basic good” that can be bought, traded or exchanged-think grain, beef or gold. Commodities often are considered stores of value because they hold their value over time—unlike, say, shares of Webvan back in the day, which were securities.
The Strategic Approach to Building a Board
Building your board forward from product-market fit - instead of backward from an IPO date - helps you clarify the most critical challenges facing your company and find the right people to advise you.
A good board of directors can be one of the most strategic - and most undervalued - levers a CEO has to address the challenges of operating at scale. Conventional wisdom advises CEOs to start building out their board 6–12 months in advance of an IPO, but if you work backwards from a transactional moment and a list of regulatory requirements, you’ll miss out on a wealth of business value for your company.
Carbon-Tech Draws Record Venture Funding as Investors Hunt for Impact
Carbon and climate startups have attracted record investments at a time when other industries are struggling to tap funds from venture capitalists. Buoyed by corporate and government pledges to cut greenhouse gas emissions, a record $1.4 billion poured into climate and carbon-focused startups in the second quarter of this year. That’s in stark contrast to the broader market for venture funding, which faces its largest quarterly percentage drop in nearly a decade, according to CB Insights. “Venture capital investors are not asking for the highest ROI anymore. They’re asking for a mix of profitability, but also positive impact,” Raphaele Leyendecker, managing director at Techstars Paris Accelerator, said in an interview. “The investment is being redirected to game-changer technologies that are helping the planet actually live longer.” Investments in climate-tech startups jumped 47% in the first half of 2022 from a year earlier, with venture capital funds such as Y Combinator, Lowercarbon Capital and Techstars helping feed that surge.
Why emerging managers are a critical part of a well rounded venture portfolio
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.
The combination of new startup accelerators and reduced overhead costs (companies no longer needed to buy servers) brought the explosion of new fund entrants and the accompanying institutionalization of the seed stage market. Instead of single monolithic investment models, we saw new managers with investment models focused on stages, sectors, and niches. Most emerging managers remain seed stage-focused funds, and today we estimate that the number of seed firms in the US exceeds 2,000.
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. Trouble is, 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.
A16z is betting big on Adam Neumann's new real estate startup
The WeWork founder's foray into residential real estate reportedly has a $1 billion valuation well before it's launched. Andreessen Horowitz is betting big on Adam Neumann's return to the real estate startup game. A16z co-founder Marc Andreessen wrote in a Monday blog post that the firm would partner with Neumann on a new startup called Flow, which is focused on the residential real estate market. Neumann was famously pushed out as leader of WeWork in 2019 after the firm pulled its IPO plans, and his personal and professional antics - padding around barefoot, investing in a wave-pool startup - have provided fodder for books and an Apple TV+ series.
Facebook is losing its grip as a ‘Top 10’ app as BeReal and TikTok grow
Facebook this year has been struggling to maintain its position among the Top 10 apps on the U.S. App Store, according to an analysis of iPhone App Store data. As younger consumers shift to newer social networking experiences like TikTok and now BeReal, the tech giant’s big blue app has lost traction in the App Store’s Top Charts. Last year, for instance, Facebook only fell out of the Top 10 free iPhone apps in the U.S. seven times. But in 2022, that figure has already soared to 97 — an indication that Facebook may be losing ground as new apps push their way into the App Store’s top rankings. For a more direct comparison, Facebook’s app fell out of the App Store’s Top 10 apps just six times during the first half of 2021. In the first half of 2022, however, it has dropped out of this grouping a total of 59 times, per data provided to TechCrunch by app intelligence firm Sensor Tower. It even once stayed out of the Top 10 as long as 37 consecutive days in 2022, the firm noted, up from just two consecutive days in 2021.
Venture lending flourishes amid VC funding pullback
Venture lending, long a backwater in the startup funding market, has attracted growing interest in recent quarters as cash-hungry, fast-growing companies tap the debt market for capital, hoping to buy themselves more time before embarking on a new equity round. Startups in need of cash see debt financing as a way to avoid more dilutive equity investment at a time when falling public market valuations, a frozen IPO market and investor pullback from later-stage and pre-IPO startups have created a widening funding gap. Blackstone's recent push into the venture debt market, reported last week by The Information, is the latest example of large asset managers making moves to capture this pent-up demand. Other nonbank lenders have also shown increased interest in the market. Private equity and venture capital investor Insight Partners is reportedly raising its second fund focused on structured equity, while credit hedge fund King Street is stepping up its hunt for opportunities by extending high-yielding loans to growth-stage tech companies.
Ukraine has shown the value cryptocurrency offers to real people
The world is still struggling to comprehend the geopolitical and human impact of the Ukraine war. With more than 10 million people fleeing their homes and 6 million seeking refuge in foreign countries, it's been a time to support a sovereign country under attack. It has also proven to be the moment where cryptocurrency proved its true value to real people. Not as the high-concept tech toy for the wealthy elite as many had previously dismissed it, but rather as an empowering force for good in a dangerously unstable world. When the Russian invasion began in February, Twitter accounts belonging to the Ukrainian government posted pleas for crypto asset donations. Now, as more than $100 million in crypto donations have already been raised to support the Ukrainian resistance, those of us who have championed crypto as a way of giving ordinary people rather than corporations and governments control over their own money have been vindicated.
The Void In Startup Valuation For Emerging Markets
Globally, there is no standardized methodology for calculating the value of a startup. Generally, the market is robust enough - balancing capital and opportunity - that both sides of the transaction are obliged to be fair in their assessment of the deal and negotiation of the terms.
Founders in developed economies have access to capital from a variety of sources, including alternatives to traditional equity investment: government grants, academic grants, business loans, venture debt and cash-flow financing. There are a range of ways to fuel the growth of a young business, though equity fundraising remains the most apt for early-stage high-risk ventures and competition for those deals helps maintain a founder-friendly environment.
Valuation for those equity transactions remains a complex topic, but most of the time - with one method or another - a price is agreed and the market ensures that price is reasonably fair.
More trouble for card fintechs; VC funds bullish on EVs & Semafor’s India launch
Fintech companies have had a rough time of late as the RBI has sought to tighten regulations for the sector. Spooked by these rules, a popular banking partner of fintech firms has now told them to stop taking on new customers for its co-branded prepaid card product. State Bank of Mauritius (SBM) India, one of the most active partner banks for fintech firms, has told its card-fintech partners to immediately stop onboarding new users for its co-branded credit prepaid card product. This has impacted several startups in the space, including Slice, Uni and LazyPay. “They (SBM) have sent out a note on new user additions. They are quite apprehensive following the RBI guidelines last week but there are meetings lined up with the bank later this week. For now, the note talks about pausing onboarding of new users,” one person who was briefed on the matter said.
Blockchain venture capital funding down over 43% in July: Report
Typically a lagging indicator of the sector’s health, the explosion of venture funding in the blockchain sector in 2021 and the first half of 2022 appears to be cooling off after seven consecutive sectors of growth. According to Cointelegraph Research, inflows in the blockchain venture capital market have declined by 43% month-on-month in July 2022.
The Web3 sector, including GameFi and the Metaverse, continues to command the lion’s share of investor interest. But, the decline in capital inflows should be viewed in context as the numbers are close to the same period in 2021 when the crypto market was in a bull run.
What’s The New Normal For Biotech Funding?
Biotech is in a weird place right now. After basking in two years of record-high investments, the startup space is experiencing what amounts to economic whiplash as investors leave the space and longtime venture firms turn down the funding tap. Now, investors and startups are navigating a new world of plummeting valuations, down rounds and less-than-ideal exit strategies. Once considered the slow and unsexy niche of a fast-moving tech industry, many people saw tangible results of biotech innovation in the COVID-19 vaccines that were created in record time. Funding among U.S. biotech startups reached a record high of $77 billion in 2021, according to Crunchbase data, as investors flocked to a space blooming with innovation in genetics, therapeutics and diagnostics. Biotech is often referred to as a recession-proof industry. People who are sick will always need drugs, and it often takes a recession’s worth of time to get a drug to market. But as the global economic downturn causes the venture community to tighten their purse strings, the flourishing biotech startup ecosystem is struggling.
The BlackRock Trust: Crypto Legitimacy or the Beginning of the End for Bitcoin?
After BlackRock, the largest asset manager in the world, announced on Aug. 11 that it will launch a private bitcoin trust for its clients, some crypto enthusiasts said the move could legitimize the digital asset in the eyes of more traditional investors. BlackRock’s new private trust will make bitcoin available to its institutional clients, tracking bitcoin’s performance, offering direct exposure to the price of the cryptocurrency and of course, trading options. “Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities,” BlackRock said in its press release. The news comes shortly after the firm announced a partnership with Coinbase to provide clients of its Aladdin platform access to cryptocurrency trading and custody services. These developments highlight how traditional investors and institutions from banks to hedge funds are moving into the crypto market, indicating that digital assets are here for the long haul.
How Venture Capital Can Help Young People Make an Impact
Gen Z and millennials are more impact-minded than any previous generation. Growing up as digital natives, they've been exposed to the challenges facing our world in real time and are highly aware of the need to make a difference. Constant headlines remind them of the mounting urgency to take action on climate change, social injustice and income inequality. They see firsthand how tech can be used to create solutions to these pressing problems. And they're not content to wait for someone else to fix things. They want to be the ones making an impact. They're also well-positioned to drive change. As Deloitte reports, 71% of millennials and 70% of Gen Z report feeling "financially secure," and this isn't without reason: Millennials have higher inflation-adjusted incomes, higher net worths and more savings than previous generations at the same age. Young people are also more educated than ever before, with 69% of millennials having some education beyond high school, compared to just 54% of boomers. With all of this knowledge and opportunity at their disposal, it's no wonder that young people are focused on making a difference.
With markets down and tech investors skittish, it’s been a challenging year for young, venture-backed startups. These 25 represent the ones we think have the best chance of reaching a billion-dollar valuation. For the eighth year in a row, Forbes teamed up with TrueBridge Capital to search for the country’s 25 venture-backed startups most likely to become unicorns. Our track record has been stellar: Of the 175 companies to make this list over the years, 116 have become unicorns; another 22 were acquired, and 9 went public before hitting the mark. Just 5 imploded or shut down. This year is likely the most challenging yet, with markets down, tech investors skittish and some would-be list members getting cut due to significant layoffs. These 25 companies, in alphabetical order, represent the ones we think have the best chance of becoming future stars.
Europe's most active domestic venture investors
Enterprise Ireland, an Irish government agency, has topped the list of most active European investors in domestic venture capital deals. From 2018 through H1 2022, the firm completed 988 deals, 42% more than its nearest competitor, French sovereign wealth fund Bpifrance. European investors have been particularly active in domestic deals this year, with their share of overall deal count increasing since 2021. In H1 2022, some €56.3 billion was invested across 5,526 deals, according to PitchBook data. Of these rounds, 42.6% featured only European investors—2,353 deals worth €11.7 billion—up from 39.3% for last year's total. Over the past few years, foreign VCs have become increasingly present in Europe, driving up deal sizes and valuations. As the downturn hits, however, it seems that they have slowed their dealmaking, leaving a bigger gap for domestic investors to plug.
As SEC Leans on Enforcement to Regulate, Crypto Lawyers Study Every Word
What makes a crypto token a security? It’s the central question plaguing the industry, and while the U.S. Securities and Exchange Commission isn’t volunteering an answer, the agency has showed some of its hand in enforcement documents crypto lawyers are studying like scripture.
A complaint against a company selling an alleged unregistered security this week - Dragonchain and its DRGN token – follows on the heels of a more expansive document last month in which the agency spent dozens of pages explaining how AMP and eight other cryptocurrencies should be registered securities. This stream of enforcement language offers a rudimentary guide for other companies wary of the same finding, according to interviews with several industry advisers. The stakes are high, because any token that’s a security would need to be registered with the SEC and be traded on regulated exchanges – an infrastructure that doesn’t really exist, yet.
Why London tops global league for fintech VC funding?
London was confirmed last month as the world’s top hub for fintech venture capital funding.
So far in 2022, it has raised $6.3bn. That's well ahead of New York, at $4.5bn, and Silicon Valley, at $5.5bn. It comes on the back of record-breaking venture capital investment into London last year of $25.5bn as well. With my own business background in fintech, this sector and its success — which is incredibly important to London’s economy — is very close to my heart. London is the undisputed tech capital of Europe and is home to more start-ups and scale-ups than anywhere else. There is nowhere else on earth that you can meet venture capitalists, regulators, clients and partners, all within a short ride on the underground, an ecosystem that is now even better served with the newly opened Elizabeth line. The success of London’s fintech sector is a testament to traditional industries such as fashion, financial services, healthcare and education innovating with technology to create bold new ideas. The capital’s position as a global financial centre, combined with its status as a global technology hub, has cemented the UK as a leader in fintech.
Investors target recession-resilient healthcare recruiting startups
The US had a shortage of nurses before 2020, yet the pandemic greatly exacerbated the problem as a large number of medical staff left the profession, citing increased stress and risks. Now, a handful of tech-enabled marketplaces for nurses are trying to help solve the shortage by matching healthcare workers with hospitals. It is a sector that continues to attract investor interest despite the market downturn. The latest example of VCs' appetite for this space is Incredible Health's $80 million Series B fundraise, led by Base10 Partners with participation from Andreessen Horowitz, Obvious Ventures and Kaiser Permanente. The round valued the 5-year-old San Francisco-based startup at $1.65 billion. Other healthcare recruiting startups have mainly targeted temporary workers. Startups that help hospitals find so-called traveling nurses include Nomad, which grabbed $105 million Series D1 in June, and CareRev, which in March raised $50 million Series B at a valuation of $600 million.
Seems counterintuitive that some people might want lower valuations for their company. Are those people cynical or wise?
While it is nice working for big tech companies that pay well, the allure of working at a startup is the equity that could be worth fortunes. Let’s say person A begins working at a startup valued at $50m and person B begins working at that same startup a year later when it gets valued at $200m. A few years later that startup IPOs at a $1b valuation. Assuming person A and B were hired for similar roles, who benefited the most? Obviously, person A… they got 4x the outcome (with the added risk of working at an earlier stage).
Why Web 3.0 will rewrite the concept of marketing
Marketing practices have changed dramatically in recent years as new technologies, channels and processes have rewritten rules of engagement and delivery. But at its core, many key concepts that underpin marketing – aggregating audiences, designing and delivering campaigns and driving conversion – remain essentially the same as they were when they were first refined in the 1950s and 1960s. However, the world is changing rapidly, and is evolving towards what may be the next great revolution in digital technologies: Web 3.0. This promises to bring together concepts relating to identity, trust, decentralisation and immersive virtual environments.
China’s Growing Trade Dominance in Latin America
Over the past 20 years, China’s economic presence around the world has grown significantly, including in Latin America. Now, China is one of Latin America’s largest trade partners, which is threatening U.S. dominance in the region. This graphic by Latinometrics uses IMF data to show trade flows between China and Latin America since the 1980s. Four decades ago, the United States had a much stronger trade relationship with Latin America than China did. In 1981, Cuba was the only Latin American country trading more with China than the United States. Here’s a look at total trade flows between Latin America and the two countries since 1980. Latinometrics calculated trade flows as total exports plus imports.