VNTR Capital News Aug 28th, 2022 - News, Events, VC Reads
Hello friends,
Happy Sunday!
We hope you enjoy the last summer vacation days with your family and friends.
Scroll down to view Venture Capital news, upcoming VC-related events, and VC news/reads.
VNTR Capital newsletter is delivered to 20k+ investors weekly to share the latest news, events, and articles from the global VC and startup ecosystem.
VNTR CAPITAL COMMUNITY NEWS
Are you ready for a new life after summer? This summer was a busy travel and vacation season for our global community. The startup funding slowdown was partially due to the travel after all the COVID lockdowns in the past two years, which also affected the whole startup ecosystem, layoffs, and financial crisis that might be coming. Are you restarting your active investment period after summer? What is your strategy for the rest of the year? We are resuming our syndicated deals into Series B+ deals. The minimum check to join VNTR Capital syndicated deals is $10k+.
VNTR Capital Syndicate is investing in a Series B of a FinTech startup that launches neobanks in emerging markets very quickly and efficiently by partnering with traditional local banks -launching neobanks in Vietnam and Nigeria in 2022, Pakistan and India in 2023. If you are interested to learn more about the opportunity, join our syndicate and we will share the investment memo and deal details privately.
We are producing 60+ events this year to host 1000+ investors globally www.vntr.vc/events. Our events expose companies who want to offer their services/products directly to investors or their portfolio companies. We need your help introducing potential sponsors/partners who will join us to provide exceptional experiences to our investor guests. We are recruiting a Sponsorship Sales Manager to join our team, work with our partners, and prepare for the VNTR Capital Global Investors Summit in 2023.
Thank you to our current partners CoinsPaid, CoinsPaid Media, and TWO12, for helping us to host VNTR Capital community events.
Join us at the upcoming VNTR Capital Events globally:
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 21st - VNTR Growth Roundtable, Online (community members mastermind)
Sep 22nd - VNTR Capital Breakfast Mumbai, India
Sep 28th - VNTR Capital Breakfast Singapore
Oct 4th - VNTR Capital Breakfast London, UK
The first event in NY in Sep/Oct
RSVP to Upcoming VNTR Capital Events
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.
The VNTR Capital Investors Community is growing and has 280+ vetted active investors as active members: VC / Crypto Fund managers, angel investors, and family offices.
Follow us on Social media: Instagram, LinkedIn, Facebook, and Twitter.
UPCOMING VC EVENTS
Sep 1-4 - Deep Tech Momentum, Berlin, Germany
Sep 6-7 - Pirate Summit, Cologne, Germany
Sep 7-8 - YC Demo Day Summer 2022
Sep 12 - FO & HNWI Round Table Pitching & Dinner by Dunhill Ventures, Dubai, UAE
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 20-22 - Dreamforce, San Francisco, US
Sep 26-Oct 2 - Asia Crypto Week, Singapore
Sep 26 - 29 - Oslo Innovation Week, Oslo, Norway
Sep 28-29 - Token2049, Singapore
Oct 5-6 - Sifted Summit, London, UK
Oct 8-14 - Wow Summit, Dubai, UAE
Oct 10-14 - GITEX Global, Dubai, UAE
Oct 11-13 - Take Off Istanbul, Turkey
Oct 15 - World Blockchain Expo, Dubai, UAE
Oct 17-18 - World Blockchain Summit, Dubai, UAE
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 ? - XPO.CRYPTO, Medellín, Columbia
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 23-24 - Global Blockchain Congress, Dubai, UAE
Nov 24 - VNTR Capital Breakfast Berlin
Dec 1-3 - Art Basel Miami, US
Dec 6-7 - NOAH Zurich 2022, Switzerlan
Want 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
Want Seed Funding? Why Investors Want to See $72 Million in Revenue by Year 10
What would make your early-stage company venture-backable? Investors typically talk about three factors driving their decision making: team, product, and market. But there's an overriding component overlaying all three. That is, how much of a return your company can generate for investors when all three factors align as hoped. If that return isn't large enough, investors don't want in, according to Augustin Sayer of Newfund, a $300 million seed stage VC firm.
It's common to hear VCs make the sweeping statement that you need to show a path to growing revenues 1,000x, and valuations by 100x, to justify an investment.
Can A Sale Stave Off Layoffs? VCs Say ‘No’
Headlines of tech-related layoffs are even more prevalent than reports of the drop in venture funding. As of mid-August, more than 38,000 workers in the U.S. tech sector have been laid off so far in 2022, according to the Crunchbase News layoff tracker. Much of that bloodletting is due to the dip in venture funding startups are realizing, as their runways narrow and hard decisions are made. One of those hard decisions is deciding when to sell a company, especially if it could mean saving employees’ jobs. However, venture capitalists and those who sit on boards say while preserving jobs always is a concern, selling a company in an effort to avoid layoffs is a gambit unlikely to pay off in the long run. “Exits are something planned, not really forced,” said Bá Minuzzi, founder and general manager of San Francisco-based UMANA House of Funds.
H1 European VC valuation trends in six charts
European venture capital valuations landed higher than expected in the first half of 2022, rising across all stages from last year's figures. This growth is unlikely to last as we head deeper into the year, with layoffs, down rounds and valuation haircuts expected to become more frequent given the current economic outlook. The median early-stage valuation for H1 was €8.4 million, pacing 33% higher than last year. Early-stage startups have been relatively insulated from near-term volatility thanks to their distance from the public markets, and increased competition between investors at this stage has helped buoy valuations. Overall, valuations for late-stage companies have remained positive, still tracking above 2021 numbers despite layoffs and weaker revenue growth for more mature businesses. As the year goes on, more late-stage startups are expected to cut their price tags as investors become more cautious about high valuations, which could lower the median valuation.
Financial bubbles occur when large groups of investors repeatedly make poor investment decisions, often due to greed, misunderstanding and easy money. A modern-day example of this is quantum computing. Quantum computing is often portrayed as an up-and-coming technology whose eventual impact will only be rivalled by artificial intelligence. According to the quantum evangelists, it is only a matter of time before a fully-functional quantum computer will appear and do everything from revolutionising drug development to cracking internet encryption schemes. Billions of dollars have poured into the field in recent years, culminating with the public market debuts of prominent quantum computing companies like IonQ, Rigetti and D-Wave through 2021’s favourite frothy market phenomenon, special purpose acquisition vehicles (Spacs).
The Tales of Usefulness Have Been Greatly Exaggerated
Venture capital is a weird hodge podge of money management, advisory services, thought-piece marketing, and (increasingly) meme accounts. As recently as 2019 the conversation around "let me know how I can be helpful" mostly revolved around lending "social capital in lieu of financial capital." In other words? VCs say it when they pass on an investment but don't actually mean it. But progressively the meme has expanded to "all VCs are useless" pretty quickly. This sentiment creates a significant dose of soul-searching among VCs.
Venture Investors Put Billions Into Nuclear Fusion And Fission Projects
Nuclear power is having a big year for venture funding, and it’s not just fusion startups that are attracting capital. A Crunchbase analysis of investment in nuclear projects shows companies pursuing both fission- and fusion-powered technologies have racked up huge rounds of late. Collectively, they’ve pulled in over $3.4 billion this past year. The largest recent round was for TerraPower, a venture founded by Bill Gates and other climate-focused backers around the idea that the private sector needed to take action in developing advanced nuclear energy to meet growing electricity needs. The Bellevue, Washington-based company raised $750 million last week in equity financing led by Gates and South Korea’s SK Group. The fundraise follows some big developments for TerraPower, which is building a demonstration site for its Natrium nuclear technology in Wyoming. The project features a sodium-cooled reactor with a molten salt-based energy storage system capable of providing a maximum of 500 MW of power—roughly the power consumption of 80,000 typical American homes.
How to tell if a cryptocurrency project is a Ponzi scheme
The crypto world has experienced an increase in Ponzi schemes since 2016 when the market gained mainstream prominence. Many shady investment programs are designed to take advantage of the hype behind cryptocurrency booms to beguile impressionable investors.
Ponzi schemes have become rampant in the sector primarily due to the decentralized nature of blockchain technology which enables scammers to sidestep centralized monetary authorities who would otherwise flag or freeze suspicious transactions. The immutable nature of blockchain systems that makes fund transfers irreversible also works in the scammers’ favor by making it harder for Ponzi victims to get their money back. Speaking to Cointelegraph earlier this week, KuCoin exchange CEO Johnny Lyu said that the sector was fertile ground for these types of schemes due to one main reason.
Corporate VC is booming, but is it what your startup needs?
After a decade of easy money, start-ups are suddenly facing a strange new reality: funding is drying up. Global venture funding fell by 23 percent to US$108.5 billion in the second quarter of the year – the second-largest drop in a decade. Although the figure is still higher than levels seen before the pandemic, entrepreneurs could be forgiven for feeling more anxious about their venture being starved of financial backing. The landscape has its bright spot though, and that is the rise of corporate venture capital (CVC). Between 2010 and 2020, the number of corporate investors grew more than six times to over 4,000. Collectively, they invested a record US$169.3 billion in 2021, up 142 percent compared to 2020. Even as investment appetite cooled in Q1 this year, there were a record 1,317 CVC-backed deals. However, funding fell 19 percent to US$37 billion.
Huawei founder sparks alarm in China with warning of ‘painful’ next decade
The founder of Huawei has delivered a stark warning for the tech company’s future, sparking alarm with the frankness of his assessment and what it signals for smaller businesses amid China’s economic troubles and a global downturn.
In a leaked internal memo, Ren Zhengfei told Huawei staff “the chill will be felt by everyone” and the company must focus on profit over cashflow and expansion if it is to survive the next three years, indicating further job cuts and divestments.
$350 million for WeWork co-founder shows how broken and biased venture capital is
A reported $350 million investment into a new, yet-to-be-launched real estate venture founded by a controversial businessman has drawn criticism from women entrepreneurs.
The investment, which was made and publicly shared by venture capital powerhouse Andreessen Horowitz, is in Flow, the new company of WeWork co-founder Adam Neumann.
Given Neumann's questionable business dealings and his abrupt exit from WeWork amid a fraught initial public offering in 2019, this new investment typifies the immense gap that exists in comparison with how much money venture-funded companies founded solely by women garner, experts say. The investment is a prime example of how venture capital (VC) ecosystems "have always been inequitable," Rebekah Bastian, the CEO, and co-founder of OwnTrail, a startup that helps people achieve their next personal and professional milestones, told NPR. "When 16% of investment partners at VC firms are women, 3% are Black, and 4% are Latinx, it's not shocking that women founders have received 1.9% of venture dollars so far in 2022," Bastian told NPR over email. "Black-founded startups in the U.S. raised less in Q2 2022 in aggregate ($324 million) than Adam Neumann received in a single check from Andreessen Horowitz."
Private equity and venture capital are concerning risk-off LPs
Institutional investors in alternative assets are in no mood to take risks according to a new report from industry analysts at Preqin. The firm’s H2 2022 Investor Outlook report polled 300 limited partners (LPs) to assess global investor sentiment in ESG, private equity, venture capital, private debt, hedge funds, real estate, infrastructure, and natural resources. With economic concerns heightened, the poll found around half of respondents expect worse performance over the next 12 months from private equity (PE) and venture capital (VC). VC is the most concerning with 80% of investors assessing the asset class as overvalued; along with PE it is expected to be most impacted by economic headwinds. The survey was conducted in June 2022, with 55% of survey respondents believing then that the equity market is reaching the low point of the market cycle. Cameron Joyce, SVP, deputy head of Research Insights at Preqin, said the survey results reveal a material shift in investor behaviour and the perfect storm for risk assets in 2022.
Publicly traded PE firms could absorb rivals in a quest for growth
Publicly traded US PE firms could focus more of their firepower in the coming quarters on acquiring stakes of competing firms as they look for ways to grow and sustain their stock prices. Given the strong US dollar and slowing economy—and as pressure from investors continues to rise—public PE institutions are likely to see more opportunities to make domestic and international platform acquisitions in the months ahead, according to our latest analyst note on US public PE firms. A number of factors could drive a GP to consider selling itself to another private investor, according to PitchBook analyst James Ulan. "GP consolidation has been more driven by the broader trend of large GPs seeking growth and diversification via acquisition," Ulan said. "As large public PE firms have expanded, they've commanded a greater proportion of LP assets, making fundraising more difficult for small GPs. This could be causing some GPs to consider selling. And as in many industries, size often means higher profit margins."
A conversation with Andreessen Horowitz’s fintech leads
Last month, Andreessen Horowitz - one of venture capital’s largest and most prominent players - announced that its “headquarters will be in the cloud” going forward. Founded in 2009 in Menlo Park, California, the firm - also known as a16z - has for years been a symbol of Silicon Valley investing. Its new philosophy in this post-COVID era of remote work is that there is no longer a need for a centralized HQ. This philosophy extends to its fintech team. And let’s face it, fintech is opening so many doors in general - making a lot more things possible in terms of running a company or just operating in general, globally. Many may underestimate just how much the pandemic really pushed this acceleration in the financial services world and people are now kind of commenting, “Oh, there’s this slowdown and, like, look at how much-decreased investment is in fintech.” You have to put it in perspective — we’re still way, way up from 2020 in terms of how much money is going into this space. And fintech is still taking almost a fifth of all venture capital dollars. I believe this is because it impacts everyone on a daily basis. If financial services are easier to access or if it’s easier for a business to operate or make payments or accept payments, then that’s all because of fintech.
In 2019, Anthony Oni showed up to the first pitch meeting for his startup and noticed a stark difference between himself and the lenders seated across the table. The room reflected much of the venture capital industry: white men. "When I walked into the room, I remember thinking, none of these investors look like me," Oni said. Oni was successful that day and in those that followed. He won funding for his clean-tech company, Cloverly, which allows users to neutralize their carbon footprint by matching every carbon-producing transaction with an equivalent investment in carbon credit. And when a group of venture capitalists invited Oni to join their firm, he said yes. He is now a managing partner of Energy Impact Partners, a venture capital firm specializing in funding sustainable-energy projects.
Within 2 years, India will have the largest pool of web3 developers in the world
India today has the second largest crypto user base in the world. We believe that with increasing regulatory certainty, India will probably have the largest pool of web3 developers in the world in the next two years. When Web2 was developing, it was a different story as the digital economy was not strong. That story will change with Web3 developers. India will see more unicorns coming out of the Web3 space as compared to the Web2 space.
European VC public listing retreat drags down valuations
Valuations for venture capital public listings in Europe took a big hit in the first six months of the year as the IPO market all but disappeared. Public listings valuations reached a new peak last year as investors and companies took advantage of the strong demand for tech, which resulted in a record number of public entries. As the tide turned in 2022 with widespread tech sell-offs and increased market volatility, valuations have dropped significantly. The median pre-money value for public markets stood at €30.7 million (about $30.6 million) in H1, according to PitchBook's Q2 2022 European VC Valuations report, which is some 56.8% less than at the end of 2021. VC-backed companies in the bottom quartile suffered the biggest drop with a 74.2% decline in the median valuation. For those in the top quartile, the median price tag fell by 22%. The fall in European VC public listing valuations is explained by a significant drop in the number of such exits and their value. In H1, Europe saw 34 public listings for a combined total of €11.3 billion, a decline of 83.3% and 89% from 2021, respectively.
Legendary investor Julian Robertson has passed away - but leaves behind many powerful mentees
Julian Robertson’s hedge fund investors didn’t want to listen to him when, in 1999, he questioned the sanity of the prices being paid for shares in nascent internet companies. So months after being berated for 15 minutes at an annual shareholders meeting at the Plaza Hotel in New York in October 1999, he began the process of closing up his shop. “There is no point in subjecting our investors to risk in a market which I frankly do not understand,” Robertson reportedly wrote to them in March of 2000. “After thorough consideration, I have decided to return all capital to our investors, effectively bringing down the curtain on the Tiger funds.”
In April 2000, the tech market began to implode. His good timing only cemented the legend of Robertson, who just passed away at age 90 of cardiac complications, according to his spokesman, but who, until he was 67, led Tiger Management, one of the best-known funds in the 70-year-old hedge fund industry.
Blockchain Means So Much More Than Crypto
Use the word “blockchain” in a conversation and the topic will likely gravitate to one of a handful of topics prominent in the news, like cryptocurrencies, the metaverse, and Web3.
Theoretical, next-generation technology trends tend to dominate technology discussions. Blockchains have spawned entirely new asset classes for investors in cryptocurrencies and non-fungible tokens (NFT), and they will power a new generation of innovations built on nebulous concepts like metaverse and Web3.
Private equity wades into cybersecurity subsector consolidation
The fragmented identity and access management subsector of cybersecurity needs consolidation, and private equity firms are taking the opportunity to combine vendors and create players that can compete better in the marketplace. Deal activity in 2022 by Thoma Bravo LP is an example, according to Garrett Bekker, principal research analyst at 451 Research. The software-focused private equity firm completed its approximately $6.9 billion acquisition of SailPoint Technologies Holdings Inc. on Aug. 16 and is now in the process of acquiring Ping Identity Holding Corp. for $2.8 billion. "You could see some private equity activity following an example of, say, Thoma [Bravo] picking up Ping and SailPoint," Bekker said. "There's a very high chance that they will look to combine those two companies." Identity and access management is a group of technology that deals with managing digital identities and controlling access to enterprise resources. There are at least five subsegments within the space, including authentication, identity governance, access management, privileged access management, and customer identity access management, Bekker said.
The founder of a crypto powerhouse says Meta and Microsoft are 'digital dictatorships' and wants to crush their dominance in the online world
Big tech critics have long singled out the industry as having too much power, and the co-founder of a powerful crypto giant just chimed in on the matter. Yat Sui, who leads Hong Kong-based Animoca Brands — which backs a number of major crypto projects and owns The Sandbox — told Bloomberg in a report published Wednesday that his company has invested in more than 340 firms spanning finance, gaming, and blockchain. The goal, he told Bloomberg, is to tear down tech giants' dominion over the industry and return online ownership of one's digital identities and properties back to users. He called the likes of Meta, Facebook's new parent company, and Microsoft "digital dictatorships" without saying more in the interview.
Edtech Funding Falls Sharply
After spending record sums in 2021, investors in education technology startups have learned a lesson. Apparently, they recognized that perhaps too much money went into too many excessively large rounds at unsustainably high valuations. This year, they’re paring back.
That, at least, is the takeaway from a Crunchbase News analysis of venture funding to EdTech and education startups in the U.S. and abroad. Data shows that funding to U.S. companies in the space is on track to come in at less than half-year ago levels. Globally, the numbers are down too, with around $5.4 billion going into seed and venture rounds for education and EdTech companies so far this year. That’s on track to come in well below the $15.8 billion investors poured into the space in 2021.
Monthly VC Funding in India Falls Below $1 Billion for first time in 2022
Leading data analytics firm Global Data has revealed July to be the first month of 2022 where total venture capital (VC) funding raised by Indian startups fell below $1 billion. The VC funding value plunged by a massive 58.7% to $907.5 million last month. It further states that the deal volume also fell by 9.6% compared to the previous month. The cumulative announced VC funding deal volume for January to July was 1,108, while the corresponding value stood at $16.5 billion. The average deal size more than halved from $15 million in June 2022 to $7 million in July, due to the drop in the volume of big-ticket deals. Aurojyoti Bose, the lead analyst at GlobalData, said, “In addition to the volatile market conditions, investors’ shift in focus towards sustainable business models and profitability seem to be taking a toll on the VC funding activity in India.” Private equity players and venture capitalists around the world were scrambling to have a share of the Indian startup ecosystem, but tables have turned due to the harsh funding winter.
Venture Slowdown Not Prompting More M&A
VC-backed startups have not yet started to turn to the M&A market as a way to exit even as fundraising has become more difficult and the IPO pipeline has dried up. The pullback in the venture capital market and general economic uncertainty would seemingly create an environment where cash-strapped startups look for a safe landing spot in the form of a sale. However, according to Crunchbase data, M&A activity involving VC-backed startups has fallen since last year. In 2021, there were more than 3,000 M&A deals globally involving a VC-backed company getting bought, according to Crunchbase data. Halfway through the third quarter of this year, just under 1,600 startups have found a mate in the market. The numbers are even more stark in the U.S.—a leading indicator for the venture market in general. Last year, just fewer than 1,700 VC-backed startups were bought, per Crunchbase. This year has only seen 745 such deals.“It’s not terribly hot right now,” said Don Butler, managing director at Thomvest Ventures, about the M&A market for startups.