VNTR Capital News Aug 7th, 2022 - News, Events, VC Reads
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VNTR CAPITAL COMMUNITY NEWS
We are one week away from our trip to Portugal, where we will travel from Lisbon to Algarve and back to Cascais at VNTR Capital Summer Trip from Aug 15th to 19th, 2022. We will explore Portugal with active investors and enjoy the various unique experiences https://www.vntr.vc/camp.
We will host events for the local investors' community:
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 produce the VC Camp.
Upcoming VNTR Capital Events:
Aug 10th - VNTR Capital Breakfast New Delhi, India
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
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UPCOMING VC EVENTS
Aug 9-10 - Febraban Tech, São Paulo, Brazil
Aug 15-19 - VNTR Capital Camp, Algarve, Portugal
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 - VNTR Capital Breakfast, Dubai UAE
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
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VC READS
Still Falling: July Funding Drops Again After A Stronger June
Global venture funding plummeted in July as investors continued to shift their attention from late-stage to early-stage companies while investing fewer dollars in both stages. July 2022 funding reached nearly $28 billion, a drop of 34% month over month from $42 billion in June, Crunchbase data shows. And funding is down 56% from $63 billion in July 2021. Monthly funding totals do not always follow a clear trendline. Funding was lower in May, spiked in June, and was down this past month. How much this is part of a summer slowing in funding will be clearer as we reach the end of the third quarter. However, the second quarter of 2022 was already trending down—around 25% quarter over quarter and year over year—as investors began moving away from late-stage companies. July’s nearly $28 billion total is the lowest funding month on record since November 2020, when funding reached $26.4 billion. It has taken a while for the tumble in technology stocks—beginning in late December—to impact venture funding.
What Is Crypto’s Downfall? Its Complexity
As in many financial markets, bitcoin and other cryptocurrencies have seen their value plunge so far this year. A handful of projects like Terra have imploded before our very eyes. This sequence of events has led many investors and onlookers to question whether there's a viable future for the asset class that was so bullish just a year ago. The pandemic brought an influx new bitcoin and other asset investors, many of whom lost big this summer. Most didn’t understand the risks partially because of naivete, but also due to the increasingly complex crypto ecosystem making it harder to understand. The warning signs were there for those of us who have been around for more than one market cycle. The reality is that each project is its own unique animal, and not all of them are built to withstand the myriad threats that lie ahead.
While it will take some time for sentiment to recover, it’s premature to dunk on bitcoin and the like right now. There may still be some potential to be found out there. In the meantime, there are several red flags to watch out for when vetting other projects.
The Collapse of the World Economy or Great Depression 2.0: Reasons, Time Frame, Consequences
We all remember one of the biggest economic collapses two decades ago when the US stock market crashed due to an asset valuation bubble of unviable Internet startups. Not only did unprofitable startups go bankrupt at that time, but this bubble bursting even hit successful companies that had established business processes and were good at generating profits.
You are probably wondering why we are bringing this up 22 years later? The truth is that many experts are now finding some similarities with the current situation. We decided to carry out a deeper analysis of the dot-com crisis. Perhaps past mistakes will help us cope with crises in the future. So, let’s get down to business.
Layoffs Move Beyond Tech As Walmart Reportedly Cuts Corporate Staff
While layoffs have primarily been affecting the tech sector, it looks like they’re now coming for retail too. Walmart is laying off hundreds of corporate employees amid a company restructuring, The Wall Street Journal reported. The layoffs will affect departments spanning from merchandising to real estate and global technology, WSJ reported. One source told the publication that around 200 jobs at the retailer are being cut. It hasn’t been an easy year for Walmart and other retail companies. Retailers have been facing a surplus in inventory, leading to markdowns and sales. Both Walmart and Target have recently said they expected their profit to decline, given their excess inventory. Shoppers aren’t shopping like they did in the early days of the pandemic, and inflation has reduced the incentive to spend discretionary dollars. That, combined with supply chain issues, has created a pileup in inventory that retailers are now trying to get rid of through sales.
Here's what climate tech investors think of the Inflation Reduction Act
When tech investor Abe Yokell heard about the $369 billion bill to fund climate investment in the US, he almost fell out of his seat. Yokell, a managing partner at Congruent Ventures, wasn't alone. Climate tech investors and advocates were shocked by the agreement between Senators Joe Manchin and Chuck Schumer that, if passed, would be the largest investment in decarbonization the US has ever made. Just weeks ago, the Democrats' push to fund climate initiatives seemed dead. Now, with Arizona Senator Kyrsten Sinema's support, the bill appears poised to pass. If it does make it all the way to President Biden's desk, the package will supercharge an already strong environment for climate tech investment. US VC funding for climate tech has been on a tear in recent years, topping $16 billion in 2021, more than double the prior year, according to PitchBook data. And leading private equity firms from TPG to Brookfield Asset Management have raised billions to finance green projects.
Forecasting a Return to Venture Normalcy
The prospects of every startup change monthly. However, one observed phenomena of early-stage investing is that startups doing well are more likely to give you updates—and startups doing poorly are less likely to give you updates.
This means a month with low activity (i.e., changes in price per share because of financings or exits) but many positive updates, and a month with high activity but fewer positive updates might reflect the same underlying state of startup health. In the former case, we just didn’t hear about the negative activity.
Corporate VC Is Booming, but Is It What Your Start-Up 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.
Coinbase will give BlackRock clients access to bitcoin
Coinbase said Thursday that it has partnered with BlackRock to give the world’s biggest asset manager’s clients access to bitcoin and other cryptocurrencies. The news sent Coinbase shares rallying more than 15% as a partnership with a major Wall Street institution eased investor worries about heightened regulatory scrutiny of the crypto marketplace. Coinbase will provide clients of BlackRock’s Aladdin software “direct access to crypto, starting with bitcoin,” Coinbase executives Brett Tejpaul and Greg Tusar said in a blog post.
VC wells drying up: Y Combinator's latest class shrinks 40%
Venture capital is the latest to feel the pinch from the economic downturn, with venerable Silicon Valley incubator Y Combinator's Summer 2022 cohort consisting of less than 250 companies, down from over 400 last Winter's list - a drop of 40 percent. Lindsay Amos, Y Combinator's communications director, confirmed to The Register that the incubator had done so intentionally, attributing the reduction to the current state of the economy. Despite the downturn, Amos said, Y Combinator's summer 2022 cohort "is still a large batch relative to the last five years."
London scoops 81% of UK venture capital investments
London-based companies received 80.6% of all venture capital investments last quarter in a sign that regional hubs continue to be overlooked by investors. Data released by KPMG’s Venture Pulse report shows that £5.8bn of VC investments between April and June went to companies based in London, while £1.4bn was invested across all the other regions around the country combined. Among the top regional deals was the £84m investment into Manchester-based Freedom Fibre. The company aims to bring fibre connection to two million buildings in the Northwest. Overall, the £7.2bn raised by UK companies was a decline from the £8.5bn raised in the first quarter in a sign that soaring inflation, rising interest rates and macroeconomic uncertainty from the war in Ukraine is being felt by investors.
Venture investors to founders: Turn down for what?
Gumroad’s Sahil Lavingia broke into the venture world as one of the early testers of the rolling fund, an AngelList product that allows investors to raise capital on a subscription-like basis. That was in 2020. Fast-forward to 2022, and a lot has changed. One of those changes? The number of pitches from founders looking to raise. “Since March, it’s gone down about 90%,” Lavingia told TechCrunch. “I was probably seeing more than most — about 20 to 40 well-vetted decks a week – and that number is down to about two to four a week now.” He’s also seen the quality of talent rise for people wanting to work for Gumroad — which he partially attributes to the steady stampede of layoffs — and a decline of founders starting companies. A downturn in the number of founders raising capital suggests that early-stage startups aren’t as immune to macroeconomic shifts as some investors claim; in contrast, a boom of fresh startups would support the idea that recessions — and the accompanying spate of layoffs — are the time when startups are born.
Debt Numbers Tick Up As VC Market Slows
Venture capital-backed startups in the U.S. are raising slightly more debt than they did in 2021—another possible sign that equity fundraising this year is much different than last year.
Although debt numbers are not up dramatically from last year, there has been an uptick in dollar amounts even though the number of deals is relatively even. According to Crunchbase data—which tracks publicly announced debt financing rounds—VC-backed startups in the U.S. have raised nearly $15.9 billion in debt in 321 deals through the first seven months of the year. Through the same period in 2021, startups had publicly announced about $13.3 billion of debt in 320 deals. Those who deal in debt say the increase is very real. “I think March was the beginning of what we are seeing now,” said Dan Allred, senior market manager at Silicon Valley Bank. “At that time, people were just asking about the uncertainty (of the VC market), now it is just full-on choppy.”
Venture capital’s silent crash: when the tech boom met reality
The venture capital world is in the grip of a silent crash. Unlike the stock market, there are no daily market indices to broadcast the pain, and no individual share prices for anxious tech employees to watch as their personal wealth evaporates. In fact, for many of the investors and entrepreneurs who have just lived through a historic boom in venture investing, it is even possible to pretend a crash isn’t happening at all. Loose rules that require only sporadic writedowns, the estimated value of private companies, have made it easy for many to turn the other way. Josh Wolfe, co-founder of Lux Capital, likens the response to “the classic five stages of grief”. “We’re probably somewhere between anger and bargaining,” he says, referring to the emotions that follow denial. Yet investors and company founders, Wolfe adds, are still resisting the full implications of a market downturn that will have a profound effect on the start-up economy.
UAE aims to convert oil wealth into tech prowess
The Middle East has long been thought of as an oil region, but the United Arab Emirates aims to change this with an intense focus on growing the country’s technology and startup scene.
For the first half of 2022, the Middle East region brought in $1.73 billion in investments across 354 deals, up from more than $1.2 billion in the first half of 2021 — a 64% year-over-year growth. The UAE took in 46% of the total venture capital received in the Middle East and Africa in 2021, according to the country’s Ministry of Economy. The UAE began focusing on its tech and startup hub goal in 2016 by establishing the Sharjah Research Technology and Innovation Park to incubate companies in a variety of industries, including water management, renewable energy, transportation, manufacturing, and agriculture.
Co-Founder Yi He To Lead Binance's $7.5B Venture Capital Arm
Binance, the world's leading blockchain ecosystem behind the largest cryptocurrency exchange, announced the appointment of its Co-Founder Yi He as the new head of its venture capital (VC) arm and incubator, Binance Labs. "As part of the founding team, Yi has been actively involved in Labs since its inception and has played a pivotal role in identifying early-stage projects and founders with the vision and drive to disrupt those global institutions that no longer serve society effectively," said Binance CEO CZ (Changpeng Zhao). "This is the perfect moment for Yi to take on a larger role in Labs as this market presents an unparalleled opportunity to identify those projects with the tenacity to thrive in tough market conditions."
Binance Labs is the largest crypto VC in the industry by Asset Under Management (AUM) with a Multiple on Invested Capital (MOIC) of 21.0x, a performance metric that is unmatched in the industry. Binance Labs manages total assets of $7.5 billion, consisting of more than 200 portfolio projects.
Are corporate VC 'tourists' pulling back amid the downturn?
In the wake of the dot-com crash and the global financial crisis, many corporate venture capital firms ran for the hills with their capital, earning a reputation of being fair-weather VC investors, but this time might be different. Since then, CVCs have significantly increased their presence in VC deals, with their participation in global rounds rising by 462.5% in the 10 years ending in 2021. Firms like Coinbase Ventures and GV have found themselves among some of the most active investors in VC deals in recent years. But as a new downturn hits, many investors are wondering if the past will repeat itself.
Decentralized finance faces multiple barriers to mainstream adoption
Decentralized finance (DeFi) is a growing market popular with experienced crypto users. However, there are some roadblocks regarding mass adoption when it comes to the average non-technical investor. DeFi is a blockchain-based approach to delivering financial services that don’t rely on centralized intermediaries but instead use automated programs. These automated programs are known as smart contracts, enabling users to automatically trade and move assets on the blockchain. Protocols in the DeFi space include decentralized exchanges (DEXs), lending and borrowing platforms and yield farms. Since there are no centralized intermediaries, it’s easier for users to get involved in the DeFi ecosystem, but there are also increased risks. These risks include vulnerabilities in a protocol’s codebase, hacking attempts, and malicious protocols. Combined with the high volatility of the crypto market in general, these risks can make it harder for DeFi to reach wide adoption with average users.
European venture funding plunges as inflation hits private markets
European venture capital funding slumped in the second quarter of the year as an investment boom tailed off amid soaring inflation and market shocks brought on by Russia’s invasion of Ukraine, new research has revealed. Total venture capital investment into European firms fell over 18 percent to $26.4bn between April and June, after a bumper first quarter that saw $32.2bn injected into firms across the continent, according to a European Pulse Check from the Silicon Valley Bank and Dealroom. The slowdown came as the threat of an extended period of rising interest rates puts an end to the cheap cash that fuelled a venture capital funding boom last year. The IPO market also remains largely shuttered, closing off the option of lucrative exits for investors.
Most Active Investors Not Slowing Despite Downturn
At this point in 2022 there is no question that we are in an investment downturn. Venture funding clearly declined in the second quarter with amounts down by around 25% and deal counts also trending downward.But what does this look like for the most active venture investors or the firms that raised large funds in recent years? We looked closer at how these players—40 specifically—are investing in this environment. It turns out they haven’t slowed down by much.In the first half of 2022, this cohort of 40 firms invested actively in new portfolio companies on par with 2021. And in 2021, these 40 firms had upped their pace by more than 50% year over year compared to 2020.
Banks Aren’t Going to 'HODL' Bitcoin
“Bank for International Settlements to allow banks to keep 1% of reserves in bitcoin,” cries the headline on an article about the BIS’ newly proposed regulations for banks holding crypto assets. The article was retweeted by Changpeng "CZ" Zhao, CEO of crypto exchange Binance, with the comment, “Banks now use bitcoin for reserves. Probably nothing.” Crypto Twitter went wild. Zhao's comment was retweeted thousands of times and “liked” by more than 10,000 people. If the BIS really intends to “extend its hand” to bitcoin by allowing banks to hold it as reserves, as the article claims, that would indeed be great news for bitcoin as an asset class, though perhaps not for those hoping it would eliminate banks. But sadly, the BIS, which is an organization of the world's major central banks, has no intention of doing any such thing.
Xi Jinping’s massive venture capital thrust has a dark side
China’s industrial policy seems to have fans across the Pacific. The US’s $280 billion Chips and Science Act is a direct response from the Biden administration to Beijing’s spending to help key industries. But just as the likes of Intel and Micron Technology jostle for a slice of US government support, the perils of relying upon public money are sending shock waves through China’s chip industry. In recent days, corruption investigations have engulfed top officials in a sector that is integral to President Xi Jinping’s “Made in China 2025" ambitions. At least three senior executives from a $20 billion state-owned private equity fund, set up to invest mainly in chip manufacturing, were detained; so was Xiao Yaqing, head of the agency in charge of the nation’s industrial policy.
4 Questions Venture Capital Investors Will Ask in Your Pitch (and How to Answer Them)
Pitching your startup to a venture capitalist (VC) investor can be intimidating. You're speaking to exceptionally smart, successful individuals in a competitive market. According to Statista, 2021 set a new record for venture capital investments in the U.S. at approximately $330 billion invested — nearly twice as much as the year before. You're competing against a crowd of clever founders and amazing ideas. How can you best prepare for success? Consider the perspective of the VC. With such a wide range of investment opportunities and pitches, VCs typically have a set of criteria they look for to help themselves evaluate an opportunity. Think about what you would want to know as a prospective investor and build your pitch from there.
These Are The Leading States For Non-Software Startups
Geographic funding breakdowns have long been a staple of startup coverage. How much did Silicon Valley companies raise? How about the Midwest? Or what about that burgeoning Florida scene? Until a couple of years ago, this seemed like a sensible lens for looking at data. Employees at seed through mid-stage startups tended to work at headquarters. Companies that got VC funding generally spent much of it scaling up in their hometowns. Since the pandemic, however, this sort of geographic calculus no longer holds true. Instead, there’s a breakdown by industry. Software startups commonly operate fully or largely remotely. Companies with physical infrastructure are usually on-site. With this shift in mind, we set out to explore a different kind of geographic funding analysis: One that separates companies in remote-work-leaning sectors and more infrastructure-heavy industries. Broadly, we call it “non-software startups” and “software startups.”
The most active VC investors in European healthtech
While many sectors are seeing venture activity contract as the downturn persists, European healthtech is on pace for another record year. So far in 2022, startups in the vertical have raised €3.6 billion (about $3.7 billion), according to PitchBook data, representing over two-thirds of the €5.1 billion secured last year. Deal count has dipped slightly, with 369 rounds coming in just under 2021's halfway mark. European healthtech investments rose significantly with the onset of the pandemic, which highlighted society's vulnerability to health crises. Aging populations and a need for innovation within outdated healthcare systems ensure demand, making the sector more resistant to a downturn. The amount of capital invested in European healthtech has also been buoyed by several mega-rounds. The largest deal so far this year was a €500 million Eurazeo-led investment in online medical portal Doctolib, making it France's most valuable VC-backed company.
Private equity and venture capital deals rising in Asean
THE ever accelerating rate of technology adoption has seen private equity and venture capital (PEVC) deals rising, especially to fund startups. Assets under management reached US$57bil (RM253bil) as of September 2021, up from just US$17bil (RM57.75bil) a decade ago.
The best opportunities this year in PEVC are in Asean and it is the highest among all emerging markets. Digitalisation of existing businesses in recent years has led to robust investor interest. There is a strong push in early stage investments by investors in the region, says the “Preqin Territory Guide Asean: 2022” report. Last year, VC deal activity reached US$20bil (RM80.12bil) in Asean and the trend continues. The aggregate deal value for Asean in 2021 was 35% higher than the 2019 and 2020 levels combined, and 85% higher than the last peak of US$11bil (RM49.02bil) in 2018, the report says. Singapore and Indonesia accounted for most of the VC deals last year, representing 46% and 37% of the aggregate deal value in Asean, respectively.