VNTR Capital News Feb 13, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - Feb 13 News, Events, and VC Reads
Happy Monday! Have a great week ahead!
VNTR Capital Newsletter is delivered to 30k+ investors weekly to share the latest news, events, and articles from the global VC and startup ecosystem.
Scroll down for VNTR Capital Community News, Upcoming Events, and VC News/Reads.
VNTR CAPITAL COMMUNITY NEWS
London — VNTR Investors Roundtable London was held Feb 8 during ICE London, where 30 local and visiting investors discussed investments in Web3-driven solutions featuring metaverse, NFTs, native tokens, blockchain, payments systems, and more. Gary Guerassimov, co-founder of ChangeX.io, introduced the ChangeX platform that combines the power of Crypto, DeFi, and Banking and opened a discussion about the importance of operating in regulated markets. Many thanks to Olga Sergeeva, Iva Matasic, Sophia Schluger for moderating the event.
Dubai — the very first VNTR Investors Lounge in Dubai was a great success. Held in partnership with the TMRW Conference Dubai on Feb 8-9, over 100 investors gathered at the VNTR Investors Lounge for private meetings, VNTR Investors Roundtable Dubai on Feb 9, and a panel discussion with UWill.World on the steps to increase the number of women investors worldwide.
Israel — We are meeting with top VCs in Israel to explore investment by our Fund of Funds Syndicate Program — providing syndicate LPs access to top funds at smaller check sizes than required for direct LPs. For more information on our Fund of Funds Syndicate Program, apply here.
Jerusalem — 1st Investors Roundtable in Jerusalem will be held on Feb 16 as a side event to OurCrowd Summit on Feb 15.
Barcelona — We look forward to kicking off our Barcelona investors community with 2 events in Barcelona:
Investors Roundtable on Feb 17 as a side event to European Blockchain Convention.
Investors Roundtable on Feb 28 as a side event to Mobile World Congress
Thank you to our partners:
Crypto Hunters TV Show is a groundbreaking adventure-reality series that delves into the world of cryptocurrency. Our show offers a unique blend of action, entertainment, and education as our contestants embark on a thrilling worldwide journey to uncover the secrets of the crypto world. With a focus on accessibility and entertainment, we aim to bring the excitement of cryptocurrency to a wider audience. Rounding out our approach to untapped markets will be the Crypto Hunters Mobile Game App. The game will be intrinsically linked and prominently advertised through the Crypto Hunters TV show. Learn more and contact HK.
Changex is a unique personal finance mobile app that connects crypto and DeFi to the real world via in-wallet banking. The company is building a swiss knife financial solution by providing access to multi-chain crypto trading, proprietary products such as Leveraged Staking to leverage any POS asset, and a Crypto Debit Card for unprecedented utility. Learn more and contact Gary.
Perfect.Live - Personal lifestyle app with premium concierge services and a well-rounded calendar for all life events. Empower your routine with integrated GPT technology for seamless access to luxury services and an effortless lifestyle. Enjoy personalized assistance with tasks, errands, and reservations, freeing up time for what truly matters. Learn more and contact Dmitri.
Upcoming VNTR Capital events:
Feb 16 VNTR Investors Roundtable Jerusalem (during OurCrowd Summit 2023)
Feb 17 VNTR Investors Roundtable Barcelona (during European Blockchain Convention)
Feb 28 VNTR Investors Roundtable Barcelona (during Mobile World Congress 2023)
Mar 11 VNTR Investors Roundtable Austin (during SXSW)
Mar 23 VNTR Investors Roundtable Paris (during Paris Blockchain Week)
Mar 30 VNTR Investors Roundtable Hong Kong (During Wow Summit)
Apr 12 VNTR Investors Roubdtable San Francisco (During Startup Grind)
Apr 27 VNTR Investors Roundtabe Austin (During Consensus)
RSVP to Upcoming VNTR Capital Events
The VNTR Capital Investors Community has a growing membership of 340+ qualified investors, actively investing in high-growth technology companies as VC/Crypto Fund managers, angel investors, and family offices.
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UPCOMING VC EVENTS
Feb 16-17 Blockchain Fest, Singapore
Feb 24 - Mar 5 ETHDenver, Denver, USA
Feb 27-28 Blockchain Life 2023, Dubai, UAE
Feb 27 - Mar 3 Mobile World Congress, Barcelona, Spain
Feb 27 - Mar 5 Miami Web3 Week
Feb 27 - Mar 2 4YFN 2023, Barcelona, Spain
Mar 1-2 Affiliate World Dubai, UAE
Mar 1-5 Dubai International Boat Show
Mar 10-19 SXSW, Austin, USA
Mar 13-16 AIBC Eurasia, Dubai, UAE
Mar 13-15 FinTech Week Tel-Aviv, Israel
Mar 15-17 sTARTUp Day 2023, Tartu, Estonia
Mar 19-20 Crypto Expo Europe, Bucharest, Romania
Mar 20-24 Paris Blockchain Week, Paris, France
Mar 20-21 World Blockchain Summit Dubai, UAE
Mar 23-25 Art Basel Asia, Hong Kong
Mar 29-30 WOW Summit Hong Kong
Apr 11-12 Startup Grind, Silicon Valley, USA
Apr 26-28 Consensus by CoinDesk, Austin, USA
Apr 27-28 TechChill, Riga, Latvia
May 15-19 AIBC Americas, Sao Paolo, Brazil
May 24-25 Next Block Expo, Warsaw, Poland
May 30 - Jun 4 Tech Week San Francisco, US
May 31 - Jun 2 GITEX Africa, Morocco
Jun 7-9 South Summit, Madrid, Spain
Jun 9-10 Epic Web3, Lisbon, Portugal
Jun 12-13 Metaverse Summit, Paris
Jun 14-17 Viva Technology, Paris
Jun 26-29 Collision, Toronto, Canada
July 6-7 Block3000, Lisbon, Portugal
July 19-22 AIBC Manila, Phillipines
If you would like to submit VC-related events, please respond to this email or Telegram @byuric
Follow us on Social media: Instagram, LinkedIn, Facebook, and Twitter.
Check out VNTR Capital upcoming events
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Europe’s unicorn investors
The number of unicorns — current or exited — in an investor’s portfolio has long been considered a barometer of their success. The earlier the investment, the higher the return.
Europe is home to over 120 unicorns, so who’s got the best eye — both in Europe and overseas— for finding needles in the haystack?
Funding Slowdown? Not For Climate And Clean Energy Software
Discouraging news on the climate front is easy to find. Atmospheric carbon dioxide levels continue to rise. The “Doomsday Glacier” is disintegrating faster than predicted. And climate change is contributing to extinction risk for thousands of species. Positive indicators are scarcer. That’s why it’s encouraging to see at least one small sign of positive momentum coming from the startup sector. It comes in the form of more money. In recent quarters we’ve seen unprecedented sums going to software startups focused on tracking and reducing carbon emissions, and on speeding up the shift to cleaner energy sources. The funding surge comes amid a broader rise in funding to climate-focused startups of all stripes. A sampling of top funding recipients for climate and clean energy software shows at least $1.68 billion in capital raised since the beginning of 2022, per Crunchbase data. For a sense of where the money is going, we chart out 34 of the most recently or heavily funded companies below.
Web3 community unites for Turkish–Syrian earthquake victims: Finance Redefined
In the aftermath of a deadly 7.8-magnitude earthquake in southeastern Turkey, the Web3 community has come together to raise awareness and aid for disaster victims. Stablecoins could prove to be a critical factor in larger DeFi adoption, says Aave founder Stani Kulechov. According to the Aave executive, building the “payment layer,” which involves stablecoins, can potentially hook regular people into the space, eventually introducing them into DeFi. On the other hand, S&P Global Ratings believe DeFi protocols can attract institutional interest if they get securitization right. Venture capital firm Andreessen Horowitz (a16z) used 15 million Uniswap tokens to vote against the deployment of Uniswap v3 on BNB Chain using the Wormhole bridge. Web3 developer ConsenSys has cast 7.03 million UNI votes in favor of its deployment on BNB Chain.
The SEC takes aim at America’s golden goose
The Securities and Exchange Commission (SEC) is considering a new rule that would expose investment funds such as venture capital, private equity firms, and hedge funds to litigation for failed investments.
This rule, which is set to be released and put to a commission vote, would address levels of liability for “negligence” related to funds and fund advisers. As the SEC considers the proposed changes, it is important that it does not overcorrect at the expense of innovation. Doing so could have dire consequences for all Americans.
Global venture capital deal value drops 68.9% YOY in January
Global venture capital investment fell 68.9% year over year in January to $18.18 billion from $58.49 billion, according to S&P Global Market Intelligence data. The number of funding rounds with venture capital participation was down 52.6% to 1,059 rounds, from 2,238 rounds in January 2022. The total amount raised declined from $19.71 billion in December 2022 via 1,104 rounds. Digital payment applications developer PhonePe Private Ltd. raised the largest funding round in January with a transaction value of $1 billion. New investor General Atlantic Service Co. LP led the first tranche of $350 million, and PhonePe plans to use the proceeds to develop infrastructure, scale UPI payments in India and invest in new businesses.
Private debt secondaries flooding the market overwhelm limited capital
Private debt secondaries are on the rise as investors increasingly hunt for liquidity options. Dealmakers say, however, that the market remains undercapitalized, even as secondary buyers pour in more money at a faster pace. Although some heavyweight buyers have snatched up debt secondaries, investors say the market has been pulling out all the stops to absorb big-ticket LP portfolio sales, and it’s been difficult to find buyers for some larger GP-led transactions. According to secondaries specialist Coller Capital, the trade in secondhand stakes of private debt funds hit $17 billion in 2022—more than 30 times the total volume in 2012. At the current rate, the value of secondary deals is expected to reach $50 billion by 2026, the firm estimated.
972 billion portfolios: How to design the optimal venture portfolio
We ran nearly a trillion portfolio simulations to determine the optimal portfolio construction. Here's what we found.
Determining the optimal size and strategy of an early-stage VC portfolio is an art, with as many answers as there are firms.
That said, there are two main camps: 1) a small, concentrated portfolio, betting on the best companies you can find, or 2) as large a portfolio as possible, acting like a sort of index of the market. And there are plenty of successful examples from both ends of the spectrum.
But it’s hard to find a general formula because the optimal portfolio is a function of many factors, and it largely depends on your goal. What do you want to prioritise? No losses? 2x returns? 10x returns?
Venture World Watches As SEC Moves To Regulate Industry
The Securities and Exchange Commission and venture capitalists have traditionally lived in two different worlds, but if a new rule from the regulatory agency advances, VCs could find their world under increased scrutiny. Nearly a year ago, the SEC started looking at adding regulations around how private investors — think private equity firms, hedge funds, some real estate investment companies, and yes, venture firms — vet deals. The added scrutiny would also open the door for LPs to push litigation against an investor if proper due diligence was not followed in a completed deal — something VCs have not had to worry about before.
Chance or deep observation: Our approach to thesis articulation
When an investor decides to back a company, what are they really investing in? At the pre-seed and seed stages, when a start-up may be little more than a big idea, there is rarely the luxury of a robust financial record to guide decisions. Instead, investors must assess a range of considerations, from the capabilities of the founders to the breadth of the market opportunity, the nature of the competition, the scalability of the business plan and the degree of future optionality.
All of these must prove favourable for an embryonic business to succeed, and any one of them might result in its failure. So how does an investor really decide: what do they look for, and which factors do they judge most important? Do those vary according to the maturity of the business, the geography, and the sector it is operating in?
‘The music has stopped’: A look at venture capital in retail
2021 was a big year for venture capital. Global venture-based funding rose 111% year over year to about $621 billion, according to data from CB Insights’ 2021 State of Venture report. The U.S. was the leading region for total funding dollars that year, and the unicorn valuation count rose globally by 69%. But in 2022, that picture changed. Global funding this past year was down 35% to $415.1 billion, per CB Insights’ 2022 report. In the U.S., there was a 37% drop year over year, but it was a 31% increase from 2020. While deal volume fell by just 4% globally, there was a 31% drop in IPOs. More specifically, retail technology funding globally declined by 52% in 2022.
Most Active US Investors In January: Y Combinator And Triangle Tweener Fund Lead Slow Month
Just one month into the year, and 2023 already is looking different from 2022.
Last January, more than a dozen investment firms participated in 10 or more funding deals involving U.S.-based startups. This January, that number dropped to only two investors — Y Combinator and Triangle Tweener Fund — as few big names made a lot of deals in the first month of 2023. Andreessen Horowitz made a good amount of deals, but other big players were nowhere to be found — at least in the U.S. Last January, Insight Partners and Tiger Global both announced 15 deals in U.S. startups. However, last month that number dropped to only one each. Let’s take a closer look at the firms that still remained active in a slow market.
Even in these times, smart startups can get funded. Here’s how
There was a moment last spring when startup founders across the globe experienced a sudden collective whiplash. It was the Great Venture Capital Reset of 2022, when fundraising activity screeched to a halt after running fast and hot for the longest bull market in VC history. Untold numbers of in-progress funding rounds sputtered in the process, and every startup that had planned to raise in the second half of 2022 found a very different market waiting for them.
Geopolitics Are Changing. Venture Capital Must, Too.
The era of American hegemony is ending. It is being replaced by a new geopolitical world order defined by great power competition and increased nationalism, a transition that will have enormous consequences for the global economy. This new environment will mean the end of, or at least a shift away from, the unique conditions that fueled global growth and development for the past 30 years, and will introduce increasingly complex, systemic challenges that will require new types of technology, innovation, and collaboration to solve.
Simply put, the technologies and companies that will thrive in this new era will require more capital, more patience, and greater levels of governance than before. In order to build and support the next generation of enduring businesses, we need to develop a new approach to company building, one that transcends, and ultimately redefines, venture capital.
Is the UK doing enough to support its tech startups?
When UK prime minister Rishi Sunak took up his post in October, his government's aspiration for the tech ecosystem was clear: developing the UK into the world's next Silicon Valley. This week, the government seemed to double down on that promise by setting up a new ministry for science, innovation and technology. At the same time, UK startups and their investors have expressed concern over recent policies that appear to run counter to these aims, among them the move to pull funding from government-backed industry body Tech Nation, the lack of visas for attracting startup talent and the removal of tax relief for research and development. As post-Brexit Britain falls behind the rest of Europe in recovering from a series of economic crises, the government is under increasing pressure to safeguard the development of the country's most innovative sectors. Not everyone thinks it is doing enough.
Private Investment Diligence and Fraud Prevention: Will New Regulations Change the Game?
Venture capital and other private funding sources continue to be an important pathway for financing early-stage companies. Unfortunately some startups that raised money did so by misrepresentation and in certain cases fraud, only to end up failing when the truth was finally discovered - resulting in significant losses for their investors.
Given the high-profile nature of a few of these failed startups and the resulting losses, there has been a call for increased scrutiny. The U.S. Securities and Exchange Commission (SEC) in particular appears to have heard the call and has proposed new regulations that may result in requiring certain investors to exercise a higher level of scrutiny when considering an investment. In this article we will explore the implications of such proposals and how they may affect investment firms’ obligations to their investors, as well as the overall startup investment landscape.
Regulating Crypto by Enforcement and Stealth Will Set the US Back
First, all indications are that the Securities and Exchange Commision will outright prohibit companies from providing staking services to retail customers in the U.S., products that give investors an opportunity to share in the token rewards that proof-of-stake blockchains deliver to validators. Following a hint from Coinbase CEO Brian Armstrong Wednesday that such a ban was coming, news broke Thursday that, in response to an SEC lawsuit, Coinbase competitor Kraken is indefinitely abandoning the staking service it offered to its U.S. customers and paying a $30 million fine. Second, per observations from Castle Ventures general partner Nic Carter and Blockchain Association chief policy officer Jake Chervinsky, and evident in other signs such as Binance’s problems with U.S. dollar bank transactions, it seems regulators are pressuring U.S. banks to stop servicing crypto companies.
SoftBank Posts $5.6B Loss Thanks To Vision Fund Segment
SoftBank posted a loss of $5.6 billion for the quarter ended in December of last year, thanks mainly to significant declines in its Vision Fund investment arm. The Vision Fund segment recorded a $5 billion loss for the quarter — further illustrating the softness in the current tech market as valuations have been slashed on private startups and share prices of publicly listed companies have been decimated. In a significant change from the past status quo, charismatic SoftBank CEO Masayoshi Son did not take part in the earnings release. Back in August, the engaging executive took responsibility for the poor performance of SoftBank’s investments, saying he had become “delirious” with the high returns the funds were seeing at the height of the market.SoftBank — known for its investment in U.S. companies like Uber, WeWork and DoorDash — has pulled back decisively on its investments. The Japanese conglomerate is now “focused on defense” when it comes to investing, and only deployed $300 million in capital for the quarter and only $600 million in the last two.
Tips for Talking to Your Investors about Bridges and Extensions
Discussing a bridge round or extension is one of the most challenging and important conversations between founders and investors. In the current environment, these conversations are happening daily. I wanted to share my experiences navigating these conversations and provide founders with some insights into how many investors think about when to provide additional bridge or extension funding to an existing portfolio company.
For many investors, the decision to participate in a bridge or extension comes down to whether or not they think they think they see a good outcome for the company. A good outcome could be a bridge that sets the company up for a future round of financing on the way to becoming a valuable company that could someday go public. A good outcome could also be a near-to-medium-term M&A transaction where investors think they will generate a good return. In some cases, a good outcome could be getting the company to profitability with a path to continued growth without additional invested capital. This decision is also often influenced by the investor’s relationship with and feelings toward the company, whether or not the investor led the last round or has a seat on the Board, and the investor’s capacity to tap into reserves to provide more financing. To get to that answer of a yes or no on a given bridge, many investors ask themselves (and often the companies) a subset of the following questions.
Kazakhstan to mandate 75% revenue sale from crypto mining for tax purposes
A new law signed by Kazakh President Kassym-Jomart Tokayev on Feb. 6 reinstated the nation’s stand against the unlawful mining operations and issuance of crypto assets. Kazakhstan, one of the world’s biggest Bitcoin mining hubs, announced plans to introduce new crypto regulations to reduce tax fraud and unlawful business operations. A new law signed by Kazakh President Kassym-Jomart Tokayev on Feb. 6 reinstated the nation’s stand against the unlawful mining operations and issuance of crypto assets. Out of the two distinct pieces of legislation, the first requires the secured digital assets issuers to have the government’s permission. Moreover, such issuers will be subject to monitoring by the existing law of the land — “On Combating the Legalization (Laundering) of Proceeds from Crime and the Financing of Terrorism.” The law will enter into force from April 1, 2023.
ChatGPT vs Bard vs Ernie: The revolutions of AI
The world of technology is taken by storm after the arrival of OpenAI’s ChatGPT. The AI-based chatbot is part of sophisticated systems that produces content from text to images - that is set to be one of the most disruptive forces in a decade to big tech, industries, and the future of work. However, the world of technology could no longer witness the monopoly of ChatGPT; hence Google swept in with its own AI chatbot called Bard, and Baidu with its Ernie. Here is a comparison between ChatGPT, Ernie, and Bard to help you understand how all three platforms are different and, at the same time, can overpower each other.
Sequoia reveals in filing how much is sitting in its Sequoia Capital Fund (and yes, it’s a lot)
Almost a year ago to the day, the 50-year-old investing powerhouse Sequoia Capital announced that it had reorganized itself around a singular, permanent structure: The Sequoia Capital Fund.
Now, thanks to an SEC form filed on Friday, we know how much is sitting in the fund: $13.6 billion.
How To Sell Your Stock Options On A Secondary Market
Startup stock options mean something different in 2023. Many unicorns are staying private for around eight to 10 years while enjoying household name status with public companies like Amazon and Microsoft. Some of the highest-valued startups on the The Crunchbase Unicorn Board, including Stripe, Shein and ByteDance, have been around as private companies for longer than a decade. As their valuations have climbed and anticipation for their IPOs builds, those companies’ stock options have become increasingly valuable for their employees. That’s where the secondary market — a marketplace that enables employees and shareholders to sell pre-IPO stock — comes in. Secondary markets have become more popular in recent years as pre-IPO stock has become more valuable. It’s a great option for those who want to liquidate their assets. Maybe you don’t want to hold on to your shares from that one startup you worked at 10 years ago. Maybe you’ve just been laid off and need some extra cash in the bank. Maybe you’re just not ready to wait for liquidity until your company goes public or is acquired.
After a record 2022, 8 investors explain why it’s ‘still just Day 1’ for Africa’s startup ecosystem
Last year was a good 12 months of firsts for African tech startups. For the first time, the sector attracted over 1,100 unique investors in 2022, which in turn resulted in a record fundraising haul of $6.5 billion, according to data from Partech. In fact, even some of the excesses of 2021 were eclipsed when the number of investments on the continent rose higher in 2022 than they had a year earlier, boosted by early-stage firms flocking to fund startups in the wake of landmark exits of homegrown companies like Jumia and Paystack. What drove such volumes when the rest of the world was reining back the collective enthusiasm of 2021? To find out, we polled a few investors who had the highest volume of deals in Africa last year. It turns out that while later-stage investors, mostly international VC firms, grabbed headlines by writing immense checks, pre-seed and seed-stage investors were instrumental to the growth of the continent’s tech ecosystem.
Investor appetite, microfunds help seed investing defy startup drubbing
While the end of the more than decade-long tech investing bull cycle was far from unanticipated, many venture investors were not prepared for the swift market downturn that began to take shape in early 2022. Despite the harsh headwinds of inflation, rising interest rates and geopolitical uncertainties, VCs continued to deploy capital near all-time highs. In 2022, a total of $283.3 billion was invested in US companies across an estimated 17,990 deals, a record that falls just behind the blockbuster deal activity of 2021, according to the latest PitchBook-NVCA Venture Monitor. Although it appears that venture capitalists may not have made a sharp course correction to their overall investment pace, a closer look at the data reveals that deal activity slowed down steeply for later-stage companies while remaining robust for seed investments.
Why Chinese companies are investing billions in Mexico
Bill Chan had never set foot anywhere in Mexico, let alone the lonely stretch of desert in the north of the country where he abruptly decided to build a $300 million factory. But that seemed a trifling detail amid the pressure to adapt to a swiftly changing global economy. It was January 2022, and Chan’s company, Man Wah Furniture Manufacturing, was confronting grave challenges in moving sofas from its factories in China to customers in the United States. Shipping prices were skyrocketing. Washington and Beijing were locked in a fierce trade war. Man Wah, one of China’s largest furniture companies, was eager to make its products on the North American side of the Pacific.
Janitor, Manager or Entrepreneur? Why Your Job Title Doesn't Matter
In a corporate setting, a job title can be used as leverage, something for you to strive for. Titles to distinguish levels, such as Associate, Vice President and Managing Director, allow other employees to understand your position in the firm and the status that comes with it. Certain titles come with specific salary ranges and perks — which is one of the reasons to strive for them. Humans aim to be verified with some level of significance, and in a business setting, one of those levels of significance comes from the job title. However, when it comes to entrepreneurship, the way we think of titles is different.
Are the Remaining Crypto Giants Staring Down the Barrel of the US Government’s Gun?
The latest action from the U.S. Securities and Exchange Commission (SEC) against Kraken is probably only the first stirring of a U.S. government campaign to come for the major remaining crypto exchanges, according to industry lawyers, consultants and former regulators. The San Francisco-based exchange inked a ground-shaking settlement with the SEC on Thursday, with Kraken agreeing to shutter its U.S. staking services and pay a $30 million fine amid agency accusations that the services amounted to a sale of securities. That enforcement action likely marks a beginning of similar cases putting big exchanges in the spotlight.