VNTR Capital News Feb 20, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - Feb 20 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
Jerusalem, Israel — VNTR Investors Roundtable Jerusalem was held on Feb 16 as a side event to OurCrowd Summit. More than 9,000 participants, including 1,700 investors and 950 entrepreneurs from 81 countries, gathered to discuss the latest startups and technology trends. The roundtable event brought together investors from Israel, the UK, the US, Switzerland, Monaco, South Africa, Estonia, Latvia, Kazakhstan, Portugal, and the Caribbean, expanding our community’s opportunities for co-investment and deal flow sharing across the globe.
Tel-Aviv, Israel — We met with VC funds to explore co-investments and participation in 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.
Barcelona — We hosted the 1st Investors Roundtable Barcelona on Feb 17 as a side event to the European Blockchain Convention with a focus on Blockchain and Web3 investments. Our 2nd Investors Roundtable Barcelona will be held on Feb 28 as a side event to Mobile World Congress, where executives and investors will gather to learn about the newest trends and advancements in the mobile communications industry.
Portugal — Last chance to join the Golden Visa program. The government recently announced its intention to end the program in the coming months due to a shortage of affordable housing in Portugal. The new law is expected to be approved and come into effect in two months, at which point the window to apply will close. Investors interested in obtaining a Golden Visa can apply here. Our trusted local partners can assist with finding a qualifying investment vehicle and guide you through the application process.
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 28 VNTR Investors Roundtable Barcelona (during Mobile World Congress 2023)
Mar 14 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)
May 2 VNTR Investors Roubdtable Rio De Janeiro (During Web Summit Rio)
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 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 13-15 W3summit Bengaluru, India
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
Ma 12-14 TMRW Belgrade, Serbia
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 30 - Jun 2 Innovex, Taipei, Taiwan
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
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Check out VNTR Capital upcoming events
VNTR Investment Platform streamlines participation in VNTR investment syndicates. You can view the investment opportunities and co-invest in a few clicks.
If Startups Want To Be The Hip Kids Again, They Need To Start Losing More Money
A couple years ago, when startups were raising record sums and using it to lose money, there were those in the non startup founder community who tut-tutted about why it seemed like a bad idea. “Slow down” was the common mental refrain. If you sell your products at a loss, how will you ever turn a profit? What if investors no longer want to fund growth at any cost? Is it really wise for a company this deeply in the red to spend on perks like in-house manicures and dog walking? Well, now we’ve been heard. The cycle has shifted. Rather than counting on a massive up round, startup types are opining about conserving runway. These days, it’s all about raising gross margins, cutting noncore expenses and positioning for long-term viability.
EU members just clinched agreement to raise a €10 billion fund-of-funds to retain European growth talent
Spain, Belgium, Italy, Germany and France have all committed to the new fund-of-funds vehicle, heralded as creating European collaboration in late-stage capital markets to fend off US and Chinese challengers.
Not content with its existing arsenal of funding instruments, five members of the European Investment Bank today launched a targeted €10 billion fund-of-funds to spawn more mega European VC funds with sufficient dry capital to supply late growth-stage EU innovators.
4 Huge Revelations in the SEC’s Charges Against Do Kwon and Terraform Labs
The U.S. Securities and Exchange Commission late Thursday released a 55-page document detailing various charges of fraud against Do Kwon and Terraform Labs, the so-called "company" Kwon founded to develop the Terra blockchain. Broadly, the SEC alleges that Kwon and others “engaged in a scheme to deceive and mislead investors in the U.S. and abroad.” The documents also contain a number of major revelations – claims that were previously merely suspected or entirely unknown, but that the SEC appears to have confirmed in its investigation. The SEC’s findings paint a much clearer picture of the entire Terra system as a fraud, one just as elaborate and calculated as Sam Bankman-Fried’s FTX. They also point to a variety of unnamed counterparties who could eventually be targeted as collaborators in the fraud.
VC-Unicorns Vs. Real-Unicorns: The 2 Key Impacts On Venture Growth
WeWork became a VC-Unicorn and then lost its luster when investors realized that the company was a financial sieve.
Theranos became a VC-Unicorn that was ostensibly based on a scientific breakthrough from a freshman-dropout without any science background. After raising a pile of capital and being feted by presidents and the Silicon Valley crowd, it turned out that there was no “there” there.
Sam Bankman-Fried is the latest incarnation of the fallen VC-Unicorn. He raised billions from “smart” money, and also from the general public. It seems like Bankman-Fried was a student of W.C. Fields who said: “It’s morally wrong to allow a sucker to keep his money.”
Rise of ‘zombie’ VCs haunts tech investors as plunging valuations hammer the industry
For some venture capitalists, we’re approaching a night of the living dead. Startup investors are increasingly warning of an apocalyptic scenario in the VC world — namely, the emergence of “zombie” VC firms that are struggling to raise their next fund. Faced with a backdrop of higher interest rates and fears of an oncoming recession, VCs expect there will be hundreds of firms that gain zombie status in the next few years. “We expect there’s going to be an increasing number of zombie VCs; VCs that are still existing because they need to manage the investment they did from their previous fund but are incapable of raising their next fund,” Maelle Gavet, CEO of the global entrepreneur network Techstars, told CNBC.
“That number could be as high as up to 50% of VCs in the next few years, that are just not going to be able to raise their next fund,” she added.
Venture capital stayed robust in Europe last year - report
European venture capital valuations and deal values showed "solidity" across financing stages in 2022 despite mounting uncertainty across financial markets, latest research from PitchBook revealed.The region's IT and energy sectors specifically saw an increased median deal value, and restricted energy supplies supported the energy sector, as did the growing attraction for renewable energy, according to the report. Last year witnessed 47 new 'unicorns' emerge in Europe, the second highest on record. The cumulative unicorn count stands at 129.Since Brexit, the French and Benelux regions have seen more activity. In the past five years, the region's median pre-money valuation has grown higher than in the UK and Ireland for both early and late-stage financing – increasing 44.9% and 21.2%, respectively.In contrast, the UK and Ireland region experienced a dip of 27.8% from €26 million to €18.7 million in median pre-money valuation amid political turmoil.
SEC vs. Kraken: A one-off or opening salvo in an assault on crypto?
In a year of crypto upheavals, the United States Securities and Exchange Commission’s settlement with crypto exchange Kraken, announced on Feb. 9, set off yet another tremor. Agency chief Gary Gensler took to mainstream media last week to explain the agency’s action, which seemed to be an attack on crypto staking — part of the validation mechanism used by a number of blockchain platforms, including Ethereum, the world’s second-largest network. The immediate issue, in the agency’s view, was that Kraken had been selling unregistered investment products. Indeed, it was advertising big returns on staking crypto — up to 21%, Gensler told CNBC.com. “The problem was they were not disclosing to the investing public the risks that the investing public were entering into,” Gensler said.
This Downturn Will Show Us Which LPs Actually Believe In Diversity
The current market downturn is presenting a crossroads for LPs. Early-stage venture remains an attractive investment area, particularly now given the more rational pricing and abundance of later-stage dry powder waiting for the right opportunities. But rather than continue to invest with the diverse and emerging managers that received so much traction when capital markets were booming, the risks in the current environment are redirecting some LPs to deploy their capital in the (perceived) “safer bet” funds, the household name-brands.It’s time for LPs to make an important decision. How these institutions choose to deploy capital over the coming year will give the world a clear perspective on where these investment organizations, and the people who manage them, actually stand on diversity.
Generative AI holds promise and peril for private market investors
The recent hype around AI had a dose of reality this week when users revealed several flaws in Microsoft's new AI Bing search. Powered by ChatGPT, a jaw-dropping AI tool launched by startup Open AI in November, the service threatens to upend internet search. But it also has a penchant for generating wrong, and often unnerving, answers. Similar issues were found with Bard, a rival product that Google hastily announced after it was caught napping by Bing and ChatGPT. The debacle wiped $100 billion off parent company Alphabet's market value. The technology has some way to go, but generative AI, which uses deep learning and natural language processing models to produce new data, is still likely to have a big impact not just on internet searches, but on many other industries. Private markets will be no exception.
Global private equity entries plummet in January
The volume and value of global private equity and venture capital entries got off to something of a weak start in January, according to S&P Global Market Intelligence data.
Deal value stood at $25.32 billion, down 62.1% year over year from $66.88 billion. Total entries were 921, representing a 44.6% decrease from 1,663 in January 2022. North America recorded the highest deal volume in January with 320 transactions, followed by Asia-Pacific with 285 deals and Europe with 269.
US PE earnings dashboard
Publicly traded US private equity firms reported lackluster performance for Q4 2022 as falling asset values slowed the pace of exits. Most bright spots in their businesses were found in private credit or other nonbuyout divisions. The asset managers' distributable earnings—the allocation of cash that can be returned to investors—were down nearly across the board year-over-year. Apollo Global Management was one notable exception, as the firm's 2021 merger with Athene Holdings buoyed earnings, even as the firm's PE income suffered. All six firms' stock prices finished lower on the year, in step with their drooping quarterly earnings. Apollo's stock dropped the least, ending 2022 down 12%. The Carlyle Group pulled up the rear with its stock trading 46% lower in December than it had 12 months prior.
UK saw fintech investment collapse in 2022, but is still a world leader
The UK fintech sector saw a steep drop in investment last year, but was still a top-three global destination for capital. Investment in UK fintech from private equity and venture capitalist firms fell 56% in 2022, reaching $17.4bn compared with $39bn the previous year, according to KPMG. In its latest Pulse of fintech report, KPMG said investments in the second half of 2022 were much lower than the first six months as “higher interest rates and inflation alongside downward pressure on valuations dampened investor appetite.”
There were 593 private equity and venture capital fintech deals in the UK in 2022, compared with 724 in the year before. Despite the falling investments, KPMG’s UK head of financial services, Karim Haji, said it was a strong year for the UK fintech industry. “The UK is a major global player, with investment in UK fintech only behind that of the US and Australia,” he said.
Bulk of venture debt deployed in Series D+ startups in 2022
More than half of venture debt capital in India in 2022 was deployed in Series D startups and beyond, according to a new report. Fintech sector witnessed the maximum deals, raising 52% of the total venture debt deployed, venture debt firm Stride Ventures said in a report based on data from intelligence firm Tracxn. “Venture debt has become one of the key growth enablers for Indian startups," said Ishpreet Singh Gandhi, founder and managing partner, Stride Ventures. Venture debt is offered to startups, which are backed by venture capital firms. It is primarily a type of loan that is offered to early-stage, high-growth companies through dedicated funds as a complement to equity financing.
Putting The Company Mission First: How Startups Can Build Strong Teams To Drive Regulatory Change
At some point, nearly every company, from a brand-new startup to a corporate behemoth like Amazon or Walmart, will look to shape the policy and regulatory environment around them. Whether for a small change to an esoteric rule or a multinational lobbying campaign, an effective regulatory strategy is key to long-term growth. The key point missed by many companies attempting to influence a regulatory environment: When forming a team, stakeholders must align on a common mission, so individual priorities aren’t elevated over the mission of the company. The solution rests on three pillars. First, there must be clear ownership of decisions regarding regulatory strategy. Policy, legal, and operations (and other) perspectives should all be considered, but there must be a central decision-maker responsible for making the final call and moving forward. This helps not only resolve internal disagreement, but provides consistency in approach as well.
What Fat Tails and Revolutionary Ages Mean for Digital Assets
Stock market returns are overwhelmingly driven by a small group of winners. We expect the same trend in digital assets. Between 1926 and 2016, just five out of 25,300 publicly traded companies drove 10% of the entire U.S. stock market’s $35 trillion of total wealth creation: Exxon Mobil (XOM), General Electric (GE), International Business Machines (IBM), Microsoft (MSFT) and Apple (AAPL). Ninety stocks accounted for more than half. Just shy of 1,100 generated the entire gain; the rest collectively returned less than U.S. Treasury bills. Stock returns don’t fall along a normal distribution. They skew positively, with a few remarkable ones creating a “fat” right tail. Long-term investors who didn’t own those stocks risked missing out on the market’s average return.
How Candy Conglomerate Mars Is Investing In Pet Tech, One Of The Few Areas VCs Still Love
It may surprise you to know Mars Inc., the maker of beloved candy bars, was hit in 2017 with an antitrust warning from the Federal Trade Commission requiring the company to divest some assets before acquiring a new company. But the FTC’s warning didn’t stem from Mars’ candy empire, which includes Snickers, M&M’s, Altoids, Life Savers and Skittles. Mars owned too many veterinary clinics, the FTC said, and was mandated to divest 12 of them in order to complete its $9.1 billion acquisition of VCA animal hospitals. In fact, the candy conglomerate is the world’s largest pet food manufacturing company and has been steadily investing in dozens of pet tech startups in recent years, per Crunchbase data.
“Mars Petcare actually is very much growing and is one of the biggest parts of Mars corporate,” said Audrey Yoo, vice president of innovation at Mars Petcare.
How Founders Should Manage Burn Rates During A Recession
Managing burn rate is a critical aspect of running a startup, especially in a recession or protracted economic downturn. The market has shifted and so have investors’ expectations. It’s no longer a game of growth at all costs — sustainability, profitability and efficiency are the new key performance indicators catching the eyes of investors. This change means that founders need to focus on burn rate now more than ever, so I’ve put together my thoughts on how to manage your startups in today’s economic climate. First and foremost, founders need to have a clear and realistic financial plan. This includes having a detailed understanding of the startup’s current financial situation, and projecting future financial needs based on different scenarios.
Takeaways from Davos: Blockchain is changing the way we fight for sustainability
The Conference of Parties (COP) of the United Nations Framework Convention on Climate Change unites around 40,000 people from 196 countries. Governments, international institutions, financiers, businesses, non-governmental organizations and native communities gather for a two-week sprint to discuss the measures to tackle the climate crisis. The famous 17 United Nations Sustainable Development Goals were also first introduced at COP21 in Paris along with the historic Paris Agreement. It is aimed at limiting global warming to below 2 degrees Celsius above pre-industrial levels, with an aim to limit it to 1.5 degrees (most likely already achieved according to most evaluations).
Venture Capital and the Climate Crisis
From unicorns and downgrades to moonshots and dawn raids, the world of finance can be confusing for those not in the know. But whether we understand it or not, we can’t avoid its impacts. When it comes to venture capital (VC), this influence has generally been confined to the apps we browse or software we use, but there is a growing narrative that positions sustainable investment at the forefront of climate solutions. But does VC really shape the climate movement, or is just reflective of a wider shift toward greener technology?
Abu Dhabi Starts $2B Initiative to Back Web3 Startups
Hub71, Abu Dhabi's tech ecosystem, has started a $2 billion initiative to back Web3 and blockchain technology startups in the region.
The Hub71+ Digital Assets ecosystem initiative will also provide startups access to a wide range of programs and potential corporate, government and investment partners.
The program will also support businesses relocating to Abu Dhabi and promote startup growth in the Middle East and global markets.
Gulf relations, generative AI take center stage at Israeli investor summit
After a three-year break, venture investing platform OurCrowd's 2023 Global Investor Summit returned for its first in-person event since the pandemic to showcase some of the world's most innovative startups. More than 9,000 participants, including 1,700 investors and 950 entrepreneurs, from 81 countries gathered in Jerusalem on Feb. 15 to discuss the latest startup and technology trends. Climate tech, generative AI, and ongoing relations in the Middle East were among the topics highlighted by investors. Like many other countries, VC activity in Israel dropped in 2022, with €9.7 billion invested across 666 deals—compared with 801 rounds worth €11.7 billion in 2021, according to PitchBook data.
ChatGPT Amendment Shows the EU is Regulating by Outrage
The EU is considering placing generative artificial intelligence (AI) tools, such as ChatGPT, in a “high risk” category in its upcoming AI bill, thereby subjecting such tools to burdensome compliance requirements. This sloppy addition needlessly stunts creativity and shows the EU is hitting the panic button instead of carefully considering the benefits and risks of new technologies.
Signs that a Startup is Going Bad
When money was easy, everyone looked like a genius, and even the worst-run companies could put up some numbers. But in early 2023, we are now in the midst of a tech recession, if not a general economic recession.
As Buffett would say, the tide has gone out, and now we see who has been swimming naked.
Generative AI holds promise and peril for private market investors
The recent hype around AI had a dose of reality this week when users revealed several flaws in Microsoft's new AI Bing search.
Powered by ChatGPT, a jaw-dropping AI tool launched by startup Open AI in November, the service threatens to upend internet search. But it also has a penchant for generating wrong, and often unnerving, answers. Similar issues were found with Bard, a rival product that Google hastily announced after it was caught napping by Bing and ChatGPT. The debacle wiped $100 billion off parent company Alphabet's market value.