VNTR Capital News Jan 15, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - Jan 15 News, Events, and VC Reads
Hello friends,
Happy Sunday!
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
Weekly Highlights
World Economic Forum in Davos, Switzerland, January 16-20, 2023 – This year’s forum activities take place at the intersection of three focus areas: Mastering the Fourth Industrial Revolution, Solving the problems of the Global Commons, and Addressing global security issues. Read more
VNTR Capital’s Investors Roundtable in Davos, January 19, 2023 – We are opening the year with our “Venture Capital Investors Roundtable” in Davos during the World Economic Forum. Keynote speaker - Sébastien Borget is the Co-founder and COO of The Sandbox, a decentralized NFT gaming metaverse.
Companies who wish to join us as a sponsor in Davos are welcome to apply here.Fund of Funds Syndication Program – We have agreed to co-invest in a new fund of one of the top VCs in Silicon Valley. Through our Fund of Funds Syndication Program, select investors can participate as Syndicate LPs with smaller check sizes than permitted for Direct LPs. For more information on VNTR’s Fund of Funds Syndication Program, register here.
VNTR PRO Membership Program, Cohort 1 kicks off on February 1, 2023 – VNTR PRO Membership provides extended benefits to our investors' community. The application deadline to join Cohort 1 of the PRO Membership is Jan 23, 2023, apply here.
Sponsors & Partners – We produce 40+ Investor Roundtables and Lounges throughout 2023, providing a global platform for active investors to connect and co-invest. Sponsors and partners (conferences and media partners) who are interested in collaborating with our community and programs can apply here
Thank you to our partners:
TradeDog Venture Capital is a $100MM venture and special situations fund founded by technology entrepreneurs, engineers, and successful investors. The fund will be well supported by the TradeDog ecosystem of companies and backed by a strong track record of building and growing early-stage Web3 companies.
Seaside is a Dubai-based Web 3 holding company creating the first-ever Crypto-related TV show, "Crypto Hunters," in partnership with renowned Hollywood producers Bianca Goodloe, Samad Davies, and Bruce McDonald. With a projected audience of over 250 million households, the show is expected to have a major marketing impact and potential for partners and investors. The show will be hosted by famous personalities to be announced soon, and there is already significant interest from major TV and streaming networks with ready-to-sign agreements.
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.
Upcoming VNTR Capital events:
Jan 19 VNTR Investors Roundtable Davos (during WEF 2023)
Feb 8 VNTR Investors Roundtable London (during ICE London)
Feb 9 VNTR Investors Roundtable Dubai (during TMRW Dubai)
Feb 16 VNTR Investors Roundtable Jerusalem (during OurCrowd Summit 2023)
Feb 28 VNTR Investors Roundtable Barcelona (during Mobile World Congress 2023)
Mar 11 VNTR Investors Roundtable Austin (during SXSW)
Mar 30 VNTR Investors Roundtable Hong Kong (During Wow Summit)
RSVP to Upcoming VNTR Capital Events
The VNTR Capital Investors Community has a growing membership of 330+ 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
Jan 16, 20 Crypto Summit, Zurich/Davos, Switzerland
Jan 16-20 World Economic Forum, Davos, Switzerland
Jan 16-18 iFX Expo, Dubai, UAE
Jan 23-25 IPEM Cannes, France
Feb 6-9 ICE London, UK
Feb 8-10 TMRW Dubai, UAE
Feb 9-11 World Artificial Intelligence Cannes Festival, Cannes, France
Feb 16-17 Blockchain Fest, Singapore
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 2-4 Expoverse, Miami, USA
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
May 15-19 AIBC Americas, Sao Paolo, Brazil
May 31 - Jun 2 GITEX Africa, Morocco
Jun 7-9 South Summit, Madrid, Spain
Jun 26-29 Collision, Toronto, Canada
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.
VC READS
Venture capital investments in Saudi Arabia up 72% during 2022
Investments in Saudi startups grew by 72 percent to a record high of SR3.701 billion ($987 million) in 2022, according to a report. According to the “2022 Saudi Arabia Venture Capital Report,” the Kingdom achieved the highest growth of venture capital funding among countries in the Middle East and North Africa. The Kingdom maintained its position as the second-most funded market in MENA in 2022, accounting for 31 percent of the total capital deployed in the region, increasing from 21 percent in 2021, added the report published by the venture data platform, MAGNiTT, and sponsored by the Saudi Venture Capital. Although 2021 was a record year for venture funding in the Kingdom, 2022 witnessed unprecedented VC deployment, setting a new record in VC funding, it said. A record high of 104 investors participated in deals closed by Saudi startups in 2022, up 30 percent versus 2021. The country also recorded double the number of exits in 2022 compared to 2021, with 10 exits.
Startup life expectancy expected to fall
Only one out of every 10 startups survives, said the old adage. But that was far from the case during the boom years of the last cycle when company failure rate was low—very low. "VCs expected a certain percentage of their portfolio not to make it to the next round, but [company survival] has been off the charts," said Miguel Luiña, managing director of fund investments at Hamilton Lane. He added that for certain managers, almost 100% of their companies raised subsequent funding during the capital-rich era that ended last year. The number of VC-backed companies filing for bankruptcy or shutting down has hovered around 1,000 per year since 2016, according to PitchBook data. At the same time, new startup formation has increased, as measured by first VC financing, greatly exceeding startup failures.
How Founders Should Approach The Coming Wave Of M&A Deals
The current market conditions of slowing growth, high interest rates and dramatically reduced availability of venture capital for startups is creating a surge of M&A interest.Many startups have built amazing products, teams and companies over the past few years, leveraging frothy venture capital markets to grow rapidly. Many of these companies are approaching the end of their runways without the ability to raise the next round of capital needed to continue on their mission or have existing investors willing to keep supporting them. So what options do founders have?
High-Speed Latin American Startup Funding Slows in 2022
One year, you’re the fastest-growing region in the world for startup investment. The next, it’s all shrinking fast. That’s the narrative playing out across Latin America in the wake of a sharp shift in the startup funding climate. Per Crunchbase data, investors put $8.28 billion into the region in 2022, down 79% from 2021, a record-setting year. Over all of 2022, investment was down heavily at both early and late stage, while seed investment actually rose a bit. In the fourth quarter, funding at every stage came in far below year-earlier levels.
India ranks fourth globally for tech venture capital investments in 2022
India ranked fourth globally in venture capital (VC) investments in 2022 recording $24.1 billion as tech investors worldwide continue pouring funds into the country’s tech firms despite a challenging macroeconomic climate, according to a recent report. The report released by Dealroom and London & Partners said India follows the United States, China, and the United Kingdom, which clocked $233.3 billion, $48 billion, and $29.9 billion respectively, becoming the top three countries for tech investments globally. According to the data findings, however, total global VC funding experienced a 33 percent dip to $485.2 billion from the record levels seen in 2021 of $723 billion — a year that saw an unprecedented surge in economic activity post the opening up of COVID-19 restrictions. The data also showed that the funding in 2022 was still 28 percent higher than the global investments in 2020 of $348.9 billion or earlier.
Microsoft Bets Big on the Creator of ChatGPT in Race to Dominate A.I.
As a new chatbot wows the world with its conversational talents, a resurgent tech giant is poised to reap the benefits while doubling down on a relationship with the start-up OpenAI.
When a chatbot called ChatGPT hit the internet late last year, executives at a number of Silicon Valley companies worried they were suddenly dealing with new artificial intelligence technology that could disrupt their businesses. But at Microsoft, it was a cause for celebration. For several years, Satya Nadella, Microsoft’s chief executive, had been putting the pieces in place for this moment. In 2019, Microsoft invested $1 billion in OpenAI, the tiny San Francisco company that designed ChatGPT. And in the years since, it has quietly invested another $2 billion, according to two people familiar with the investment who requested anonymity because they were not authorized to speak with the media.
Clouds might be scattering in China’s venture capital world
The outlook of investing in China is suddenly brightening up as the country gradually phases out its draconian zero-COVID policy, which has caused disruptions in businesses of all kinds and kept the country’s borders shut for the last three years. For venture capitalists, the pandemic has been a tumultuous ride. Tony Wu, a partner at Northern Light Venture Capital, a China-focused VC firm with $4.5 billion assets under management, calls 2022 the “toughest” in his 15 years of investing in Chinese startups. “Now spring is finally bringing new life to dried trees. There’s a lot of optimism for 2023,” says Wu, who focuses on the consumer internet realm at the firm, in an interview with TechCrunch. NLVC’s wide-ranging portfolio includes China’s on-demand services titan Meituan; BGI, the country’s gene giant; and Black Sesame Technologies, one of the few home-grown makers of automotive chips. What went wrong in 2022? And what makes Wu more hopeful about the coming year?
PE emerging managers brace for headwinds in 2023
The year ahead could be challenging for emerging managers in private equity, but LPs won't abandon them altogether. LPs are becoming increasingly selective about the managers they invest with, as market conditions make capital deployment more difficult. For emerging managers, who typically don't have a proven track record of outperformance or preexisting relationships with LPs, this environment could mean lighter inflows of capital in the year ahead.
In 2023, LPs are expected to be more careful about their allocations and only deploy capital with GPs they know and trust, according to Silicon Valley Bank's Global Fund Banking Outlook Report Q4 2022. "If you're an emerging manager these days, the market is a lot less favorable than it was a year ago," said Jesse Hurley, SVB's head of global fund banking. SVB defines an emerging manager as a firm that has less than $200 million in AUM.
Veteran enterprise VC Peter Wagner on the opportunities for AI startups
Depending on whom you ask, artificial intelligence will either vastly improve our lives or take away our jobs. For veteran venture investor Peter Wagner, it’s a little more nuanced than that.
We recently caught up with Wagner, who, along with fellow veteran investor Gaurav Garg, launched Wing Venture Capital. Combined, they have upward of 25 years of experience at storied investment firms: Wagner joined Accel as an associate in 1996 and stayed more than 14 years before leaving as a managing director to co-found Wing, and Garg spent 11 years as a partner at Sequoia Capital. Since launching Wing in 2011, the two have been steadily growing their team and portfolio, backing such companies as Snowflake, Gong and Cohesity, among others, and “helping people do their best work,” as Wagner told us.
Sequoia Capital cuts fees for new funds amid VC slowdown
Sequoia Capital has lowered management fees in its two recently-launched venture funds as it braces for a slower investment environment, partner Alfred Lin said on Thursday. The changes in fee structure, communicated to investors in December, allow limited partners (LPs) who committed capital to Sequoia's crypto and ecosystem funds launched early last year to pay management fees based on capital deployed, rather than the common model of capital under management that applies to other Sequoia funds. Sequoia launched a $950 million ecosystem fund to back funds managed by others, including scouts and those launched by Sequoia network, and a $600 million crypto fund to invest in crypto companies and tokens. So far, 10% of the crypto fund has been deployed, Lin said. The move marks an unusual concession by the world’s top venture investor after U.S. venture capital deals fell from their 2021 peak by 31%. Sequoia's longstanding relations with LPs has been tested by the nosedive in valuation in tech companies and the fallout in its portfolio company FTX.
'Warning signs': PE could impact public pension plans' funding status this year
Private equity returns are a major threat to pension plans' ability to pay retirees in 2023.
The reporting lag for private equity returns data means that public pension plans' 2023 portfolio numbers will reflect losses in the asset class, marking a major "warning sign" for the institutions in the year ahead, Equable Institute, a nonprofit that works with public retirement system stakeholders, noted in its update to its state of pensions 2022 report released Tuesday. The 2022 fiscal year saw an average investment return of -6.1%, and when 2022 numbers are finalized, Equable expects the national funded ratio average to decline from 83.9% in 2021 to 77.3% in 2022. This funded status—or the percentage of assets needed to pay future beneficiaries—is lower than the funded ratios in 2007 and 2008, just before the global financial crisis.
6 tips to help you survive and prosper from the dreaded down round
YOUR COMPANY has managed to survive as long as it can on its existing resources. It has tried and succeeded or not to do an extension round, keeping its valuation flat, and that money is running out. It has even burned through the borrowing it raised through a convertible loan agreement (CLA). The Nasdaq plummeted 33% in 2022, the biggest annual fall since 2008, and US interest rates are rising at the fastest pace since 1981. Meta and Tesla each lost about two-thirds of their value, while Amazon dropped by half and Alphabet by 40%. Some tech companies shed as much as 90%. The only option for a startup in need of fresh funds in this environment is to re-group, re-price and accept the inevitability of a dreaded down round, where new shares are offered at a lower value than the company’s previous funding raise and there is a recapitalization of the preference stack or waterfall.
Europe Venture Fell In The Second Half Of 2022, But Not As Steeply As Other Regions
Venture and growth investors invested $90 billion in European startups in 2022 — marking a 25% decline from Europe’s 2021 funding peak of $119 billion. Much of the slowdown was concentrated in the second half of 2022, according to an analysis of Crunchbase data. And over this past year, late-stage funding took the biggest hit, having grown more than threefold year over year in 2021. Despite the decline in funding, 2022 is still significantly higher than annual funding in prior years, with 2022 close to double the $46 billion in funding raised in 2020. It appears that Europe has weathered the downturn better than other regions. Venture funding did not fall as sharply as North America or Asia in 2022 — markets which each declined between 36% and 39%, respectively, year over year.
3 blockchain use cases that extend beyond crypto
Blockchain use cases have expanded far beyond cryptocurrency in recent years, with multiple industries embracing the technology in a wide range of fields, including healthcare, logistics and financial services. There are many factors behind the hype. Blockchains are decentralized, transparent and increase the capacity of a whole network, opening a window for solutions that require significant computational power. More importantly, they give users the capacity to control their assets, including their data, without relying on third parties. As blockchain evolves, companies across the world are working to find the best ways to implement the technology for a range of applications. To gain further insight, Cointelegraph reached out to projects disrupting industries and bringing blockchain closer to people’s daily lives.
It’s Crazy How Much Investors Cut Back From Q1 to Q4
As we bid adieu to 2022, it seems easy in hindsight to sum up the startup investment climate as your usual cyclic clean-up after a big party. Valuations fell, investors got pickier, and a cratering public market reminded us that tech stocks do sometimes go down. But parsing through the quarter-by-quarter numbers for active investors, it’s clear 2022 wasn’t entirely a clean-up-the-mess year. For large investors, the party actually continued to rage through the first quarter and remained festive in the second. Only in the latter half of the year did we really see a big slowdown. To drive this point home, we put together a chart of investors who led or co-led the most expensive collections of rounds in 2022, organized by quarter.
Bitcoin Mining Companies Need to Better Manage Risk
This past year has created an unprecedented risk event for the Bitcoin community. While we’ve seen this level of spot price volatility before, the leverage within the mining community has reached record levels. This has compounded the effects of debt exposure with falling spot prices, increasing energy price, and diminishing collateral value. Bad treasury management ran rampant in 2022 and led to a problem that financial hedges can solve and/or prevent.
The strategy many miners have used to manage treasuries up until this point has been relatively simple: buy and hold bitcoin. In other words, hope and pray. With price models often assuming an average of ~2% spot growth per month, and a price floor near the current average production cost between $18,000 and $22,000. Clearly those assumptions have not held true.
Peter Pan and Neverland VC Returns
As we start 2023, the infamous phrase “software is eating the world” turns 12 and fast approaches its teenage years. After a glorious decade-plus run, I believe the typical angst, awkwardness and entitlement awaits many parts of the industry in its teenage phase. As the VC cloud ecosystem evolves from being a “do no wrong” innocent child into a mature adult that has to deal with the realities of the outside world, I believe the industry (and its returns) are likely to have its Peter Pan moment where it fights mean reversion while still trying to fly around in Neverland. The emerging consensus view that “now is the best time to invest in venture” is unlikely to materialize — although that doesn’t mean those at top need to worry much (at least for the next decade) or that some savvy firms can’t do more than deliver market beta.
US-China chip war: America is winning
For more than a century the scramble for oil unleashed wars, forced unusual alliances and sparked diplomatic rows. Now the world's two biggest economies are battling over another precious resource: semiconductors, the chips that literally power our daily life.
These tiny fragments of silicon are at the heart of a $500bn industry that is expected to double by 2030. And whoever controls the supply chains - a tangled network of companies and countries that make the chips - holds the key to being an unrivalled superpower.
China wants the technology to produce chips. That's why the US, a source of much of the tech, is cutting Beijing off.
Get ready for big tech deals—and IPOs—says top Silicon Valley VC
Don't let all that bad news coming out of Silicon Valley get you down: dealmaking's set to pick up in tech-land. Or so says Kamran Ansari, Greycroft Board Partner and former Pinterest (PINS) Head of M&A on Yahoo Finance Live (video above).
"My suspicion," said Ansari, "is that going into the new year, Q1, Q2, you're going to see a number of additional deals announced. Particularly from private equity firms that operate in the tech space – like Thoma Bravo, Vista, and Silver Lake – and large-cap tech buyers themselves, like Amazon, Salesforce, and Oracle," said Ansari.