VNTR Capital News Jan 22, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - Jan 22 News, Events, and VC Reads
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VNTR CAPITAL COMMUNITY NEWS
Happy Chinese New Year！
Congrats to the VNTR Capital Investors Community for expanding our reach in Davos during the World Economic Forum. Over 90 top-level investors joined us at our Investors Roundtable on January 19, where participants introduced themselves, discussed topical issues, and networked with potential collaborators and co-investors.
Our keynote speaker in Davos, Sébastien Borget, Co-founder and COO of The Sandbox, shared his vision on the development and future implications of Metaverses. Thank you, Sébastien, for sharing your insights with our community!
Please join us this week for the VNTR Investors Roundtable in Lisbon on January 26. This is our 6th event in Lisbon and 8th in Portugal! The community of peers is expanding; relationships are growing, members are collaborating, and even playing padel tennis together. Looking forward to seeing you again on the 26th! Companies who wish to join us as a sponsor in Davos are welcome to apply here.
We are hosting our first VNTR Capital Investors Lounge in Dubai on Feb 8-9 together with TMRW Conference Dubai. VNTR Investors Lounge will provide a private space for investor meetings, interactive programming, and facilitated introductions to investors. Companies who wish to join us as a sponsor in Davos are welcome to apply here.
VNTR PRO Membership Program, Cohort 1 kicks off on February 1, 2023 - VNTR PRO Membership provides extended benefits to our investors' community — apply here.
Fund of Funds Syndication Program – Through our Fund of Funds Syndication Program, select investors can participate as Syndicate LPs with smaller check sizes than permitted for Direct LPs. Register here for more information on VNTR’s Fund of Funds Syndication Program.
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 a 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. Learn more
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
Upcoming VNTR Capital events:
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 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 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 12-13 Metaverse Summit, Paris
Jun 14-17 Viva Technology, Paris
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
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New AngelList Data Shows Startup Fundraising Pain in Second Half of 2022
Early-stage startups finally got the message that there was a tech downturn in the second half of 2022, according to new data released by AngelList and Silicon Valley Bank.
Series B valuations, in particular, were hammered, falling 50% from a median valuation of $250 million in the first quarter of the year to $125 million by the fourth quarter, according to AngelList data.
In the third and fourth quarter, a smaller percentage of early-stage startups raised new money and of those that did more of them were down rounds than in previous quarters.
The Week’s 10 Biggest Funding Rounds: Pathalys Pahrama Lands $150M; Impel Drives Away With $104M
After a strong start to the year, this week slowed down. No round came close to $200 million, and only three rounds hit the $100 million mark. Health care and biotech were big again, as well as a startup that uses AI (it’s everywhere) to help people buy a car.
Blackstone raises over $22B for world's biggest secondaries fund
Blackstone has lined up about $25 billion in commitments to its secondaries strategy, underscoring investors' expectations of a long-term need for liquidity in a challenging exit environment. The global private equity giant's Strategic Partners arm said Wednesday that it closed its Strategic Partners IX fund on $22.2 billion, making it the industry's single largest fund dedicated to helping limited and general partners offload assets on the secondary market. That fund, along with Blackstone's existing $2.7 billion Strategic Partners GP Solutions vehicle, gives the firm plenty of firepower to provide investors with liquidity and diversification under its Strategic Partners unit, led by Verdun Perry, which now manages $67 billion in assets. Secondary and GP-led continuation strategies are taking on growing importance as investors and GPs grapple with an increasingly difficult exit environment.
A Proposed SEC Rule is Roiling the VC World
A potential new rule from the US Securities and Exchange Commission is unsettling the venture capital class.
The change would make it easier to sue investors for negligence, and could make VCs more culpable for failures at the startups they back. The rule, designed to address “lack of transparency, conflicts of interest” and other problems in the private markets, could be particularly impactful in a turbulent market environment. Recent months’ spate of startup scandals includes (but isn’t limited to!) the implosion of the now-disgraced crypto exchange FTX, which drew praise and dollars from some of the top names in venture capital.
Funding To Web3 Startups Plummets 74% in Q4
While everything Web3-related dominated much of 2021 and the early part of last year, the end of 2022 showed a significant cooling of investor interest in the still young space. The softening of the market is not unusual, considering the significant venture capital spending pullback witnessed globally and investors likely turning to more mature, proven industries. However, the crypto winter and shakiness of the digital asset market also undoubtedly drove investors in a different direction — something that likely will be exacerbated with the dramatic collapse of FTX.
The final quarter of last year proved the most brutal as funding fell a staggering 74% from the same quarter in 2021, dropping from $9.3 billion to just $2.4 billion, according to Crunchbase data. The total dollar amount also makes it the lowest quarterly total since just about $1 billion went to startups in Q4 2020.
Private-debt market braces for stormy seas
The private debt market, itself the result of global financial upheaval, potentially faces its biggest test yet amid 2023's uncertain economic outlook. After nearly a decade of rapid growth, private debt could be in for a rude awakening as higher interest rates threaten companies' abilities to service their borrowing costs—which in turn will force investors to think twice about their private debt exposure. Meanwhile, aggressive monetary tightening and the very real prospect of a global recession could also stifle the deal pipeline for alternative lenders, much as it has for private equity firms. Yet, investors are raising large amounts of capital for the strategy. Earlier this month, Muzinich & Co. said it has hit an €800 million (around $870 million) close on its pan-European debt fund, which has already made 18 investments. Other big-name PE firms also remain bullish on their private credit strategies.
Six charts highlighting European PE trends in 2022
Deal volume and value are estimated to have slightly increased in 2022 over 2021, itself a blockbuster year in part because of pent-up demand as pandemic restrictions were loosened. According to the figures, deal count for 2022 was up 13.1%, and deal value increased by 1.4% on the previous year. The amount of AUM in European PE ended the year at an all-time high, standing at €873.9 billion (about $943 billion). This came despite interest rates rising across the region, with the European Central Bank increasing to 2.5% while the Bank of England lifted its base rate to 3.5% in the space of last year. These changing economic conditions would have an impact across private markets as a whole in the region.
Buyers Call Bluff On Unicorn Valuations: Spread Between Asking Prices And Bids Widens On Secondary Markets
For several years, you couldn’t do better than to work at a tech startup. Employees enjoyed competitive wages, luxurious benefits and valuable stock options as the tech startups they worked for swam in venture capital funding and valuations soared. But those stock options aren’t as valuable anymore. At least not on the secondary market, where buyers and sellers can trade pre-IPO stock. In 2021, thanks to high valuations, employees could sell shares of the private companies they worked for at rather generous prices. Now, the secondary market is calling companies’ bluff on those valuations. The discrepancy between what sellers are asking for and what buyers are willing to pay (known as the bid-ask spread) on secondary markets platform Forge Global is around 22%, quelling what was previously lively and bustling trading activity, according to the company. This has created a logjam of sorts.
UK venture capital investment drops by 30% in 2022
UK venture capital (VC) investment dropped by 30% in 2022, with London continuing to attract the lion’s share of funding. According to a report from professional services firm KPMG, UK businesses secured £22.7bn in VC funding last year. In the first half of 2022, the UK attracted £14.7bn of VC investment before taking a dive to £8bn in the second half. The tech sectors that saw “strong activity” were sustainability, gaming, along with health and biotech. However, the report noted, buy now pay later (BNPL) “struggled”. Warren Middleton, lead partner at KPMG, said: “VC investment into UK businesses remains well above pre-pandemic levels, and as we look ahead to 2023 it is likely that we’re about to enter a period of “new normal” in terms of valuations and M&A.”
Fintech in 2022: A story of falling funding, fewer unicorns and insurtech M&A
If you thought the fourth quarter of 2022 felt slow when it came to investment activity in the fintech space, that’s because it was. In fact, the three-month period marked the lowest quarter for U.S. fintech funding since 2018, according to CB Insights’ State of Fintech 2022 Report.
But overall, while total fintech funding globally was down markedly last year compared to 2021, numbers were still higher than 2020. Specifically, global fintech funding amounted to $75.2 billion in 2022, down 46% compared with 2021, but up 52% compared to 2020. The second half of the year was especially bleak. Only $10.7 billion of investment dollars went to fund fintech startups in the fourth quarter. About $3.2 billion of that, or nearly 30%, flowed into U.S.-based companies. Meanwhile, global venture funding reached $415.1 billion in 2022, marking a 35% drop from a record 2021.
Venture Capital Funding in Solar Jumps 56% with $7 Billion in 2022, Reports Mercom Capital Group
Mercom Capital Group, a global clean energy communications and consulting firm, released its annual report on funding and merger and acquisition (M&A) activity for the solar sector in 2022. Total corporate funding worldwide in the solar sector, including venture capital and private equity (VC), debt financing, and public market financing, came to $24.1 billion in 2022, a decline of 13% compared to $27.8 billion in 2021. The total deal count, however, was up by over 20% year-over-year (YoY). “The war in Ukraine has accelerated demand for solar around the world and the Inflation Reduction Act has boosted the sector in the U.S. In 2022, we saw record venture capital and private equity funding; solar companies were acquired in record numbers; and solar projects saw its second best year for acquisitions,” commented Raj Prabhu, CEO of Mercom Capital Group.
Startup radar: Europe's fintech startups to watch
Europe's fintech sector has taken a hit amid the downturn and has seen a significant slowdown in both venture deal count and value. So far this year, only €136 million has been invested across 19 European fintech deals, according to PitchBook data. While it's too early to tell whether activity will rebound this year, investors are expecting fintech dealmaking to fall short of previous records and valuations to suffer. "As we head into 2023, the situation for cash-starved fintech companies is likely to become even more challenging," said Stefan Tirtey, managing partner at fintech investor CommerzVentures. "Many of the inside investors having footed internal rounds will have maxed out their reserves, leaving companies to find new investors externally who are likely to be more selective. We expect to see a growing number of down rounds, distressed sales and exits."
Unicorn Valuations Are On The Chopping Block
The ranks of The Crunchbase Unicorn Board have swelled in the past two years, adding almost 1,000 new companies and trillions of dollars in reported value. But now, as private company valuations go through a hard reset in a tough market, the board faces a reckoning.
Since the beginning of 2021, 925 companies have been added to the Unicorn Board and more than $400 billion was invested in those unicorns. But many of those same companies that raised in 2021 and the first half of 2022 will find their valuations — even just 18 months after their most recent funding — are too high in the current economy.
Women-founded startups raised 1.9% of all VC funds in 2022, a drop from 2021
Last year, U.S. startups with all-women teams received 1.9% (or around $4.5 billion) out of around the $238.3 billion in venture capital allocated, according to the latest PitchBook data.
That percentage is a notable drop from the 2.4% all-women teams raised in 2021. The decline was expected, given the economic climate of last year: the bear, the bust, the winter. In fact, aside from 2016, the last time all-women-led startups raised such a low percentage of funds was in 2012, another period of funding decline caused by economic uncertainty and an election.
Davos 2023| “We are carefully optimistic about India and the global economy”: Siemens’ Matthias Rebellius
German conglomerate Siemens AG, which has invested more than 5 billion Euros in various infrastructures in India, is staying bullish on the Indian market and the global markets even as it remains cautious of the tight macroeconomic conditions. “We are not sure when, how much, and where the impacts of the recession will be seen. It will not be the same everywhere around the world…And talking about India, I do see continued investment. So I'm carefully optimistic for India, but also for the global economy,” said Matthias Rebellius, Member, Managing Board of Siemens AG and CEO of Smart Infrastructure. Even with the looming fear of recession, the companies especially in the capital goods and engineering goods manufacturing have witnessed strong order bookings until now, but sentimentally, global orders may see some softening, say experts.
Crypto to play 'major role' in UAE trade: foreign trade Minister
UAE’s minister of state for foreign trade Thani Al-Zeyoudi noted that as the country has attracted a lot of talent from the crypto sector, the UAE now needs to roll out the correct regulation to support further growth. Crypto will play a “major role” in the United Arab Emirates' global trade moving forward, says the UAE’s minister of state for foreign trade Thani Al-Zeyoudi.
Speaking with Bloomberg on Jan. 20 in Davos Switzerland — where world leaders gathered for the 2023 World Economic Forum — Al-Zeyoudi provided a host of updates regarding the UAE’s trade partnerships and policies heading into 2023. Commenting on the crypto sector, the minister stated that “crypto will play a major role for UAE trade going forward,” as he outlined that "the most important thing is that we ensure global governance when it comes to cryptocurrencies and crypto companies.”
The state of the French Tech Ecosystem
France has systemic issues that make it relatively weak as an exit market: local corporates don't do much M&A, shallow public market, labor and tax regimes that can turn off international acquirers, etc. The BPI can prop up French tech as much as it wants, but a lack of sizeable exits keeps France from becoming a top-tier ecosystem
L’Oréal’s VC fund makes first metaverse investment with Digital Village
L’Oréal’s venture capital fund Business Opportunities for L’Oréal Development, or BOLD, announced a minority investment in metaverse and NFT startup Digital Village last week as part of a $4 million funding round for the company. This is L’Oréal’s fist venture capital investment in the metaverse and Web3 space, according to a company press release. Digital Village operates as a virtual world building platform and NFT marketplace. The Venture Reality Fund, a VC tech firm that specializes in VR and AR, co-led the funding round with BOLD. Venrex, British Fashion Council, and others also participated.
Why Indian Family Offices Are Pouring More And More Money Into VC Funds
India's venture capital (VC) firms have been predominantly backed by global offices for many years. However, today, the tables have turned. VC firms are seeing a huge percentage of capital coming from Indian family offices in their recent funds. The second-generation entrepreneurs of these offices have become more active as limited partners (LPs). A case in point is Blume Ventures, which recently closed its largest India-dedicated fund at $250 million. The firm told us in an exclusive interview that this time around 40 percent of the capital came from Indian LPs. "This time, we had an unexpected outcome, a slightly divergent theme, where Indian money came in a big way. With a lot more confidence and a lot more gumption," said Karthik Reddy, managing partner at Blume Venture Advisors.
Why international DFIs are looking to African startups to scale impact investing efforts
Even as VC funding dries up across the world, development finance institutions (DFIs) are looking to African startups to deploy their dry powder. British International Investment (BII), a DFI from the UK, told TechCrunch recently that it will deploy $500 million into startups by the end of 2026, and half of that amount has been earmarked for African tech companies. In addition to backing VC funds in the region, the organization aims to make more direct equity investments in startups, adding to the four African companies it invested in last year. Formerly known as the Commonwealth Development Corporation, the BII is not alone: The World Bank’s International Finance Corporation (IFC) and the Netherlands’ Dutch Entrepreneurial Bank (FMO) have each invested in more than 10 startups over the last four years. The IFC also recently launched a $225 million fund to back early stage startups in Africa, Central Asia, Middle East, and Pakistan.
Psychedelic Therapy Is Now Legal In Oregon. Are Investors And Startups Ready?
In the past few years, investment in psychedelic startups has mostly focused on drug development in anticipation of Food and Drug Administration approval to use such substances to treat depression and anxiety. But things haven’t exactly turned out that way. Instead, Oregon has beaten the FDA to the punch, approving the legal use of psilocybin or “magic mushrooms” in a therapeutic setting. California and Colorado are expected to pass similar laws soon. Under the guidance of a therapist, adults can consume hallucinogenic mushrooms as a tool to reach their mental health goals. This new opportunity hasn’t translated into startup funding yet. Pharmaceuticals ended 2022 with $143 million in funding globally, while ancillary services such as telehealth and administrative services received about $29 million.
DeFi should complement TradFi, not attack it: Finance Redefined
Following FTX’s demise, the DeFi space is up for a complete remodel as crypto users demand better security and compliance practices. SushiSwap’s roadmap for the coming year includes the development of a decentralized exchange (DEX) aggregator, a decentralized incubator and “several stealth projects.” All these projects combined can grow its market share 10x, said the CEO. The co-founder and CEO of Ava Labs spoke with Cointelegraph at the World Economic Forum in Davos, Switzerland, on the future of DeFi and traditional finance (TradFi) and said DeFi should complement TradFi, not attack it. Another DeFi report suggests that decentralized forex could reduce costs by as much as 80%.
Top Seed Trends Include Carbon Capture, Women’s Health And AI Productivity
Entrepreneurial minds have long been focused on reducing carbon emissions. In recent months, their efforts manifested in funding seed-stage companies focused on better ways to capture, store and even create useful products from this all-too-abundant element. Along these lines, we identified at least seven companies that collectively raised over $25 million in seed funding in the past four months. The largest funding round — $8.7 million — went to Paebbl, a Scandinavian startup that combines captured carbon with abundantly available minerals to create a carbon-negative raw material. Lithos Carbon, a Seattle startup developing carbon capture technology for farms, landed $6.3 million, while Carbon Re, a British company whose platform aims to reduce emissions from the cement industry, secured just over $5 million.
In Davos, Blockchain Yields More Promises Than Problems
About half of the estimated 500 companies that attended the 2023 annual World Economic Forum (WEF) event in Davos, Switzerland, are technology companies and startups. You see them stretching out over the Promenade – the main street running through the city center where all the action happens. The showcases are demoing products and services in blockchain technology, artificial intelligence (AI), virtual reality (VR), robotics, 3D printing, and the Internet of Things (IoT), offering a taste of the latest and greatest to come.
One of the most notable topics being discussed – on panels, at events, over live broadcast – is the future of money. Of course, when talking about the future of money you must also mention crypto. The conversations I’ve overheard or been a part of, so far, have concerned the pragmatic (using blockchain for traceability), the political (using blockchain for anti-corruption), the futuristic (decentralized finance and the metaverse) and the hopeful (incentivizing climate action through Web3).
Crypto Technology’s Impact Goes Beyond Crypto Technology
After the drama punctuated by doldrums (or is it the other way around?) of 2022, many of us glass-half-full types have been welcoming the opportunity to focus less on market moves and more on the impact that the continued development of crypto technology can have on the world. And it’s potentially a pretty big impact, nothing less than the spreading of economic opportunity and individual empowerment while rewiring finance and culture, so it certainly deserves more attention. When we talk about focusing on technology, we generally mean ways to store and distribute information on networks with varying degrees of decentralization, which in turn will power new forms of engagement and economic activity. What is still largely overlooked is the potential that crypto technology has to support innovation in other areas of development. That impact will be felt well beyond blockchains, finance and culture.
What Is ‘Cerebral Valley’? San Francisco’s Nerdiest New Neighborhood
The techies are at it again—only this time, they’re not looking for kombucha on tap or Patagonia vests, but all-inclusive “hacker houses” in Hayes Valley.
Artificial intelligence workers are now forming co-living and coworking communities, where like-minded founders and developers can eat, sleep and breathe their work. These communities are often operated out of historic Victorians near Alamo Square, just a stone’s throw from Souvla and a Cotopaxi outlet.
The hacker house craze has grown quickly in recent months, so much so that some in the industry are now calling the neighborhood around them “Cerebral Valley.” (For the record, we at The Standard think the techies missed a big opportunity in renaming it “HAIyes Valley).