VNTR Capital News Jan 29, 2023 - News, Events, VC Reads
VNTR Capital News Jan 29, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - Jan 29 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
We hosted Stephan Morais as a keynote speaker at VNTR Investors Roundtable Lisbon on Jan 26 where he shared his journey as Managing Partner at Indico Capital Partners and their investments in Sustainability, BlueTech, and Ocean Tech. Stephan also discussed best practices in working with the European Investment Fund (EIF) for emerging VCs to form their first funds in Europe.
We are hosting a two-day VNTR Capital Investors Lounge in Dubai on Feb 8-9 together with TMRW Conference Dubai. VNTR Lounge will serve as a meeting point for investors and VIPs to connect, network, co-work, host meetings, and participate in interactive group discussions and events (fireside chats, debates, and daily happy hours). Please attend the VNTR Investors Roundtable on Feb 9 for roundtable introductions and discussions.
VNTR Investors Roundtable London will be held on Feb 8 during ICE London to provide a place for traveling investors and local London investors to meet and explore co-investment opportunities
Companies who wish to join as event sponsors in Dubai and London are welcome to apply here.
VNTR PRO Membership Program, Cohort 1 kicks off on February 13, 2023 - VNTR PRO Membership provides access to:
VNTR community members directory and messaging
Facilitated matchmaking and introductions by community managers
Vetted deal flow and the ability to share your deals for peer review and co-investment
Mastermind groups (sounding board) to share ideas, solve problems and peer support
Learn from experienced investors and industry leaders at Fireside Chats, Q&As, and Masterclasses
Priority access to syndicate allocations and events
Partner benefits and discounts
Fund of Funds Syndication Program – Select investors can participate as Syndicate LPs in world-class venture funds 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:
Mocha Ventures - We are a team of blockchain experts, OG digital natives, serial entrepreneurs and experienced investors with a global team. We have a proven track record in investing in the blockchain and digital assets projects with more than $85M deployed in 150 plus companies; outperforming our peers in terms of DPI and TVPI. Based out of Liechtenstein we enjoy the most regulated digital securities laws across EU. By implementing the Blockchain Act in both the physical and digital world Liechtenstein became a powerhouse for regulated digital securities. For further information, please get in touch with Renato Brioni.
Crypto Hunters - Crypto-related TV show 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 increase crypto adoption. 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
CV Lab Lisbon - We help global start-ups, corporates, and investors to leverage blockchain technology to transform industries, create better services, and evolve new marketplaces. In short, CV Labs supports those driving blockchain technology to build better ways for humanity to live, work, interact and transact.
Kübe Lisbon - The home of flexible spaces. Coworking | Events | Community. Kübe was born with the purpose of offering flexible and disruptive spaces for teams to unite around a common goal.
Upcoming VNTR Capital events:
Feb 8-9 VNTR Investors Lounge Dubai (during TMRW Dubai)
Feb 8 VNTR Investors Roundtable London (during ICE London)
Feb 9 VNTR Investors Roundtable Dubai (during TMRW Dubai)
Feb 16 VNTR Investors Roundtable Barcelona (during European Blockchain Convention)
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
Feb 1-3 DLD Tel-Aviv, Israel
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 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 30 - Jun 4 Tech Week San Francisco, US
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
July 6-7 Block3000, Lisbon, Portugal
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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VC READS
Losing the horn: VCs think majority of unicorns aren’t worth $1 billion anymore
The past few years have been a rollercoaster for the startup world’s herd of unicorns.
Two years ago, we saw a record number of companies cross the $1 billion valuation milestone. But that momentum slowed to a trickle last year, and this year’s market conditions look likely to reverse course to a point that we may witness some of those companies losing that status.
Down rounds are likely to become the norm this year as venture firms and investors look to bring valuations back to earth. We’ve already started to see some decacorns, like Stripe and Instacart, lowering their valuations, but they are so highly valued that they aren’t at risk of losing their unicorn status. But most unicorns don’t enjoy that luxury.
How VCs’ lack of succession planning is leaving big firms without a future
From the monarchs of yore to today’s global CEOs — leaders have always had succession on their minds. Even more so today; the average CEO is only around for five years.
Yet for many VCs, the topic remains taboo.
As the industry expands — funding for European startups quadrupled from 2017 to 2022 to reach $94bn — VCs will have to start succession planning if they want to keep their firms running for another 40, 50 or even 100 years. Some older US VC firms have already transferred leadership successfully, but many European firms still haven’t thought about who will take the reins when the original partners check out.
Thinning The Herd
In the last ~3 years, we've seen hundreds of companies reach unicorn status. Many of them are now armed with their $1B+ valuations, years of runway (maybe), and in almost every case, less than $100M in revenue. I can't tell you the number of companies I saw raise at $1B+ valuations on <$5M of revenue.
A lot of VCs are predicting that many of them will fail, in some instances as high as 50%+. I also think that a lot of companies who are overvalued are going to face a significant punch to the face. Many of them are reacting dramatically to the changing market. But I've been surprised how many are sort of going along business as usual. So I started to put down thoughts on how that might play out, for better or worse (mostly worse).
Venture capital investments into blockchain continue to free-fall
Q4 2022 saw investment capital inflows of $2.3 billion, continuing the trend since April sparked by the collapse of Terra and subsequent fallout.
The second half of 2022 saw a dramatic decline in capital inflows across all five major sectors of the blockchain industry: decentralized finance (DeFi), centralized finance (CeFi), nonfungible tokens (NFTs), infrastructure and Web3. The first half of 2022 brought in just under $30 billion of investment, while the second half only saw $7.3 billion — a dramatic plunge.
Japan to remove limit on overseas investment by startup funds
Japan intends to scrap a key restriction on overseas investments by domestic venture funds dedicated to backing startups, a move intended to attract more foreign investors into the sector.
Domestic startup funds currently must limit investment in foreign companies to less than 50% of their portfolio holdings. Ending this restriction would allow more flexibility in choosing investment targets, encouraging overseas money to flow into such Japanese funds.
The planned deregulation applies to startup funds that take the form of limited partnerships, a common method tapped by venture capital to curb risk exposure. Investors participating as limited partners are not required to take on risk beyond their investment. The arrangement not only provides an easy way for investors to supply money, but also is suited for collecting small amounts from a wide range of investors.
Global Ventures VC: Don't impose 'copycat' ideas on Mideast, Africa
As venture firms cast a wider net to find investment opportunities outside established markets, the burgeoning startup ecosystems in the Middle East and Africa are attracting great interest. Capital invested in African startups reached a record $3 billion last year, according to PitchBook data. The Middle East was down 4.2% to stand at $15.9 billion, but the region still fared relatively better than its more established counterparts like the US and Europe. Although more investors are paying attention to these regions, they remain underserved.
The world needs venture capital to take bold action on water tech
Water tech investment is picking up speed, but why does it appear stranded at sea in comparison to other climate sectors?
David Lynch, CEO of water utility software company Klir, predicts that the first trillionaire will be a water entrepreneur. It makes sense — humanity depends upon water. A human cannot survive more than three days without fresh drinking water. Global industries, including agriculture, pharmaceuticals and chip manufacturing, rely upon massive amounts of water for production — Taiwan Semiconductor Manufacturing uses more than 150,000 tons of water per day. Clearly, global fresh water dependence is crucial to life and the economy. Yet, despite intensifying droughts and groundwater depletion, water tech is a largely nascent field for disruption.
Europe’s most active deeptech investors
European investors poured $17bn into deeptech startups on the continent last year, according to Dealroom data. And while that’s down on 2021’s record-breaking $22.8bn, it’s still a big leap from the $11.6bn and $11.1bn invested in 2019 and 2020, respectively.
And, if you take megarounds (deals exceeding $250m) out of the equation 2022 only saw a slight drop-off, with $14.9bn being invested, compared to $15.5bn the year before.
The Systems of Elite CEOs: Setting the Stage for Billion-Dollar Growth
An overlooked key to growth: How well you transition from Founder to CEO determines how your company scales.
Seed-stage Founders have a hand in everything: marketing, hiring, product, sales, everything. You have to early on. But when your startup starts to grow, you can’t – and shouldn’t – keep doing it all yourself. Once you reach 30-50 people, your goal should be to build a team and mechanisms that will do “everything” so that you, the CEO, can focus on leading and managing.
The deceptively simple secret: Elite CEOs build systems.
3 ways institutional portfolios could find balance this year
In a packed hot yoga class last Friday morning in downtown Seattle, the woman next to me launched into a forearm stand, her legs dangling in the air above my head. With nowhere to move but the far edge of my mat, I willed her to avoid toppling onto me. After a minute or two, the instructor cued our descent; my neighbor floated her legs back to the mat with ease and met the rest of us in downward dog. Like a yogi's inversion, the act of portfolio balancing requires years of experience and strategy to look effortless and produce the intended result. Amid inflation, rising interest rates, geopolitical turmoil and the buzzy denominator effect, this balancing act requires even more fortitude to avoid a hard landing, especially if asset values tumble in the new year.
Venture Fell More Than 40% In Hottest States For Funding
Venture funding to the holy trinity of the startup world — California, Massachusetts and New York — fell sharply last year from 2021’s lofty heights. All three states saw a precipitous drop — more than 40% in each case — in 2022 venture funding to startups based in their borders, according to Crunchbase numbers. Deal flow also fell. But while the declines are striking, it is notable that last year was still an increase from 2020. Also, despite the drops, the three states still far outpace other states in venture. Massachusetts startups saw nearly twice the amount of venture Texas — the fourth-biggest state for venture — startups got. (Although, Texas, North Carolina and Florida posted notable gains in VC funding last year, when most other states saw declines.) “Those three will continue to be the leaders, that is not going to change,” said Steve Case, founder of Washington, D.C.-based venture firm Revolution, which focuses on investing outside the major hubs of Silicon Valley, New York and Boston.
UK’s FCA hints at why it’s only given 15% of crypto firms the regulatory nod
Despite the plans to turn the region into a bustling crypto hub, the United Kingdom’s financial watchdog says it has given the all-clear to only 41 out of 300 crypto firm applications seeking regulatory approval to date. The U.K. Financial Conduct Authority (FCA) implemented the new cryptocurrency-focused regulations on Jan. 10, 2020, to supervise businesses operating in the sector and to ensure that they’re subject to the same Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations as firms in traditional financial markets. A statement from the FCA has revealed that of the 265 applications that were “determined,” a mere 15% of these applications were approved and registered, while 74% of firms either refused or withdrew their application, and 11% were rejected. Another 35 applications are yet to be determined. While the FCA didn’t expressly state the cause of the rejected or withdrawn applications, it did provide feedback on “good and poor quality” applications.
Europe’s Leading Investors Were Active In H1 2022, Then Dropped Off
Active investors in European startups remained very engaged in H1 2022 then slowed down significantly for the rest of the year, a primer to a slow 2023. For context, the European funding environment grew 159% year over year in 2021, more dramatically than the U.S. and Asia. The slowdown in 2022 for Europe was less drastic than other regions, down 25% while North America was down 36% by year end. Seed funding in Europe showed the least decline year over year compared to other funding stages in 2022, down 11%. The most active seed investors backed on average 43 deals per year in 2022. Of the 18 most active seed investors in 2022, two-thirds were more active or on par with 2021, while one-third were below 2021 counts. Some of the more active seed investors are global seed shops, often with a base in Europe. Crowdcube, an equity crowdfunding platform, leads the list, but has a much lower investment count in 2022 vs. 2021, a signal of a cooling market.
CVCs take part in more than a fifth of European VC deals
Corporate venture capitalists may have invested less last year, but they still took part in more than a fifth of all European VC rounds. CVCs participated in 2,375 European rounds in 2022, worth an aggregate €42.6 billion (about $46.3 billion), according to PitchBook data. While this is down from the previous year's 2,661 deals, CVCs were involved in 21.7% of all European VC rounds in 2022—the highest annual percentage to date. Late-stage VC accounted for 37.3% of all European venture deals with CVC involvement, and some of Europe's largest rounds included these corporate investors. Electric vehicle startup Rimac's €500 million Series D was joined by Porsche Ventures, and GoStudent's €300 million Series D was led by Prosus Ventures.
Even startups with lots of runway probably can't grow into those sky-high valuations
"Extend your runway" has been the loud and clear mandate VCs have given their portfolio companies since the downturn began in spring. The guidance on the amount of runway—the number of months a startup can operate before it runs out of money—varied, but the general advice ranged somewhere between 18 months and 36 months. Investors were hoping that, over that time frame, startups would grow into their sky-high, pandemic-era valuations and, therefore, avoid resorting to a dreaded down round. But valuation multiples may have fallen too far from their 2021 peaks for many late-stage companies to catch up to their last valuation as quickly as investors initially hoped. That's according to PitchBook calculations using valuation data shared by IVP, one of the oldest Silicon Valley VC firms.
SoftBank deals hit record low, sapping funding for startups
SoftBank Group Corp.’s new startup bets hit a record low last quarter as valuations continued to slide, chilling an already frosty startup winter. The world’s largest tech investor — which at one point took part in $30 billion worth of financing rounds in more than 90 startups in a single quarter — participated in just eight investment rounds totaling $2.1 billion in the three months ending in December, data compiled by Bloomberg showed. It was the first time the number of SoftBank’s deals fell to single digits since the launch of its Vision Fund. Startup investments by SoftBank’s Vision Fund unit came below $350 million in the quarter just ended, a person familiar with the matter said. In total, the segment invested more than $144 billion in five-and-a-half years, which averages out to more than $6 billion per quarter.
Are SPACs Back? Freightos Marks First Expected Listing Of 2023
After a serious drought in public listings in 2022, Israel-based freight booking platform Freightos is preparing to go public via a deal with a special-purpose acquisition company on Thursday in what would be the first SPAC merger to list this year. With companies continuing to struggle to raise late-stage capital in the private markets, it’s likely some others will look to SPACs — which have committed investors — as a way to bridge the gap. “We’re going public primarily as a way of raising money,” Freightos CEO Zvi Schreiber told Crunchbase News prior to listing. “It’s not because we are trying to exit or sell shares, or be in a hurry to be a public company. It’s a good way to raise capital right now.”
Companies That Raised Money In 2021 Are More Likely To See Layoffs
During the first week of January, Carbon Health CEO Eren Bali announced on Twitter the company would lay off around 200 people. Days later, according to Crunchbase data, the health care startup announced it closed a $100 million Series D round. Carbon Health’s news follows a similar pattern we have seen in 2021 and 2022 layoffs compiled by Crunchbase. After companies raised two massive rounds in the span of a few months, layoffs followed the next year. “There was this growth-at-any-cost mindset where the main thing that was being rewarded in a venture-backed company’s ability to raise at a high valuation was revenue growth,” said Healy Jones, an executive at startup consulting firm Kruze Consulting. “That’s all people cared about.”
Do The Best Startups Really Get Funded During Bad Times?
Chat with any venture capitalist about the current down market and their talking point is always the same — great companies get funded during downturns. But is that really true? It does seem odd that when the economy slows and VCs pull back on their checkbooks, they all of the sudden are able to sort the wheat from the chaff. However, the theory is that during tough times, great companies will rise to the top and investors will do more due diligence and leg work to find them. That sounds good and makes a certain amount of sense, but does it actually play out? Did great companies get the biggest fundings when the market tanked during the global crisis of 2008-09? Or did VCs actually back their fair share of washouts just like any other time? Running a quick search of Crunchabse’s data for the largest rounds raised by U.S.-based startups between mid-2007 and mid-2009 gives us a glimpse at all the “great” startups that got funded during the previous downturn.
How African startups raised venture capital in 2022
Earlier this month, we reported that investors’ sentiments surrounding venture capital activity going into this were more reserved than upbeat. Investors believe the market correction, which caught up with the continent in the second half of 2022, will spiral into this year. But before that, there was shared optimism that African startups would raise more VC funding last year than in 2021 when the continent, for the first time, passed the $4-5 billion threshold. There was reason to believe so. For one thing, by the first half of 2022, Africa seemed to defy the global venture funding decline after its startups raised $3 billion, double the amount secured over a similar period the previous year; therefore, a twofold increase by December seemed plausible. It didn’t turn out as expected, as equity deals on the continent by the end of the year hovered around $4.8-$5.4 billion, per insights from data trackers Briter Bridges, Partech and The Big Deal, with slight percentage differences from their 2021 numbers.
US venture capitalists hope India's Budget 2023 supports growth, strengthens startup ecosystem
US venture capital firms investing in India are expecting the Union Budget 2023 to support the growth and development of the startup ecosystem in the country, according to a top investor. Union Finance Minister Nirmala Sitharaman is scheduled to table the Union Budget for the financial year 2023-24 before parliament on February 1. The venture capitalist community here in the US is very excited given the large number of unicorns emerging out of India in recent years. According to Arun Kumar, managing partner of Celesta Capital, the venture capitalists want to capitalise on Indian talent and invest in them. "As a US-based venture capital firm investing in India, we are keenly interested in policies and initiatives that will support the growth and development of the startup ecosystem in the country," Kumar told PTI.
White House Calls on Congress to ‘Step Up Its Efforts’ on Crypto Regulation
Four senior U.S. officials in the Biden administration published a statement on Friday urging Congress to “step up its efforts” with respect to regulating the cryptocurrency market.
The officials – Brian Deese, director of the National Economic Council; Arati Prabhakar, director of the White House Office of Science and Technology Policy; Cecilia Rouse, chair of the Council of Economic Advisors; and National Security Advisor Jake Sullivan – wrote that Congress “should expand regulators’ powers to prevent misuses of customers’ assets … and to mitigate conflicts of interest.” Other suggestions for Congress in the statement included strengthening transparency and disclosure requirements for crypto companies, strengthening penalties for violations of illicit-finance rules, and working more closely with international law enforcement partners.