VNTR Capital News Jan 8, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - Jan 8 News, Events, and VC Reads
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Happy Sunday!
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VNTR CAPITAL COMMUNITY NEWS
Weekly Highlights
Happy New Year – We are back live after 3 weeks of rest, meditation and preparation, launching 2023 with new programs, events, and focus. Let’s collaborate toward making 2023 a great year for VNTR Community!
Davos 2023 – We are opening the year with VNTR Investors Breakfast Roundtable in Davos, held on Jan 19 during the World Economic Forum Annual Meeting. We look forward to a productive and enjoyable gathering with investment decision-makers. Sponsors and partners who wish to join us in Davos are welcome to apply here.
Fund of Funds Syndication Program – We have agreed to co-invest in a new fund for 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. Register here for more information on VNTR’s Fund of Funds Syndication Program.
VNTR Membership Program – In response to your requests, we are launching the VNTR Membership Program, providing special tools and programs that provide even greater benefits to our Community. Benefits include access to VNTR and Member deal flow; tools and programs to better connect members; mentorships, expert sessions, and masterminds to promote growth; and membership cohorts that encourage relationship building and peer support. We are now accepting applications for the first cohort of the PRO Membership.
VNTR Investors Lounge – We have introduced VNTR Investors Lounge, a new program providing investor lounges at major conferences, a VIP meeting place for active investors to host meetings, network, and attend interactive sessions curated by the VNTR team and partners. The 1st VNTR Investors Lounge is to be announced next week. Stay tuned.
Sponsors & Partners – We are producing 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) interested in collaborating with our community and programs can apply here.
Thank you to our 2022 partners for their valuable collaboration and support:
AARGO, AIBC, Ampere, Arena Games, BitDegree, CoinsPaid, CoinsPaid Media, CoinsTelegram, Cudos, DeGameFi, Dsight, EverCash, Finberg, Flowdesk, GetTransfer, HSBC India, Kikimora, LA Tech Week, Metaweek, MMPRO, TDe.Fi, TWO12, Vauban, Wois, Wow Summit
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 Tel-Aviv (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 320+ 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 12-14 DLD Munich 23, Munich, Germany
Jan 11-13 Crypto Finance Conference, St. Moritz, Switzerland
Jan 14-20 unDavos Summit 2023, Davos, Switzerland
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 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 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
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VC READS
Global Funding Slide In 2022 Sets Stage For Another Tough Year
As the curtain falls on venture capital investment in 2022, the reviews are in, and they are mixed. Venture and growth investors in private companies scaled back their investment pace significantly in the latter half of 2022, signaling a slower funding climate as we begin 2023.
To be fair, 2021 was a tough act to follow. Fast-growing startups were showered with capital, and tech firms went public at high valuations. Acronyms like SPAC and NFT were golden tickets to cash. Every type of investor had a role to play and there was every reason to believe the lavish show would go on in 2022. But last year’s funding numbers said otherwise. Global venture funding in 2022 reached $445 billion — marking a 35% decline year over year from the $681 billion invested in 2021 — according to an analysis of Crunchbase data. But despite the slower funding environment in 2022, investors spent $100 billion more last year than the $342 billion invested in 2020.
When will IPOs return? The past may hold some clues
I am not sure about you, but lately I’ve been hearing the same chatter from friends and colleagues at startups. It’s usually a version of: “Will my equity ever be worth something?”
Let me start with the harsh truth: Nobody has a crystal ball to anticipate what the market will do or how it will impact private company stock. That may not be the most comforting thing to hear, but I also don’t believe it’s all doom and gloom. Another truth is that this is not the first market reversal, and it won’t be the last either. For me, the comforting thing to do is look at the data. To better understand where we could end up, I like looking at the past and let history inform where we are now. So, I looked at five market downturns over the past 20 years and analyzed how they affected private stock, and, most importantly, how long it took the IPO market to reopen. After all, at the end of the day, we’re all searching for the same answer: When will my paper wealth become liquid?
ChatGPT developer OpenAI in talks to raise capital at almost $30bn valuation
OpenAI, the developer behind artificial intelligence bot ChatGPT, is in discussions to raise capital at a valuation of almost $30bn, according to two people familiar with the matter, as venture capitalists rush to profit from the viral technology. The San Francisco-based company is talking to investment groups including Peter Thiel’s Founders Fund to carry out a tender offer of existing shares, in which investors would purchase OpenAI shares from current shareholders, including employees. A deal would mark a surge in the company’s valuation from about $20bn in 2021, when it was valued during a secondary share sale. Such a rise would make it an outlier in Silicon Valley as technology companies have braced for big cuts to their values and investors have pulled back from new deals.
VCs try to parse through the 'noise' of generative AI
Generalist venture capitalists didn't use to pay close attention to the niche area of artificial intelligence known as generative AI. In recent months, however, the growing buzz surrounding the technology has reached a fervor the likes of which the VC market hasn't seen in years. The release of tools like DALL-E 2, Stable Diffusion and ChatGPT has captured a wide array of investors by demonstrating that generative AI is now ready to be applied to various commercial applications from advertising and law to writing software code. Generative AI has been around for years. But in the last 18 months, the language models that power most tools in the field have become stunningly good at creating art, writing and making other content with a human-like touch. Access to these innovations had been limited until late summer, when OpenAI and Stability AI made their so-called foundation models available to developers at an affordable price or in an open-source environment.
Startup M&A Could Pick Up In 2023 As Fundraising Tightens Further
While 2022 was relatively average in terms of M&A activity involving VC-backed startups in the U.S., dealmakers think this year could see a significant jump in volume as companies’ options for money and exits dwindle. Rising interest rates make money more expensive, but those in the industry say both private equity and strategics have significant capital to get deals done now that prices have come down. “It’s true debt is more expensive, but valuations are coming down,” said Dan Nash, senior managing director and head of investment banking at Cohen & Co. Capital Markets. Although 2022 couldn’t come close to the robust number of deals announced in 2021, it was on par with previous years — with more than 1,070 VC-backed startups in the U.S. getting bought, according to Crunchbase data.However, it is interesting to note dealmaking in the space did drop off as the year went along. The fourth quarter of 2022 was on pace to be the slowest of the year, perhaps dragged down by an uncertain economy and fears of a recession.
3 ways PE firms can ensure relevant due diligence for M&A targets ahead of a recession
Economic uncertainty, market volatility, rising interest rates, inflation and the ongoing Ukraine-Russia conflict affected the M&A market in the third quarter of 2022 to the point that deal volumes declined across the globe. Most experts agree that a recession is here or likely imminent, and even if one is not, it still is a scenario that companies must prepare for. That said, while private equity deal activity declined only by a bit in Q3, when compared to the years prior to COVID, it actually increased slightly. As for Q4, there was already chatter, particularly in the lower U.S. midmarket, that deal volumes might increase due to the rush to close deals before the year ended. As private equity firms continue to pursue deals, they should look to their due diligence firms and operators to ensure extra steps are taken to accurately assess and vet potential acquisition targets given the economic climate and the possibility of a recession.
Venture capitalists predict more consolidation in digital health
Investors expect stronger startups in the sector to buy competitors this year Venture capitalists who invest in digital health forecast growing consolidation and startup formation in 2023 as the industry rebalances following a rocky year. Adoption of virtual care and other digital tools accelerated during the pandemic and marquee deals, such as Teladoc Health Inc.’s $18.5 billion purchase of Livongo Health Inc. in late 2020, raised the industry’s profile. Venture investment followed. Digital-health startups globally raised $59.6 billion in 2021, nearly twice the previous year’s total, according to market tracker CB Insights. But in 2022, initial public offerings stalled, inflation rose and investors grew more conservative. Startups that raced to high valuations during the funding boom postponed new venture rounds to prevent their valuations from falling, investors said.
The Fool's Game Of Annual Crypto Price Predictions
The price volatility of cryptocurrencies has been an issue investors have had to contend with over the past 14 months, and it doesn’t seem to be going away any time soon. That means clients active in or curious about cryptocurrencies have likely already encountered the wild world of annual cryptocurrency predictions. Perhaps no headline better encapsulates the unpredictability of token prices than this one from CNBC on Monday: “The boldest bitcoin calls for 2023 are out — and a 1,400% rally or a 70% plunge may be on the cards.” The most optimistic call. $250,000 by year-end 2023, was made by digital venture capitalist Tim Draper, according to the story, while the most pessimistic call, $5,000, was made by Standard Chartered. In rough estimates, that’s the difference between bitcoin having a $4.75 trillion or a $95 billion market capitalization.
Tech investors wary of China’s charm offensive to attract funding
Investors are sceptical about Beijing’s recent pledge to support China’s biggest technology companies in the coming year, following a bruising regulatory campaign that has tamed internet titans such as Alibaba and Tencent. During an annual policy meeting that sets out the agenda for 2023, China’s top leaders pledged last month to support digital companies to “fully display their capabilities” in promoting economic growth, according to a readout of the closed-door summit on Chinese state media. But venture capitalists and foreign investors remain wary about the apparent reversal of a brutal, two-year regulatory campaign. Beijing has levied huge fines on internet players, launched probes over data abuses, limited children’s gaming hours and nearly wiped out the edtech sector when it banned for-profit tutoring for core curriculum subjects. Alibaba’s market capitalisation has fallen by about 70 per cent and Tencent’s by about 50 per cent since both companies’ share prices peaked, in October 2020 and February 2021 respectively.
Cybersecurity Likely To See Valuation Cuts, But Demand Still Strong
Although security needs around software development, applications and data remain, cybersecurity startups likely will continue to battle against a new fundraising reality as 2023 dawns. Industry experts expect a continued softening of the fundraising market in cyber — despite 2022 easily being the second best year ever in terms of raising venture capital in the industry. “I think we are going back to normal,” said Alberto Yépez, co-founder and managing director at Forgepoint Capital — which specializes in cybersecurity and infrastructure software investments. “You are already starting to see that.” 2021 set a record for the sector, with more than $23 billion raised by VC-backed startups in network, cloud and cybersecurity, per Crunchbase data. While 2022 will only see around $16 billion, that is still nearly double from 2020. “Across the board, you are just seeing much more realistic valuations,” said Stephen Ward, managing director at Insight Partners, who invests in cybersecurity. “I think in 2023 you will see the same type of thing we have been seeing the last six months.”
Which Fintech Sectors Will VCs Favor In 2023?
Financial services remained the leading sector for venture investment in 2022 despite an overall pullback in venture funding and shockwaves in the crypto industry. And fintech is expected to remain strong in 2023, with areas from payments to accounting management likely to lead the way. Payments could remain the most-funded sector within fintech, especially startups focused on B2B payments. On the other side, cryptocurrency and blockchain, which experienced a large increase in funding in recent years, will most likely face a pullback in the wake of FTX’s collapse. Venture investment into fintech companies in 2022 reached $81 billion as of Dec. 14 — down 41% so far from the peak of 2021 at $137 billion. Still, that $81 billion figure still exceeds 2020 amounts by more than $30 billion.
Ranked: The World’s Wealthiest Cities, by Number of Millionaires
The Top 20 Cities for the World’s Ultra-Wealthy
How many millionaires, centimillionaires, and billionaires live in the world’s wealthiest cities?
While such metrics are not all encompassing, these measurements of private wealth do help put the financial health and economic activity of some of the world’s wealthiest cities in perspective.
This infographic uses information from the Henley Global Citizens Report, in partnership with New World Wealth, to rank the world’s wealthiest cities. It leverages a comprehensive data set that tracks the movements and spending habits of high-net-worth individuals in over 150 cities around the world.
The legal threat coming for venture capital
After being battered by rising interest rates and choppy markets, the venture capital industry is sweating new regulations that could expose fund managers to legal risks. The SEC is putting the final touches on a rule that would make it easier for investors to sue VCs for bad behavior, negligence or recklessness. It would “open up all types of litigation risk to being a venture capitalist,” Justin Field, the National Venture Capital Association’s senior vice president of government affairs, told MM. The proposal, which could be finalized as soon as this quarter, would “drive a wedge between VCs and portfolio companies that will hurt both innovation in this country as well as [investor] returns, which is what the SEC is supposed to be trying to protect,” he added.
Huobi confirms 20% layoffs, denies insolvency rumors
Huobi cryptocurrency exchange has confirmed plans to lay off 20% of its employees as part of the ongoing restructuring following Justin Sun’s acquisition of the firm. “The planned layoff ratio is about 20%, but it is not implemented now,” a spokesperson for Huobi said in a statement to Cointelegraph on Jan. 6. The representative emphasized that the allegations of Huobi firing as many as 40% of employees is a rumor. Huobi has established a new organizational structure after the new shareholders have taken over, the spokesperson said, adding that the firm has adjusted the business departments. “With the current state of the bear market, a very lean team will be maintained going forward. The personnel optimization aims to implement the brand strategy, optimize the structure, improve efficiency and return to the top three,” Huobi said.
VC predictions: What's in store for Europe, the Mideast, Africa in 2023?
At the start of 2022, European venture investors predicted that dealmaking would slow from the previous year's record, but few could have anticipated the extent of the downturn that eventually materialized. Europe's VC market ended December on a decidedly less optimistic note than in previous years, with ongoing uncertainty over how long current market conditions will persist and what the full impact on startups will be. We reached out to investors active in Europe, the Middle East and Northern Africa to see what they expect for the year ahead. Here are the key takeaways.Those hoping for a speedy recovery from the downturn will be left disappointed, according to Eight Roads partner Alston Zecha, who predicts the slowdown in activity to continue in 2023
All the VC fund of funds you need to know in Europe
Backing individual VC funds isn’t the only way investors can get access to VC.
They can also invest in VC fund of funds — vehicles that invest in multiple VC funds — and there’s a growing number of them in Europe.
These funds can help get LPs — limited partners, the investors in VC funds — access to competitive top-tier funds, and better returns through diversity. But they’re also seen as important actors in the ecosystem’s maturation.
VCs Stockpiled Record Funds This Year. Where Will All That ‘Dry Powder’ Go In 2023?
Venture firms have continued to raise record funds in 2022, even as startups received far less money than they did last year. That poses the question: What will happen with all that dry powder in 2023? Dry powder is as high as $1.3 trillion globally for private equity and $580 billion globally for VC, according to one estimate from James Ephrati of Lightspeed Venture Partners. The dry powder in 2021 was roughly the same, he said, but investors were putting money to work at a record pace. Investors are likely to hold back in 2023, at least in the shorter term, as funding valuations trend down. Founders are becoming more disciplined around spending, which will impact growth. And limited partners who overextended in venture capital assets would prefer firms to come back to raise subsequent funds with wider time horizons.
VCs are pushing startups — will their investors tighten the thumbscrews, too?
Over the last decade or so, many venture capitalists have built vast personal fortunes. Some of the money has been made through investments in companies that have outperformed. But much of their wealth traces to management fees that added up quickly as fund sizes — raised in faster succession than ever in history — ballooned to unprecedented levels.
Given that the market has changed — and will likely remain a tougher environment for everyone for at least the next year or two — an obvious question is what happens now. Will the industry’s limited partners — the “money behind the money” — demand better terms from their venture managers, just as VCs are right now demanding better terms from their founders?
Sheikh Mohammed unveils 10-year growth plan for Dubai
Sheikh Mohammed bin Rashid has unveiled a plan to catapult Dubai into the world's top cities by economic strength in the next 10 years.
The Vice President and Ruler of Dubai said the Dubai Economic Agenda (D33) plans to add billions of dirhams to the economy across more than 100 projects.
A key goal is placing Dubai in the top three cities by economic strength by 2033 and within the top four global financial centres. The city's economy would double in the next decade, he said.
Private equity forecast: Europe's investors brace for 2023
As the private equity industry emerges from a tumultuous 2022—marked by volatile macroeconomic conditions driven by soaring interests and geopolitical tensions—its participants are bracing for another challenging year. We reached out to dealmakers, investors, investment bankers and other service providers to get their take on what the industry will need to prepare for in 2023. Leverage for buyouts has become increasingly difficult to secure via public markets. At the same time, many banks with hung debt—debt underwritten before the market tightened—have struggled to sell it on the secondary market. "The high-yield market basically collapsed in the middle of 2022," Jason Radford, global co-head of M&A at law firm Ashurst, said. "And big deals, even with large US sponsors, just weren't getting done, and they will be having to look at bridge financing." However, he added that for certain sectors such as core infrastructure the long-term institutional debt markets have stayed reasonably robust.
2023 could be a rocky year for crypto venture investments: Galaxy Research
Last year was a big one for crypto venture capital despite multiple high-profile meltdowns and the FUD (fear, uncertainty, and doubt) tsunami that followed. However, the funds may not flow as easily this year, a crypto researcher warns. The number of deals and amount invested by venture firms into Web3 and crypto startups was a little over $30 billion in 2022, according to Galaxy Research. Galaxy’s head of firmwide research, Alex Thorn, described it as a “monster year” that was only just eclipsed by the $31 billion in VC investments in 2021. However, in a Jan. 5 report, Thorn stated that macroeconomic and crypto market conditions led to significant investment drawdowns in Q3 and Q4. This will likely continue into 2023, until macro and crypto market conditions improve. Thorn noted that there were 2,900 venture deals in 2022, though the fourth quarter saw the fewest deals and the lowest capital invested in two years.
Singapore’s venture capital scene looks set for a ‘pretty decent’ 2023
Unlike global markets more generally, the venture capital scene in Singapore is “still very active,” Tong said. That’s because companies in the country tend be at the earlier, nascent stages of development, and “in the seed and Series A stages, there’s still lots of liquidity. There’s lots of capital there,” he added. Global markets, on the other hand, tend to be at the “more mature” stages of Series B and C, where venture capital has “dried up a little bit.”
A seed funding round — also known as the initial investment — is followed by various rounds, known as Series A, B, C and so on. Venture funding for the first nine months of 2022 totaled $369 billion, down 25% year on year, according to Crunchbase. The Singapore government launched SGInnovate in 2016 to support the development of deep tech startups. Deep tech startups aim to address significant scientific problems.
Bitcoin Mining: A Positive or Negative Indicator for the Future of Crypto?
In a piece last week titled “Crypto will be fine,” former CoinDesker Brady Dale noted that even though crypto took a beating throughout 2022, some indicators remained bullish. Notably, Bitcoin’s hashrate, which is how much computational power is directed toward securing the network, held steadfast. “If the industry were dying, these miners should be winding down. They aren't,” Dale wrote. Indeed, according to Blockchain.com data, Bitcoin’s hashrate hit an all-time high in November. Bitcoin’s hashrate rose steadily over the past 12 months even as the network’s token, bitcoin (BTC), lost over two-thirds of its value. For many, that is a sign of faith in the long-term success of the network. Of course, there’s more to the story than a single statistic. As Compass Mining’s Zack Voell (another ex-CoinDesker) detailed in a Monday report, the bitcoin mining industry took a series of beatings in 2022. In his catalog of “all of the bad things that miners suffered,” Voell found that at least four executives of major mining firms resigned over the year, six lawsuits were filed against mining companies – for reasons stretching from breach of contract to zoning rule violations – and stocks for publicly traded mining companies were in the doldrums.
The Week’s 10 Biggest Funding Rounds: SpaceX Takes Off In New Year; Netskope Secures $401M
Despite last year’s decline in venture capital investment, the first week of the new year saw some sizable deals. Three were more than a quarter-billion dollars, and the top seven made it into the nine-figure realm. This week may be more of an outlier than a harbinger of things to come in light of recent headlines of layoffs and a looming recession, but it still is a big kickoff to the new venture year.
Nexus Venture eyes $700 million fund to bet on India, U.S. tech startups
India's Nexus Venture Partners is in advanced talks to raise a $700 million fund, the second-biggest such pool to be garnered in the country in the past year, to invest in domestic and U.S.-based technology firms, two sources with direct knowledge said.
The planned fundraising, which one of the sources said will close within two months, is an indication that investors may be starting to get more comfortable with Indian technology company valuations after the poor market performance in 2022 of some high-flying startups and amid a global tech sector rout.
The YC community is approaching 10,000 founders. Looking at this powerful network, we see people from all different backgrounds – each with a unique journey to entrepreneurship. Today, we are releasing a public YC Founder Directory, a companion to the YC Startup Directory. For prospective founders who are looking for inspiring leaders, here is a way to discover founders who have had experiences that reflect your own and learn more about their founder journey.
The Creator Economy Was Way Overblown
We’re seeing the truth about one of the most-hyped sectors of the past decade.
After years of hype, the Creator Economy is slamming into reality. Influencer programs are shuttering. Investment is drying up. And worsening economic conditions are threatening to crush creators and the tech infrastructure behind them.