VNTR Capital News July 23, 2023 – News, Events, VC Reads
Venture Capital, Web3, and Private Equity – July 23 News, Events, and VC Reads
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Happy Sunday!
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VNTR CAPITAL COMMUNITY NEWS
Spotlight
VNTR Chapter Director program — Join the VNTR team to build VNTR Investors Membership Chapters in tech hubs globally and build a Premier Community for VCs, angel investors, family offices, crypto investors, and CVCs. You can learn more about the VNTR Chapter Director role and apply here.
VNTR Platform — We listed VNTR Syndicate deals on the VNTR Platform, and now you can see the investment memo, pitch recording with the founders. Small check-size investors can join deals through VNTR SPVs, and large check-size investors can co-invest directly with VNTR introduction and assistance. We currently have two active Series B deals and a token sale open. VNTR PRO members shared additional deals for co-investment by other members. Join us today to co-invest and share your best portfolio companies raising additional capital from VNTR vetted investors community.
Create your VNTR Platform Account
Last Week
VNTR Masterminds — We hosted 3 mastermind sessions this week where VNTR PRO members shared their progress, challenges, and goals. Masterminds provide a secure space to share and get supported by peers who can advise or connect you to a solution. Our next masterminds are on Aug 1, 2, and 3.
Upcoming
Tokyo — This week, we will host VNTR Roundtable in Tokyo on July 26 to gather investors from Japan and South East Asia who are attending WebX Asia. (VNTR PRO members get complimentary passes to the conference)
Abuja, Nigeria — We partnered with E-Tech Africa and Moolu Venture to host the VNTR Investors Luncheon on July 31 in Abuja and kick off the VNTR Nigeria Chapter.
Santa Cruz Bolivia — We partnered with VCiLAT to host VNTR Roundtable Santa Cruz on Aug 16 at the conference and provide a place for VCs and angels to learn about each other through the roundtable introductions and share their investment focus.
Toronto — Our second Toronto roundtable will take place on Aug 16 as a side event to Blockchain Futurist Conference. Toronto Chapter will host recurring monthly events and experiences for local and visiting investors.
Bali — VNTR Bali Chapter will host its first event on Aug 25 to connect investors at Coinfest Asia.
Los Angeles— Next Casting for Crypto Hunters Adventure Reality Show will be held in Los Angeles. Don't miss your chance to be part of this epic adventure — Apply for LA Casting!
Thank you to our Partners:
Crypto Hunters is a new futuristic reality adventure TV show and immersive mobile game utilizing augmented reality (AR), with the primary objective of promoting widespread adoption and educating the general public about Crypto, Blockchain, NFTs, and Web3. The show aims to engage large audiences globally and increase their understanding of these concepts through captivating challenges and rewards. Currently, Crypto Hunters is in the process of recruiting 20 candidates (10 teams of 2) who will compete across 10 episodes for a chance to win the grand prize of $1 million. The show intends to reach a staggering audience of 500 million viewers, granting them the opportunity to participate in the immersive AR game associated with Crypto Hunters. Viewers can compete for rewards and cash prizes by engaging in various challenges and games. This synergistic relationship between the show and the game will create an extensive ecosystem and a vibrant community of Crypto Hunters token (CRH) holders. The tokens will serve as a means for community members to partake in games, purchase NFTs, merchandise, and more. With its multi-season format, the show plans to propel the adoption of cryptocurrencies further and foster one of the largest crypto communities globally. Join the Crypto Hunters Telegram community. Contact HK to learn more.
Upcoming VNTR Capital events:
July 26 VNTR Investors Roundtable Tokyo (During WebX Asia)
July 31 VNTR Investors Luncheon Abuja Nigeria (During E-Tech Africa Summit)
Aug 1 VNTR Mastermind Group A (Online)
Aug 2 VNTR Mastermind Group B (Online)
Aug 3 VNTR Mastermind Group C (Online)
Aug 16 VNTR Investors Roundtable Santa Cruz, Bolivia (During VCiLat)
Aug 16 VNTR Investors Roundtable Toronto (During Blockchain Futurist Conference)
Aug 25 VNTR Investors Roundtable Bali (During Coinfest Asia)
Sep 6 VNTR Investors Roundtable Seoul (During Korea Blockchain Week)
Sep 14 VNTR Investors Roundtable Singapore (During Token2049)
Sep 20 VNTR Investors Roundtable San Francisco (During TechCrunch Disrupt)
Sep 25 VNTR Investors Roundtable Munich (During Bitz & Pretzels)
RSVP to Upcoming VNTR Capital Events
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UPCOMING VC EVENTS
July 25-26 WebX Asia, Tokyo, Japan (VNTR PRO members get complimentary passes)
July 26 Bloomberg Sustainable Business Summit, Singapore (VNTR PRO Members delegate access)
Aug 16-18 VCiLat, Santa Cruz De La Sierra, Bolivia
Aug 24-25 Coinfest Asia 2023, Bali
Sep 1-5 IFA Berlin. Germany
Sep 4-5 Seamless, Riyadh, Saudi Arabia
Sep 6-7 DLD, Munich, Germany
Sep 12-14 Dreamforce, San Francisco, USA
Sep 12-19 Berlin Blockchain Week, Berlin, Germany
Sep 12-13 MoneyLive Asia, Singapore
Sep 13-14 Token2049 Asia, Singapore
Sep 18-19 IPEM Paris, France
Sep 19-21 TechCrunch Disrupt 2023
Sep 20-21 DMEXCO, Cologne, Germany
Sep 21-22 Metaverse Summit, Paris, France
Sep 21-23 TechSparks 2023, Bengaluru, India
Sep 24-26 Bits and Pretzels, Munich, Germany
Sep 26-28 Mobile World Congress, Las Vegas, USA
Sep 27-30 Monaco Yacht Show, Monaco
Oct 3-4 CV Summit, Zug, Switzerland
Oct 4-5 Sifted Summit, London, UK
Oct 5-6 Zebu Live, London, UK
Oct 7-8 DeGameFi, Tbilisi, Georgia
Oct 8-9 Wow Summit, Dubai, UAE
Oct 15-18 Expand North Star Dubai Harbour, UAE
Oct 16-20 GITEX Global, Dubai, UAE
Oct 16-22 NY Tech Week, New York, USA
Oct 20-23 Plan B Forum, Lugano, Switzerland
Oct 22-24 Money 20/20, Las Vegas, USA
Oct 24-25 Blockchain Life 2023, Dubai, UAE
Oct 26-27 World Blockchain Summit, Dubai, UAE
Oct 30-Nov 5 Hong Kong FinTech Week, Hong Kong
Nov 7-10 Nearcon, Lisbon, Portugal
Nov 13-16 Web Summit, Lisbon, Portugal
Nov 13-17 AIBC Europe, Malta
Nov 14-16 SALT iConnections Asia, Singapore
Nov 15-17 Singapore Fintech Festival, Singapore
Nov 30-Dec1 SLUSH, Helsinki, Finland
Dec 8-10 Art Basel, Miami, USA
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, Flickr, and Twitter.
Check out VNTR Capital upcoming events
VC Reads
The most active LPs in Europe — that aren’t owned by a state or government
During the frothy days of 2021 and 2022, European investors pumped $415.6bn into startups globally, according to Dealroom — more than the previous seven years combined. While figures have dipped in 2023, they’re still on track to be higher than any year before 2021. The ultimate providers of all that cash are limited partners (LPs), the backers of VCs, a group made up of ultra-wealthy family offices, institutions, funds of funds and state-backed investors. Using data from PitchBook, Sifted has dug into the numbers to find out which LPs — not owned by a state or government and not secondary stake investors — have backed the most European VCs since 2010. Where possible, Sifted has confirmed the data with the LPs themselves. Nordic pension funds dominate the list — highlighting their track record for backing VC — and sit alongside funds of funds, a family office and a multinational bank.
Valuation disconnect stands in the way of secondaries dealmaking
Global secondary market dealmaking declined roughly 25% year-over-year to $43 billion in the first six months of 2023, a product of persistent pricing gaps, a lower supply of assets from both GP and LP sellers, and easing pressure from overallocation, according to data from advisory firm Jefferies' H1 2023 Global Secondary Market Review. Reduced supply and widening expectations between sellers and buyers have impacted both GP-led and LP-led secondary deal activity, Matt Wesley, global head of private capital advisory at Jefferies, said in an email. He added that a public market rebound is also relieving pressure on LPs that struggled with imbalances in their portfolios due to the denominator effect. Global secondaries dealmaking slowed in Q1 when diminished supply failed to meet pent-up demand from secondary buyers. But the pace accelerated last quarter, accounting for the majority of H1's deal volume, Wesley said.
The Week’s 10 Biggest Funding Rounds: Smile Doctors Likely Happy With $550M Raise
Startups in a smattering of pretty diverse sectors raised good chunks of money this week. A dental startup, a reality TV personality-founded shapewear company, and an enterprise software firm led the way. Hard to find any connections there. After those really big nine-figure raises, there was a significant drop off on the list as venture continued a slow summer.
Unstructured Data Is A Rare Hot Area For Startup Funding
One tends to think of digital data as something that’s easy to contain in neat silos and access on demand. In reality, however, the zettabytes of data that enterprises collect and store can more resemble a disorganised home. The stuff you need may be in there somewhere, but it’s often hard to find. And the piles of clutter are only getting bigger. Data collection and storage are expected to grow at double-digit rates for the foreseeable future. In tandem, tools to help organise, navigate and access all that digital information are generating more interest as well. Money is flowing too. Even as overall startup funding is down, we’re seeing rising investment to startups touting expertise in data automation and orchestration as well as tools to manage unstructured data.
VCs Face an Existential Threat: There Are Too Many of Them
The venture industry needs to shrink to adjust to the new normal, and even the VCs themselves know it. “If you look at the industry as a whole, it's too big,” said one.
In the 2010s, back when you could toss a dollar bill into the wind and earn a 20% return on it, it felt like anyone with a bit of money and a lot of confidence was suddenly working at a venture capital firm. As Jeff Clavier, a longtime venture capitalist, put it to me: “Everybody became a VC because it was fun, because it was up and to the right, because it seemed easy.”
Early-stage SaaS startups grow the same with or without VC dollars
The role of venture capital is to help startups achieve growth and scale beyond what they could on their own. But does that always pan out? New research shows that for some early-stage companies, it doesn’t really make a difference. A new report from startup lender Capchase found that SaaS startups with between $1 million and $15 million of ARR saw nearly identical levels of growth, on average, over the last year regardless of whether they raised venture capital. The report looks at financials from 900 of Capchase’s early-stage startup customers located in the U.S. and Europe and split 49% bootstrapped and 51% VC-backed. The report found that venture-backed SaaS startups showed a 42.8% year-over-year growth from June 2022 through the end of May 2023, compared to bootstrapped companies, which saw 44% growth over the same time.
Late-stage VC valuations rebound after yearlong freefall
Late-stage startup valuations plummeted last year and into Q1 2023. But the downward spiral has finally subsided, according to the first cut of Carta’s Q2 data.
In Q2, the median pre-money valuation for Series E and beyond jumped 105% from Q1, going from $251 million to $514 million. For Series D deals, the bump in pre-money median valuation was less dramatic, increasing 7%, from $311 million in Q1 to $333 million in Q2.
How Far Will Early-Stage Valuations Fall?
Forecasting when the early-stage venture market will begin to recover using historical data.
Historically, whether a startup graduates to its next fundraising round could be considered a random event. To raise its next round, the company may need to hit key milestones pertaining to user growth, revenue growth, product development, etc., and the ability to do so is unique to each individual startup. As a result, up through 1Q20, if we plot the typical pre-money valuation against the overall markup rate of those deals, we see no correlation at all.
Why the World Bank Group’s investment arm is bullish about CEE — and wants others to follow suit
The mission of Washington-based International Finance Corporation (IFC) — a sister organisation of the World Bank, which offers financing to private companies — is to boost entrepreneurship in emerging economies. For William Sonneborn, who oversees all of the IFC’s venture investments, that means investing in startups and VCs in central and eastern Europe (CEE) just as much as in southeast Asia or sub-Saharan Africa — and even more so since the start of the war in Ukraine. Nowadays, while international investors are “very cautious” about investing in CEE and there’s “not much interest” in spending money in Ukraine, he says it’s the IFC’s job to step in, both to support local companies and investors — and to show other investors why they should too. “Commercial investors started pulling back because of the fear of reverberations or reciprocation as a result of Russia's invasion of Ukraine,” he tells Sifted.
The Future of Venture Capital? Insights Into Data-Driven VCs
Algorithms have proliferated across industries and professions. The successful application of Large Language Models (LLM), Robotic Process Automation (RPA) and other data-driven tools is the hallmark of our time.1 Yet, the contribution of such tools across different use-cases remains a topic of heated discussion. Case in point is the extent to which algorithms can engage in creative and innovative tasks or offer an accurate evaluation of their value. The successful application of data-driven approaches is documented across a host of business and scientific settings (Agrawal, Gans, & Goldfarb, 2018; Brynjolfsson & McAfee, 2014; Haenlein & Kaplan 2019; Krakowski, Luger, & Raisch, 2022). Yet, the discovery of entrepreneurial opportunities can be seen as an extreme test – think of it as ‘frontier application’ of data-driven tools. The impact of a data driven approach to entrepreneurial discovery remains a topic of open conversation.
The meeting that showed me the truth about VCs
I recently had a meeting with a well-known Israeli startup investor. The talk somehow pivoted from my seed-seeking startup into talking about the macro view of venture capital and how it doesn’t actually make sense.
“Ninety-five percent of VCs aren’t profitable,” he said. It took me a while to understand what this really means.
I’ll clarify: Ninety-five percent of VCs aren’t actually returning enough money to justify the risk, fees and illiquidity their investors (LPs) are taking on by investing in their funds.
The return of the LBO machine
The rust is coming off the gears of private equity's LBO machine. Leveraged buyouts accounted for 40% of US PE deals in 2008, but PE's bread-and-butter transaction type has given way to alternative strategies like add-on acquisitions and growth-equity deals. By 2022, it had fallen to 19% of total deal count. But a rebound in bank lending in the second half of 2023, paired with a momentary pause in rising interest rates, recent valuation corrections and heaps of dry powder, could offer a glimmer of hope for PE's hallmark deal type. "Private equity would like to do LBOs," said Melissa Knox, global co-head of software investment banking at Morgan Stanley. "The preference is to put as much debt as you can on the company at advantageous terms and get a high return on your equity."
Why Nasdaq Backing Out of Custody Is Bad, Bad News for Crypto
Yesterday, Nasdaq, the prominent, tech-forward U.S. stock exchange, announced it is calling off plans to launch a cryptocurrency custody service. The new business line, which would have been regulated as a special purpose trust in New York, was slated to launch in the second quarter of this year. The news is a significant blow amid emerging signs of life in the crypto industry. Last month, an unexpected proposal from world’s largest asset manager, BlackRock, for a spot bitcoin exchange-traded fund (ETF) rekindled optimism for an asset class that was pummeled by regulators and bad news for at least the past 16 months. BlackRock signaled that, despite the recent, apparently-coordinated crypto clampdown by U.S. authorities (sometimes called “Choke Point 2.0”), there is still deep institutional interest in bitcoin and crypto. A flurry of other spot bitcoin ETF filings quickly followed, and the white-collar side of crypto scored a win after the U.S. Securities and Exchange Commission (SEC) missed its window to deny a different but similarly exciting type of bitcoin ETF to start trading.
Have Tech Layoffs Peaked?
When will the layoffs end? The question is top of mind for anyone who works in the tech sector, whether they’ve watched friends and co-workers lose their jobs or been handed a pink slip of their own. The tech industry has undergone a major reset since the glory days of 2021. By our count, at least 250,000 tech workers in the U.S. alone have lost their jobs since the start of 2022 — likely many more, as we often don’t have reliable layoffs figures for smaller startups. This year has been particularly brutal, with more than 150,000 U.S. tech workers laid off by mid-2023, per The Crunchbase Tech Layoffs Tracker. That puts us on track to more than triple the roughly 93,000 job cuts we recorded in all of 2022. In recent weeks, we’ve also seen numerous startups shut down completely, laying off their entire staff. Other companies have become repeat offenders on our layoffs tracker. But is the wave of layoffs slowly subsiding?
Crypto VC funding tumbles as economic uncertainty scares off investors
The month of June closed out with a 29.73% decrease in venture capital investments, with just $779.32 million raised in 62 individual deals, according to data from the Cointelegraph Research Venture Capital Database. While the United States Federal Reserve halted interest rate hikes in June, the macroeconomic climate remains unchanged due to geopolitical uncertainties and continued efforts to tame inflation across the globe. As the data shows, investors remained cautious and in risk-off mode in June, with the growth trend of the previous three months coming to a halt. However, that is not necessarily a bearish signal, as the overall trend for 2023 is still upward. Plus, the recent batch of Bitcoin exchange-traded fund (ETF) applications from the likes of BlackRock, VanEck, WisdomTree and Fidelity as well as Ripple’s legal victory over the Securities and Exchange Commission have helped brighten the mood.
Venture-Capital Firms to be Held Liable for DeFi Sanctions Violations Under New US Bill
A new bipartisan Senate bill would hold venture-capital firms and other large investors accountable in some cases for sanctions violations occurring on decentralized finance, or DeFi, platforms. The legislation, aimed at preventing criminals from using DeFi for money-laundering and sanctions evasion, is co-sponsored by two Democrats — Jack Reed of Rhode Island and Mark Warner of Virginia — and two Republicans — Mike Rounds of South Dakota and Mitt Romney of Utah.
Why The Time Is Now For Ambitious Tech Founders To Break Through
The current economic environment is difficult, or even insurmountable, for startups — at least that’s the prevailing narrative. While it’s true that tech founders face a tighter market and heightened scrutiny, I can’t help but see this time as an incredible opportunity for determined founders to stand out from the pack. I’m bullish on entrepreneurs looking to drive innovation in technology and have a front seat to the creation of health care startups in my role at Redesign Health. History shows us a precedent, too: Companies like Microsoft, Airbnb and Slack all emerged victorious from the crucible of adverse market conditions. We’re poised to see a groundswell of innovation in this downturn, but that requires a willingness to act differently than in the past. Here are a few opportunities we’ve shared with our founders that may be helpful for others looking to seize this moment and lead the way in uncertain times.
Space Tech Funding Comes Back Down To Earth
SpaceX recently made headlines as it became the second most valuable private company — worth a reported $150 billion — behind only TikTok parent ByteDance. But not all space tech companies have seen the valuation and fundraising success of Elon Musk‘s aviation and aerospace darling. Funding to VC-backed space tech startups — defined here as space travel, satellite communication and aerospace — has dramatically decreased in the last year-plus, and this year is on pace for the lowest total dollars since 2020, according to Crunchbase data. Like most sectors, space tech funding rocketed to the stars in 2021, hitting an all-time high of $12.1 billion in more than 450 deals. The sector only saw about a 25% decline last year, when space tech startups raised $9 billion in just under 400 deals.
New antitrust guidelines unlikely to help US regulators block deals, lawyers say
Many VCs must feel that the deck is currently stacked against them. The Biden administration's antitrust regulators are trying to prevent tech companies from amassing more power, including via acquisitions, at a time when the VC ecosystem is in desperate need of exits. On Wednesday, officials at the Federal Trade Commission and the Justice Department released stringent new guidelines for evaluating regulatory approval of proposed mergers. The draft guidelines outline regulators' aggressive antitrust approach over the last two years. While the proposed rules could deter some acquisitions, antitrust attorneys say that the new guidelines are based on dated case law and, therefore, are unlikely to help the FTC and DOJ succeed at blocking mergers. "This doesn't change the law," said Maureen Ohlhausen, antitrust and competition partner at Baker Botts. "You have the same chance of winning in court tomorrow that you had yesterday before these guidelines [were released.]" So far, the administration has built a poor record of blocking mergers in the courts.
It’s been a bumpy 6 months for edtech — are smoother roads ahead?
It has been a bumpy six months for the global startup ecosystem. It has been equal parts exciting and alarming to see the advancement of generative AI conversations with the breadth of applications increasingly understood. It’s our view that we are coming to the end of the hype cycle, and startups, even those that previously didn’t have any generative AI plans, are beginning to look at immediate uses rather than just the moonshots and associated disruption it can cause, including in schools and workplaces. Exploring immediate uses will help us make the micro-adjustments over time that ensure disruption is minimised once the longer-term projects begin to materialise. This theme has been well explored by others, so let’s turn to other developments in H1 2023.
Latin America’s Startup Funding Continued To Fall Sharply In First Half Of 2023
Funding to Latin America startups continued to slow this year, as a peak-era investment surge looks increasingly short-lived.
In the first half of 2023, investors put $1.1 billion to work in reported seed- through late-stage financings in Central and South America, according to Crunchbase data. That’s down a staggering 83% from the same period last year.
9 Common mistakes made by VC Limited Partners
Over the last 20 years, venture capital has increased its place in investor portfolios, primarily owing to a few factors: 1) Performance of the asset category relative to other categories (top quartile VC according to Cambridge Associates has averaged nearly a 28% net IRR from 1996–2019 2) Growing length of time tech companies stay private (over the past 25 years, we’ve seen the duration to exit go from 4 years to over 8 years) and 3) Increased influence of technology in our everyday lives.
Founders: don't build a unicorn
Most founders should not be raising venture capital. You do not need to build a unicorn. Nine times out of ten, you’d be better off focusing on revenue, raising a small round from angels or a micro VC if needed, getting to profitability and being acquired by another company in your industry. Or hanging on and growing profitably.
This path can produce life-changing money for you and great returns for your angel investors, at lower risk.
Coca-Cola launches sustainability-focused venture capital fund
The Coca-Cola Co. and eight bottling partners have closed a $137.7 million venture capital fund to invest in early-stage companies developing sustainable solutions that may help reduce the Coca-Cola system’s carbon footprint. “This fund offers an opportunity to pioneer innovative solutions and help scale them quickly within the Coca-Cola system and across the industry,” said John Murphy, president and chief financial officer of The Coca-Cola Co. “We expect to benefit from getting access to emerging technology and science for sustainability and carbon reduction.” Areas of focus include packaging, heating and cooling, facility decarbonization, distribution and supply chain. Greycroft, a seed-to-growth venture capital firm, will manage the Greycroft Coca-Cola System Sustainability fund. Since its inception, Greycroft has raised more than $3 billion in capital and has made more than 400 investments across consumer, enterprise, health technology and finance technology sectors, according to the company.
Silicon Valley start-ups explore sales as funding runs dry
Cash-strapped tech start-ups are exploring sales to bigger companies in order to survive a funding crunch, as a series of takeovers of artificial intelligence companies lure buyers back to Silicon Valley.
In recent weeks, software group Databricks acquired generative AI start-up MosaicML for $1.3bn, Thomson Reuters paid $650mn for legal services AI group Casetext, Robinhood bought credit card start-up X1 for $95mn, and finance automation company Ramp acquired Cohere.io, a start-up that built an AI-powered customer support tool.
Blackstone's $1 trillion hoard propels it beyond US peers
The sprawl of Blackstone—already the world's largest manager of alternative assets—has reached a new milestone as its AUM tops the $1 trillion mark. AUM represents a particularly important figure for publicly traded private equity firms and alternatives managers, as more assets beget more management fees, which can boost shareholder distributions. Credit and insurance investments were a major driver of the firm's growth over the past 12 months. Blackstone said in its earnings call on Thursday that those strategies rose 11% year-over-year, surpassing PE and real estate, which grew by 7% and 4%, respectively. The firm's AUM is roughly double the size of the next-largest US-based firm, KKR.
Venture debt deals decline 38%, led by SVB's core market
Early-stage venture debt deals have sharply decreased since the implosion of Silicon Valley Bank, which had catered to fledgling startups.
These young companies have been the hardest hit as loan volumes decline across the venture debt landscape. The trend is a sign of lenders imposing higher standards and of startups with uncertain financial prospects failing to qualify for new loans.
In the first six months of 2023, the number of loans for angel-backed and seed-stage companies fell 44% year-over-year, and early-stage loans fell 45%, according to the Q2 2023 PitchBook-NVCA Venture Monitor. That's compared to declines of 27% and 39% for the late stage and venture growth stage, respectively.