VNTR Capital News June 18, 2023 – News, Events, VC Reads
Venture Capital, Web3, and Private Equity – June 18 News, Events, and VC Reads
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Happy Sunday!
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VNTR CAPITAL COMMUNITY NEWS
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Last Week
Crypto Hunters Adventure Reality Show – 60 candidates showcased their skills and talents on June 12 in London to secure a spot on the show, competing for the coveted Grand Prize of $1 million. Final Casting will be held in Los Angeles in July 2023, when the final 20 contestants will be announced. Apply for LA Casting!
London – On June 14, we hosted 40+ investors at VNTR Investors Roundtable London, where EHP Technologies and Crypto Hunters presented their ventures.
Upcoming
Dubai — We have partnered with World Token Summit (30% discount code: VNTR30) to host our 4th Investor Roundtable in Dubai this year on June 22. Participants will join fellow investors at the Summit Startup Pitch competition after lunch. Approved investors who attend the VNTR Investors Roundtable will receive complimentary passes to the World Token Summit.
Toronto — The 1st VNTR Investors Roundtable in Toronto will be held on June 27 as a side event to Collision 2023, one of North America's premier technology conferences.
Thank you to our partners:
Crypto Hunters TV Show is an innovative adventure-reality series that uniquely explores cryptocurrency and blockchain. The show provides an exciting combination of action, education, and entertainment as contestants embark on a thrilling global adventure to uncover the secrets of the crypto world. With a focus on accessibility and entertainment, the show aims to make the excitement of cryptocurrency accessible to a broader audience. You can apply for casting in Los Angeles. For those who can't make it to the casting events, we invite you to join the Crypto Hunters Telegram community. You can contact HK.
EHP is the only three-phase heat transfer technology that contains nanoparticles and a miraculous way to reduce energy consumption. EHP Technology is the world's first and only known 5th-generation heat transfer technology, the world's fastest, most straightforward, most affordable, and most efficient heat transfer technology.
EHP is the first recycling technology that causes up to 70% of our world's global waste heat to go to the air, saving up to 40% of the world's global energy problem. You can contact Anil.
Upcoming VNTR Capital events:
Jun 22 VNTR Investors Roundtable Dubai (During World Token Summit)
Jun 27 VNTR Investors Roundtable Toronto (During Collision)
Jul 11 VNTR Investors Roundtable Algarve (During Block Down Festival)
RSVP to Upcoming VNTR Capital Events
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UPCOMING VC EVENTS
Jun 19-23 Cannes Lions, Cannes, France
Jun 21-22 World Token Summit, Dubai, UAE (30% discount code: VNTR30)
Jun 22 Global Innovation Ventures Summit, Mountain View, CA, USA
Jun 25-26 Silicon Valley Comes to Tel-Aviv
Jun 26-29 Collision, Toronto, Canada
Jun 28-30 Blockchance, Hamburg, Germany (20% discount using BC23_VNCR)
July 10-12 Block Down Portugal 2023, Algarve, Portugal (50% discount using VNTR50)
July 25-26 WebX, Tokyo, Japan
July 26 Bloomberg Sustainable Business Summit, Singapore (with VNTR Members access)
Aug 28-29 World Blockchain Summit, Bali
Sep 1-5 IFA Berlin. Germany
Sep 12-14 Dreamforce, San Francisco, USA
Sep 12-19 Berlin Blockchain Week, Berlin, Germany
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 24-26 Bits and Pretzels, Munich, Germany
Sep 26-28 Mobile World Congress, Las Vegas, USA
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 22-24 Money 20/20, Las Vegas, USA
Oct 26-27 World Blockchain Summit, Dubai, UAE
Nov 7-10 Nearcon, Lisbon, Portugal
Nov 13-16 Web Summit, Lisbon, Portugal
Nov 13-17 AIBC Europe, Malta
Nov 30-Dec1 SLUSH, Helsinki, Finland
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
Capital calls are falling of a cliff
this is no surprise per se, the latest decline in capital calls goes hand in hand with the decline in startup funding. Even though vc funds are just a part of the startup funding environment next to business angels, family offices, corporates and governments.
Capital calls serve two primary purposes. Firstly, they allow gps to efficiently deploy capital when investment opportunities arise. By making periodic capital calls, the gps can strategically allocate funds and mitigate idle capital risk, optimizing irrs. Secondly, capital calls enable lps to manage their cash flow by spreading their investment obligations over a specified period, rather than providing the entire committed capital upfront.
Why don't VCs give feedback?
One of the most frustrating experiences for startup founders is to have multiple calls with a potential investor, dutifully answering follow-up questions from the VC and their team over the course of several weeks, only to hear…nothing.
Unfortunately, it’s an all-too-common experience. While there are some fantastic investors who make a point of providing very detailed feedback when they pass on a company, they represent the exception rather than the rule. Many VCs pass with what feels like comically generic reasons (“you’re too early for us”), while entirely too many simply ghost founders.
Why do VCs act like this? Why don’t they have the decency to at least say “no” when they decide that they’re not interested? Or provide more than a single sentence when they pass after 5 meetings and 10 phone calls?
China to see the world’s biggest millionaire exodus this year, new study shows
China, with the world’s second-largest economy and the second-highest population, will again see the biggest exodus of millionaires this year, according to new research.
According to a report by investment migration consultancy Henley & Partners, China is expected to lose the largest number of dollar millionaires this year due to migration, when compared to any other country.
Data from the firm showed that a net 10,800 high-net-worth individuals migrated out of China in 2022, and another net 13,500 are expected to leave this year.
Calpers ups VC allocation after 'lost decade'
America's largest public pension scheme, Calpers, which manages some $444 billion in capital on behalf of California's 1.5 million state, school, and public agency employees, is leaning into venture—even as many LPs lean away.
After years of bringing down its VC exposure to a 1% target, the institutional investor is now looking to increase its allocation by more than sixfold, from $800 million to $5 billion, the Financial Times reported. The strategy shift comes on the heels of steep losses in Calpers' venture strategy as well as losses related to Silicon Valley Bank's failure.
Inside the Minds of European VCs
This is one of the largest-ever surveys of European investors, focused on better understanding how they make investment decisions, operate, and view the European market. In partnership with Professor Reiner Braun, Chair of Entrepreneurial Finance at the Technical University Munich, our Partner Andreas Schwarzenbrunner interviewed 437 individual investors across the continent.
10-Year Annualized Forecasts for Major Asset Classes
While there’s no way of predicting the future, quantitative models can help us come up with a general idea of how different asset classes may perform in the future.
One example is Vanguard’s Capital Markets Model (VCMM), which has produced a set of 10-year annualized return forecasts for both equity and fixed income markets.
Visualized above, these projections were published on May 17, 2023, and are based on the March 31, 2023 running of the VCMM.
How startups can raise money in emerging markets today
With international “tourist” investors having retreated to their home markets and a limited supply of domestic venture capital, it can feel like a funding winter has come at every stage in emerging markets. Macro and political instability are only compounding this challenge for founders speaking to reticent investors. In this environment, founders need to be more strategic, methodical and dedicated in their fundraising strategy to maximise the probability of closing a new round. Some points that we at Sturgeon believe are fundamental to doing this:
The Shadow Price of Venture Capital
Venture valuations have fallen off a cliff, but they are still too high.
Valuations rise and fall with the volume of dollars invested in startups according to a stable ratio: for every one percent change in funding, valuations move two-thirds of a percent.
But since peaking in late 2021, valuations have only fallen 0.4% for every 1% drop in funding. This pricing "error" has accumulated: today's valuations are 60% higher than you’d expect for the amount of capital invested.
In other words, the "shadow price" of venture capital is a lot lower than what we're seeing in announced transactions these days. Never before have valuations and funding diverged so meaningfully from their long-run equilibrium, for so long.
What does it all mean?
Seed deals level out while Series A continues downward spiral
The median size of Series A rounds fell for the fourth straight quarter, but seed deals have not experienced a similar dip, signaling a divergence in how VC investors are thinking about these two early stages amid a broader VC slowdown.
Do Valuations Matter?
There is a lot of talk about valuations. Growth valuations have corrected following public market valuations, and the pressure is moving into the earlier stages. And venture fund managers are adapting.
In this post, we dive into: What drives valuations? Should they impact investment decisions? How do fund managers approach the “valuation question”?
Accel’s AI Investments Keep The Focus On Applications And Tooling
With 40 years of investing under its belt, global venture capital firm Accel has long seen the potential of artificial intelligence. Now the firm is making fresh bets in AI startups. The power of AI unleashed by large language models like ChatGPT has led to significant investor interest in applying AI to everything from chips to data storage and AI infrastructure, as well as tooling and applications built on the technology. We spoke with Accel partner Daniel Levine about the firm’s AI investment outlook. The firm is making investments in AI across its team in India, London and the U.S., as well as its growth team. Levine likens it to investing in software, where the responsibility does not sit with one team or person but is distributed. While not every investment is necessarily in an AI company, AI is key to the firm’s strategy. Accel is unlikely to invest in chips or data centers, said Levine. But the tooling and applications side of the technology is in its wheelhouse.
Sequoia Is Hunting for Early Deals and More AI as It Splits From China
After Sequoia Capital split itself into three last week, the flagship firm is much smaller. It’s also writing smaller checks. Sequoia Capital — now separate from its counterparts in India and China — more than doubled its seed-stage financing in Europe and the US last year, it said. The increased emphasis on very young companies is part of a larger rush toward artificial intelligence newcomers, and away from the messiness of older startups. That trend has held steady so far this year. In Europe, Sequoia is backing companies with no sales and few staff — tactics more common at smaller funds. This effort includes two recent unreported deals: Co:Helm, a London startup targeting health insurance; and Guided Energy, a Parisian company working on electric vehicle fleets. Both tout their AI capabilities.
Niche investing may grow as market matures
Indian Venture and Alternate Capital Association (IVCA), the country’s apex industry body for alternative assets, recently launched a knowledge-sharing programme on fund management, #VC101, for emerging venture fund managers. In an interview with Ashley Coutinho, Rahul Khanna, co-founder and managing partner, Trifecta Capital, and co-chair, Venture Capital Council, IVCA, talks about the opportunities in the micro venture capital space and need to educate VC fund managers. Excerpts:. The challenge for a venture capital firm is to raise capital. It can be difficult to straightway start with a $300-500-million fund. It may be much easier to start a $10-20-million fund, stay focused on a particular niche, may be in a particular geography. I met an interesting company the other day.
Life after unicorns: What does the downturn mean for the investor-founder relationship?
According to data compiled by Pitchbook, the aggregate value of European unicorns has dropped for the first time in five years. With VCs less likely to part with capital for later-stage startups, what's the measure of success in the current economic climate? How have funds changed their activities in the past 18 months? And how has the investor-founder working relationship changed? We put these questions to our expert panel on the latest edition of Sited Talks.
Europe's top 5 VC cities: Paris plays catch-up with London
London remains Europe's most venture-funded city, but Paris is growing its share of the total capital raised. With €2.7 billion (about $2.9 billion) raised so far this year, according to PitchBook's 2023 France Private Capital Breakdown, London is still miles ahead of its peers in terms of VC funding. Outsized rounds for late-stage companies and a plethora of unicorns have drawn plenty of capital to the city despite the more challenging environment. But while the UK capital has held the top spot for well over a decade, other European cities have been growing their share of European VC investment. Paris has seen the most growth over the past five years, accounting for 25% of all capital raised in the first quarter of the year by the top five cities. In general, France has had a positive start to the year, mostly because of its capital city, with dealmaking showing signs of recovery. Large rounds including crypto startup Ledger's €460.8 million Series C in March have helped the city grow its share of European funding.
Metaverse Investing Has Slowed. Can Apple Save It?
The metaverse is dead. Long live the metaverse. Well, it’s not quite dead, but it certainly is not where it was just less than two years ago after then-Facebook changed its name to Meta and it became the buzziest of buzz words. However, last week’s unveiling of the new Apple Vision Pro — with a price tag of just $3,500! — put a spotlight back on the space, highlighting what it could be and what its future may hold. The present isn’t great for the startups in the space, as venture dollars in the sector have plummeted since Mark Zuckerberg’s big name change announcement in late 2021. Funding to startups in the metaverse space — defined here as companies in virtual reality, augmented reality and the virtual world industries — has dropped 77% from the the final quarter of 2021 to the first quarter of this year, per Crunchbase data. The current quarter doesn’t seem to promise anything better.
Tiger Global opens full portfolio to individual bids in search of liquidity
Tiger Global has told select secondary investors they can bid on any private company in its portfolio after a lead buyer didn't emerge for a portfolio of assets packaged in a strip sale, according to several people with direct knowledge of the sale. The pivot underscores the challenges asset managers are facing in finding buyers for their venture portfolios. Tiger has been attempting to generate liquidity after its pandemic-era shopping spree for months. It initially tried to sell a percentage of its stakes in about 30 companies in the strip sale, according to one of the people. The most efficient way of generating liquidity is to package attractive assets alongside ones with poor prospects and negotiate an average across-the-board price that would allow Tiger to sell stakes in many companies at once, including the ones that are hard to sell individually, said Joe Endoso, COO of Linqto, which offers a private securities investment platform. Linqto is interested in buying specific companies from Tiger but isn't involved in the current bidding process.
Here’s how much Europe’s top VCs have actually been investing
As global markets have cooled, VCs have tightened their purse strings. That goes even for top-tier VCs: the number of first-time cheques into European companies written by some of Europe’s top Series A funds has plummeted, Sifted analysis has found. That’s based on analysis of the European deal count of the seven most prominent European-HQ’d VCs: Accel, Index, HV Capital, Balderton, Lakestar, Creandum and Northzone, according to Dealroom’s EMEA Prominence ranking of Series A investors. Sifted looked at both first-time investments and investments in existing portfolio companies and asked all the investors to check our numbers. Founders say deal count matters: it can be an indication of how serious an investor is when they take a meeting. And, given how many investments aren’t announced at the time they occur, it’s often hard to know how active VCs really are.
Is AI The Cause Of Job Cuts This Year?
When ChatGPT was launched on the last day of November, it punctuated what was, at the time, the largest layoff month of 2022. More people were laid off in November than in every other month of the year combined — more than 44,000 people, according to Crunchbase data. Perhaps November’s numbers were a harbinger of trying times ahead. Since then, companies have continued layoffs at the same brutal pace. While funding dried up elsewhere, leading to layoffs, venture firms were pouring money into the generative AI movement, where language models were poised to be the next big cash cow. Indeed, according to Crunchbase data, funding to AI startups made up about 10% of global startup funding. Venture’s dramatic shift in funding priorities has rocked every industry from the art world to health care. And whenever a new piece of technology promises to disrupt an industry, the first worry is that it will replace workers.
The Satellite Renaissance
A deep dive into the burgeoning space economy
It’s difficult to exaggerate Elon Musk’s role in reviving space tech. Before SpaceX successfully launched a rocket into orbit in 2008, the United States had lost both the capability and the desire to go to space.
The cost of sending anything into orbit was astronomical. Building and launching a satellite was a feat only a nation or a massive corporation could do. Despite their usefulness, only a thousand or so of satellites were orbiting the Earth in the 2010s.
Today, that number has jumped to over 7,000 active satellites. In large part thanks to SpaceX, we find ourselves undergoing a massive transition in which entrepreneurs and tinkerers can launch machines into orbit. Satellites are playing increasingly critical roles in navigation, weather monitoring, telecommunications, national security, and more.
SEC and Binance.US strike a temporary agreement on asset access
Binance, Binance.US, and the United States Securities and Exchange Commission (SEC) reportedly agreed on Friday, June 16, to temporarily limit access to customer funds exclusively to Binance.US employees. According to reports, the proposed agreement, pending approval from the overseeing federal judge, outlines measures for Binance.US to prevent any access by Binance officials to private keys of wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. Additionally, the U.S.-based crypto trading platform will disclose comprehensive information on business expenses, including estimated costs, in the upcoming weeks. The agreement has emerged as a direct response to a motion filed by the SEC seeking to freeze the entirety of Binance.US’s assets during ongoing legal proceedings. The regulatory body expressed apprehension that without a granted temporary restraining order, there might be a risk of funds being transferred offshore or crucial records being deliberately destroyed.
Crypto fans: Hold on for dear life as rules pile up
With all the excitement around AI, one could be forgiven for forgetting another great tech innovation that promised to change the world: crypto. The sector has stumbled into yet another rough patch after two of the biggest exchanges, Coinbase and Binance, were accused by the SEC of—among other things—failing to register as brokers. The brouhaha is casting a pall over the crypto markets and the decentralized finance sector as a whole. But even as regulators take steps like these to tighten the screws on exchanges, some investors remain focused on the long-term prospects of crypto. Earlier this week, Andreessen Horowitz doubled down on its commitment to crypto by opening an office in London to focus on its Web3 investments. This reflects a hope that tighter rules—while delivering short-term pain to the industry—will also provide a more stable regulatory platform upon which the technology will mature. The challenge for lawmakers will be striking a fair balance that provides security while encouraging innovation.
BlackRock’s Bitcoin ETF Would Be a Big Deal
Well, well. BlackRock (BLK) entered the chat early last year and it finally spoke up. BlackRock’s iShares unit filed paperwork Thursday afternoon with the U.S. Securities and Exchange Commission (SEC) for the formation of a spot bitcoin (BTC) exchange-traded fund (ETF). As with all things perpetually online, many are tying themselves up and tripping over semantics. Is this proposed fund actually an ETF or just a trust? The question seems odd, but the tippity top of BlackRock’s S-1 filing sports this as the name of the proposed fund: iShares Bitcoin Trust. Before going further, as Bloomberg’s Eric Balchunas tweeted, this is exactly how the SPDR Gold Shares ($GLD) ETF works. It's a trust, but it acts like an ETF. Without getting into it too deeply, if the iShares Bitcoin Trust is approved and functions with daily creations and redemptions, then it would basically look and act like an ETF. Who cares if it’s technically a “trust?”
Clean Air Startups Are Scaling Up
Everyone is happier breathing fresh, clean air. Unfortunately, we often forget this until confronted with smoky, polluted air. As Canadian wildfire smoke spread southward, North American population centers that historically haven’t suffered many dangerous air quality days got hit especially hard. Suddenly, millions are finding their thoughts turn to air purifiers and filtration systems. It’s possible startups can play a helpful role here. While they haven’t figured out how to eliminate orange haze from our skylines, venture- and seed-backed companies are working on a number of devices and technologies that could make life a little more breathable. From filters you wear in your nose to industrial carbon capture systems, startups focused on cleaner air have pulled in some big rounds over the past several years. Since air quality is on everyone’s mind lately, we decided to take a look at where the money is going.
Is blockchain technology ready for high-storage applications?
Web3 — the third generation of the internet — refers to a decentralized and distributed version of the web that uses blockchain technology, and other decentralized technologies, to enable greater user control, privacy and data ownership. It aims to redefine how we interact with digital services, moving from traditional centralized models to decentralized peer-to-peer networks. At its core, Web3 is built on blockchain technology, which is a distributed ledger that maintains a cryptographically-secured, continuously growing list of records called blocks. This decentralized nature enables direct peer-to-peer interactions. Web3 brings several key features and capabilities with the potential to revolutionize high-storage applications. Examples of high-storage applications include content delivery networks (CDNs) to host images and other visual media, online gaming platforms, and blockchain-based websites.
Tiger Global struggles to raise even half of $6B fund target
New York-based investment firm Tiger Global has raised $2.7 billion for its newest private equity fund since October, less than half of its target of $6 billion. The firm has been trying to raise capital for its 16th fund since October 2022. According to two separate regulatory filings submitted to the SEC on Friday, Tiger Global Private Investment Partners XVI, L.P. has only been able to raise $2.68 billion in its first close in January. The current fund is already half the size of its previous fund for which the investor raised $11.4 billion in February last year, just three months after its first close in November. Tiger Global isn't the only large fund struggling to attract backers. Private equity and venture capital firm Insight Partners has cut its 13th fund target from $20 billion to $15 billion due to a “great reset in tech” caused by a steep decline in public company valuations that has impacted the value, number, and quality of start-ups in which it could invest, The Financial Times reported earlier this week.
What Winter? Institutions’ Crypto View Rosier Than You Think
Amid the angst over crypto U.S. regulation and a revived bear market, an email from the digital assets team of a major international investment bank presented me with a contrarian indicator and a reminder not to solely view this industry with a U.S. lens. Its subject read: “Major global study reveals pension funds, fund managers, other institutional investors and wealth managers are positive on digital assets and plan to invest.” Did this come from Bizarro cryptoland? My mind immediately went to that Seinfeld episode in which Bizzaro is referred to as a separate parallel universe in which everything is the opposite of what’s going on in this one.
VCs joining the climate race should scare the daylights out of you
Venture capital, as an asset class, is an industry of short-term wins. Most funds have a 10-year cycle: two years of initial investments; then two to three years of company building and follow-on investments; after that, five or six years of thumb-twiddling and waiting for the ship to come in, and maybe placing a last bet on the most promising companies in the fund portfolio. This model forms part of a VC’s investment thesis; it also includes where the leads for potential investment come from (known as “sourcing”), along with the investment stage (pre-seed, seed, Series A, etc.), and any geographic or vertical or market limitations to the fund. The investment cycle has remained remarkably consistent over the history of venture capital: Wait 10 years, and the funds invested have (hopefully) multiplied.
Investors take fancy to middle-market buyout funds
Middle-market-focused buyout funds are dominating private equity fundraising in the US as larger vehicles targeting large-cap deals lose their appeal for limited partners. In the first quarter of 2023, middle-market buyout funds collected a total of $49.9 billion, representing about 88% of the total US Capital raised for buyout strategies, according to PitchBook's latest US PE Middle Market report. Last year, such funds only accounted for 45.4% of the total capital amassed by the industry. PE firms in general have faced a tougher fundraising environment in recent quarters due to a pullback in commitments from institutional allocators. However, buyout funds targeting the middle-market segment were able to reach final closes at a faster clip than before. The median fundraising time for such funds was 8.7 months in Q1 2023, versus the median of 11.7 months in 2022 and the 10-year median.