VNTR Capital News June 18th, 2022 - News, Events, VC Reads
Hello friends,
Happy Saturday! Have a great weekend!
Scroll down to view Venture Capital news, upcoming VC-related events, and VC news/reads.
VNTR CAPITAL COMMUNITY NEWS
Big announcement today! We scheduled VNTR Capital Summer Camp in Algarve, Portugal on Aug 15-19th. VC Camp will gather International investors, VCs, business angels, and family offices together in South Portugal to explore the region, enjoy the adventures and experiences together, learn about the open investment opportunities in the region and have a lot of fun.
Leading to VC Camp we will host a series of VC Breakfasts in Paris on June 22nd, New Delhi on July 7th, and Bengaluru on July 21st. Additional events are planned in Miami, London, and Bali in July/Aug.
On July 13th we will host a VNTR Capital Expert Session with Vauban CEO, Ulric Musset where you will learn how to launch your VC firm in a matter of a few clicks using Vauban.
We would like to thank our partners CoinsPaid, CoinsPaidMedia, Vauban, and Ampere for their ongoing support and for providing value to our community members and their portfolio companies.
RSVP to Upcoming VNTR Capital Events
This week we hosted our first online VC Growth Roundtable on June 15th to connect global VNTR Capital Community members and provide a platform to share challenges and get supported by other members. We will repeat this format on monthly basis to allow our global community members to meet, network, and support each other. We will share the details about the upcoming Growth Roundtable and Investment committee with active community members.
Want to co-host VC-related events, partner, or sponsor, please respond to this email or Telegram @byuric to discuss collaboration opportunities.
UPCOMING VC EVENTS
June 20-23 - Collision, Toronto, Canada
June 22 - VNTR Capital Breakfast Paris, France
June 23-24 - MBAN Summit 2022, Kuala Lumpur, Malaysia
June 28-29 - DIFC Fintech Week, Dubai, UAE
July 11-15 - London FinTech Week, London, UK
July 13 - VNTR Capital Expert Session - Your VC Firm in a Matter of Clicks
July 13-14 - Unchain, Oradea, Romania
July 14-15 - World Blockchain Summit, Singapore
July 19-20 - Venture Summit West, Silicon Valley
July 20-21 - Impact Capitalism Summit, Nantucket, USA
July 21 - VNTR Capital Breakfast Bengaluru, India
Aug 15-19 - VNTR Capital Camp, Algarve, Portugal
Aug 22-25 - AIBC Balkans, Belgrade, Serbia
Sep 12-13 - MetaWeek 2022, Dubai, UAE
Sep 26-Oct 2 - Asia Crypto Week, Singapore
Sep 28 - VNTR Capital Breakfast, Singapore
Sep 28-29 - Token2049, Singapore
Oct 8-14 - Wow Summit, Dubai, UAE
Oct 5-6 - Sifted Summit, London, UK
Nov 1-4 - Web Summit, Lisbon, Portugal
Nov 4-7 - Wow Summit, Lisbon, Portugal
Nov 14-18 - AIBC Europe, Malta
Nov 15 - VNTR Capital Breakfast Malta
Want 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
VC READS
SoftBank’s Vision Fund Deals Show Slowing Pace, Smaller Rounds
When SoftBank announced last month it will take a more conservative approach to selecting investments—after recording a $27.7 billion loss on its Vision Fund business segment for its fiscal year—it was another warning shot that the high times of 2021 are over for venture capital.
However, the technology conglomerate seemed to be slowing its investing even before the declaration—at least in terms of the size of the rounds, it participated in, if not the number, according to Crunchbase data. After investing in a fund record of 65 deals worth a total of nearly $23 billion in the third quarter of 2021, the SoftBank Vision Fund slowed its pace in the fourth quarter of last year and first quarter of this year, per Crunchbase numbers.
Bengaluru ranks 5th globally for tech VC investments in 2022
A handful of Indian cities feature among the top emerging start-up ecosystems in the world, with IT hub Bengaluru claiming the number one spot in Asia and the fifth rank globally for tech venture capital investment this year, according to a new report and research findings. The Global Startup Ecosystem Report was launched by innovation policy advisory and research firm Startup Genome at the London Tech Week 2022 (June 13-17). Further research by data intelligence platform Dealroom.co for London & Partners showed that in the first five months of this year Bengaluru’s tech firms raised $7.5 billion in VC funding, much higher than a then-record of $5.2 billion raised during the first six months of 2021. The “Silicon Valley of India” is now attracting more investments than other hubs like Singapore, Paris, and Berlin, and is trailing closely behind Greater Boston and New York.
How Crypto Lender Celsius Overheated
If the collapse of LUNA was cryptocurrency's Bear Stearns moment, Celsius Network threatens to become the industry's Lehman Brothers: the failure that exacerbates a market crisis.
Celsius, which resembles a bank while touting itself as a democratized interest income and lending platform, is rumored to be insolvent following a freeze on withdrawals over the weekend. Founded in 2018, Celsius had more than $8 billion lent out to clients and $12 billion in assets under management by May of this year, according to the company.
In the wake of the withdrawal freeze, Coinbase, BlockFi, and Crypto.com have announced job cuts, while insolvency rumors are also beginning to emerge from crypto hedge fund Three Arrows Capital. Aside from the short-term implications, overall trust in the crypto industry is falling to new lows following a six-week period that has seen $60 billion evaporate in the LUNA crisis followed by the troubles at Celsius.
SaaS valuations slide for late-stage deals
Stock prices of fast-growing software companies have been on a steep descent since late November. Shares of these businesses have plummeted on average about 60% off their recent 12-month highs, according to a recent report from Meritech Capital. While some late-stage investors started to adjust valuations in response to the stock market sell-off at the beginning of the year, PitchBook data shows that prices for venture capital deals for SaaS companies still have not fallen nearly as far as their public comparables. The median valuation of a late-stage software company dropped to $155 million in 2022, representing a 23% decline from the previous year. However, software valuations are still significantly higher than they were prior to 2021.
Tiger Global’s Startup Business Holds Up Against Bear Market
In the past two years, Tiger Global Management has upended the venture industry by investing in startups at an unprecedented pace. Along the way, the New York-based investor has racked up more unicorn portfolio companies—271 by our last count—than any other firm, edging out even Silicon Valley’s largest and most active VCs. But with 2022 lurching into the bear market territory and the firm’s hedge fund business—which invests in the public markets—reportedly losing 52 percent of its value this year amid a precipitous decline for technology stocks, the firm faces massive headwinds. One silver lining: Although Tiger’s hedge fund has taken a beating, its private equity practice—which invests in the startup ecosystem and last year overtook its hedge fund business in size—is proving much more resilient to the downturn, according to a source familiar with the firm. In the past year, Tiger has grown its private practice further as the firm continues to invest heavily in startups, according to the source, and today that business represents around two-thirds of the value of the firm’s money under management.
A field guide for startup board members in an up-and-down market
Brad Feld, a venture capitalist of 25 years and author of several books, has just republished a book that first came out in 2013 and to which Feld, with the help of co-authors Matt Blumberg and Mahendra Ramsinghani, has added quite a bit for this new, second edition. Called “Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors,” its timing couldn’t be better. With the public — and now startup — markets in turmoil, board members who may have gotten along swimmingly in the longest bull market in history may suddenly find themselves at odds with the management teams they’ve funded, as well as their fellow board members. After all, hard decisions are being made right now, and faced with very different financial pressures, many VCs are discovering their jobs just became a lot more challenging, too.
Circle launches euro-backed stablecoin EUROC
USD Coin (USDC) issuer Circle Internet Financial is launching a fully-reserved stablecoin pegged to the euro, signaling to the market that demand for crypto foreign exchange services remains high despite recent industry turmoil. Euro Coin, or EUROC, will be available for trading on June 30, Circle said Thursday in a statement that was shared with Cointelegraph. Like USDC, Euro Coin is a regulated stablecoin that is fully backed by reserves — in this case, the euro. That means every EUROC token in circulation will have an equivalent euro-denominated reserve held in custody at financial institutions regulated by the United States. Silvergate Bank, a crypto-friendly financial institution, was listed as the initial custodian for the euro-pegged stablecoin.
Venture Investors See Potential In Data Observability
It’s unlikely the term “data observability” gets most folks too excited. Unless they are investors. We’ve seen several startups in the space raise serious cash over the last couple of months.
In fact, in the span of one week three companies alone raised more than $400 million. This shows the significance of a sector that helps companies review, evaluate, index, and, in general, control what has become the lifeblood of so many large enterprises—their data.
London Tech Week opens to record-breaking investment in the UK tech sector
UK tech companies have raised more venture capital funding in the first five months of 2022 than in the whole of 2020, according to new figures. The £12.4 billion in funding raised so far this year puts the UK second only to the US in terms of start-up investment, and ahead of the likes of China, France, and India. The figures have been analyzed by the UK’s Digital Economy Council, based on data by Dealroom, and released ahead of the start of London Tech Week on Monday – the annual celebration of the UK tech sector where industry and government figures discuss the future of the industry. They show that 950 UK tech start-ups have raised £12.4 billion this year, compared to £12 billion raised across the whole of 2020.
List of 21 Fintech Unicorns In India
The term “unicorn” has become synonymous with success in the startup ecosystem across the world, and it is something that is not limited to India. The country has minted 102 unicorns so far, with Purplle becoming the latest startup to hit unicorn valuation following its funding round just days ago. Just a day before Purplle, EdTech startup PhysicsWallah (PW) became India’s 101st unicorn, the seventh EdTech unicorn, and the first profitable EdTech unicorn. For FinTech, however, the latest unicorn came in May 2022, with the neobanking startup Open becoming India’s 100th unicorn and the first neobank to attain the status. That took the total tally of fintech unicorns in India to 21, second only to ecommerce’s 24 unicorns. The story of fintech unicorns in India started way back in 2015 when Vijay Shekhar Sharma’s Paytm became India’s first fintech unicorn.
Scores of newly public companies worth less than they raised from VCs
The IPO and SPAC boom of recent years was a once-in-a-decade opportunity for investors in tech startups to cash out. Now, public investors who bought in are paying the price. Here's a stark example of how the sell-off has played out: More than 140 VC-backed companies that went public in the US since 2020 have market capitalizations that are less than the amount of venture funding they raised, according to PitchBook data. The analysis underscores the punishment that has been doled out to tech companies whose growth prospects have diminished. VCs are wrangling with how to price startups amid the volatility, and the ripple effects are being felt even in seed and Series A rounds.
The VC Reset: May 2022 Funding Falls Again, But Not At Every Stage
Global venture funding in May 2022 reached $39 billion, Crunchbase data shows, marking the first month in more than a year when it dropped below $40 billion. The May figure is also well below the $70 billion peak VC funding reached in November 2021. But while late-stage and technology-growth investing have been most severely impacted, seed funding remains surprisingly robust. All in all, VC funding in May fell 14% month over month from $45 billion in April. It’s down 20% from $49 billion a year earlier in May 2021. The largest pullback was in late-stage venture capital, which fell from 2021 monthly averages by close to 40%. Late-stage and technology growth investing has been the most impacted by this year’s venture pullback. Last month, venture investors globally spent $22.3 billion in the late- and growth-stage sectors—down 38% from the 2021 monthly average of $36.2 billion.
Metaverse could be worth $5 trillion by 2030: McKinsey report
Global spending in the Metaverse could reach $5 trillion by 2030, according to a new report from international consulting firm McKinsey & Company. Published the 77-page report titled “Value Creation in the Metaverse” which analyzed current adoption trends and drew additional insight from two global surveys; one gathered data from 3,104 consumers across 11 countries, while the other polled a range of executives from 448 companies across 15 industries in 10 different countries. McKinsey used this data to predict that the future of consumer behavior in the metaverse will most likely be divided into five primary activities: gaming, socializing, fitness, commerce, and remote learning. McKinsey found that nearly 60% of all consumers surveyed prefer at least one activity in the virtual world compared to its physical alternative, and 79% of consumers that are currently active in the metaverse have already made a purchase.
Amundi warns that parts of the private equity market resemble ‘Ponzi schemes’
Europe’s largest asset manager has likened parts of the private equity industry to a “Ponzi scheme” that will face a reckoning in the coming years. “Some parts of private equity look like a pyramid scheme in a way,” Amundi Asset Management’s chief investment officer Vincent Mortier said in a presentation on Wednesday. “You know you can sell [assets] to another private equity firm for 20 or 30 times earnings. That’s why you can talk about a Ponzi. It’s a circular thing.” Public stock and bond markets leave little room for typical investment managers like Amundi, which has €2tn in assets, to hide their performance, as fluctuations in asset prices are easy to track daily or even in real-time — a process known as marking to market.
Tech Layoffs Analysis: Late-Stage Startups Are Hit Hardest
In the brutal sweep of layoffs hitting U.S.-based tech companies this year, late-stage startups have fared the worst, according to a Crunchbase News analysis of aggregated layoff data. So far this year, more than 21,000 employees of U.S. tech companies have been laid off, a Crunchbase News tally shows. Both public and private tech companies have issued layoffs, from streaming behemoths like Netflix to high-flying startups like Bolt. Just this week, cryptocurrency exchange Coinbase said that it will lay off 18% of its workforce, or around 1,100 people, only a year or so after going public. But according to our analysis, it’s been late-stage venture-backed companies that have undergone layoffs most frequently this year. Fifty-three private companies—or more than half of the tech companies on Crunchbase News’ tech layoffs tracker—that have conducted mass layoffs this year have raised Series C or later funding.
Three Arrows Faces Possible Insolvency After Unforeseen Liquidations
Dubai-based crypto fund Three Arrows Capital is facing possible insolvency after incurring at least $400 million in liquidations, The Block reported Wednesday.
Three Arrows, popularly known as 3AC, was liquidated by crypto lending firms and is currently in the process of repaying lenders and other counterparties, according to the report.
The firm’s founders, Su Zhu and Kyle Davies, were two of the most vocal participants in the crypto markets in the past few years, making bets on non-fungible tokens (NFT), decentralized finance (DeFi) applications, layer 1 blockchain tokens, and cryptocurrency companies.
Zhu seemed to address rumors on Twitter this morning. “We are in the process of communicating with relevant parties and fully committed to working this out,” he said, without giving specifics. Tokens listed as investments on the 3AC site include ether (ETH), solana (SOL), and luna (LUNA). Prices of these are down 77%, 90%, and 99.7%, respectively, since lifetime highs, as per CoinGecko data.
Monthly VC deals down 20% this year in India, exits halve as bullish sentiment wanes
The average number of venture capital (VC) deals has fallen by a fifth or 20% to 130 deals a month so far in 2022 as the much-talked-about funding winter has gripped India’s startup ecosystem, a report by Indian Venture and Alternate Capital Association (IVCA) and Bain & Company showed. Average VC cheque sizes have also declined from $25 million in 2021 to $20 million so far this year. Moreover, exits have slumped 56 percent over the last year to $5.9 billion for a similar duration and the exit activity is expected to weaken further, according to the report. In 2021, exits had grown 300 percent or fourfold to $36 billion, the IVCA-Bain & Company report showed. “The bearish sentiment in public markets coupled with the younger portfolios of top funds could see exits dip to pre-2021 stages again. Even though the pace of deals is slowing down, large funds like Baring, TPG, ChrysCapital, ADIA, and Warburg Pincus continue to keep pace with their activity over the last year, vindicating confidence in the fundamentals of the Indian market,” the authors said in the report.
Which Startup Sectors Are The Bulls And Bears In 2022’s Sluggish VC Market?
Last year saw unprecedented investment into startups, with seemingly almost every sector notching new records for funding. This year? Not so much. Venture funding overall is retreating amid public-market turmoil, record inflation, and rising concerns about an economic recession. Even so, several startup sectors stand out—either for still outperforming or for being particularly hard-hit by the venture pullback. We take a closer look at a few of the most bullish and bearish startup industries midway through 2022. During the height of the venture market last year, few sectors did as well as cybersecurity. The industry raised a record amount of venture capital and unicorns were minted on a seemingly weekly basis. Even this year, as the venture market has turned, cybersecurity has birthed more than a dozen new unicorns in the first six-plus months of the year.
Investors show Latin American fintech startups the money
The global funding boom in 2021 was unlike anything most of us have ever seen before. While countries all over the world saw surges in venture capital investments, Latin America, in particular, saw a massive bump in dollars invested. Unsurprisingly — with so many people in the region being underbanked or unbanked and digital penetration finally taking off — fintech startups were among the largest recipients of that capital. The trend continued in the first quarter of 2022, according to LAVCA, the Association for Private Capital Investment in Latin America, which found that startups in the region overall raised $2.8 billion across 190 transactions during that 3-month period ending March 31. This marked the fourth-largest quarter on record for investment in the region, the data showed, and represented a 67% increase compared to the $1.7 billion raised in the first quarter of 2021. It also was up 375% versus the $582 million raised in the first quarter of 2020.
‘Can it get any easier?’ Bitcoin whales dictate when to buy and sell BTC
Bitcoin (BTC) left both long and short traders behind in May and June, but data suggest trading it may be “easier” than many imagine. According to on-chain analytics resource Whalemap, Bitcoin whales have all but dictated market performance in recent weeks. In a fresh analysis published on June 7, Whalemap researchers showed that BTC/USD local tops and bottoms have coincided with areas of heightened whale activity. When Bitcoin’s largest wallet entities choose to buy or sell, the price reacts accordingly. For those looking to reduce risk trading short timeframes, it may thus suffice to act according to where popular whale levels lie.
Explained: Sequoia Capital’s startup funding boost for India
Sequoia Capital has raised $2.85 billion to invest in startups in India and Southeast Asia. Of this, the venture capital firm will deploy about $2 billion to Indian startups while the remaining $850 million will be used to fund startups in the Southeast Asia region. This is the biggest dedicated India fund raised by an investor at a time when startup funding has slowed down on global cues, and some of Sequoia’s portfolio firms in the region have been hit with corporate governance issues. The firm said it intends to “double down” on the region, where it runs programs like Surge, through which it backs very early-stage firms, and Spark, using which it offers fellowships to female founders, other than venture and growth investments. The firm is planning to deploy close to $300 million to early-stage startups.
VC market faces 'rational reality' reset, investors warn
Venture investors expect a widespread reset in investment activity as the market shifts to favor sustainability over growth. At the 2022 SuperVenture conference in Berlin, the impact of macroeconomic volatility on capital raising and valuations was at the forefront of the discussion, with most investors predicting tougher times ahead for startups. "I think now we're entering a more rational reality," Balderton Capital partner David Thévenon said in a panel discussion. "Last year, rounds were closed sometimes in a matter of days, but companies need to realize that isn't going to happen now. We're going to ask a lot more questions, particularly around things like cash burn. With the new state of the market, raising money will take longer and it's not going to be as easy."
Andreessen Horowitz And Tiger Global Most Active Investors In US Market Even As Slowdown Persists
Andreessen Horowitz and Tiger Global led the way last month in investing in U.S.-based startups—both in total rounds participated in, as well as rounds led or co-led. Just like April, May saw only a half dozen firms invest in 10 or more deals announced in the month—down from May 2021 when 10 firms took part in double-digit numbers of rounds, according to Crunchbase data. However, as has been well documented, the current environment is much different from 2021 when it comes to both the private and public markets. Let’s take a closer look at the most active investors in U.S.-based startups in May and some interesting rounds they took part in.