VNTR Capital News June 25, 2023 – News, Events, VC Reads
Venture Capital, Web3, and Private Equity – June 25 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
Dubai — The 4th VNTR Investors Roundtable in Dubai was held on June 22 in partnership with World Token Summit by our Dubai Chapter Director, Yana Leonova. The roundtable provided valuable insights into the UAE VC ecosystem and highlighted the potential for growth and collaboration in this emerging market. Participants highlighted the advantages of the UAE lifestyle for expats, such as safety, the absence of personal taxes, and a diverse international community. Attendees compared the UAE VC ecosystem to Silicon Valley three decades ago. The emerging market presents opportunities for newcomers to excel and benefit. We will host recurring events in Dubai as part of VNTR Dubai Chapter membership services. On Oct 17, we will host VNTR Investors Roundtable GITEX Global Dubai.
Key considerations raised during the roundtable:Based on a civil law framework, the UAE legal system continues to evolve and align more with Western legal practices, particularly British common law principles.
Deal flow quality is a current challenge, as many exceptional projects seek funding in the USA, Europe, and Israel before considering the MENA region.
While most capital in the UAE is sourced from government and semi-government funds like ADIO and Mubadala, the flourishing of Dubai and its attraction for high-net-worth individuals is attracting more private capital.
The Dubai International Financial Center has introduced The Wealth Hub initiative to attract international family offices to Dubai.
Decision-making processes may be lengthy due to cultural nuances.
Upcoming
Toronto — The 1st VNTR Investors Roundtable in Toronto will be hosted this week on June 27 as a side event to Collision 2023, one of North America's premier technology conferences. Thank you to Coinchange.io for sponsoring the event.
Lisbon/Cascais/Algarve — Our Lisbon Chapter will host two Summer events on July 7, VNTR Roundtable Cascais, and on July 12, VNTR Roundtable Algarve, during Blockdown Festival Algarve July 10-12. (Get 50% OFF using VNTR50 discount code)
Tokyo — We partnered with WebX Asia to host our first VNTR Roundtable in Tokyo on July 26 as an official side event for investors. (VNTR PRO members get complimentary passes)
Los Angeles— Next Casting for Crypto Hunters Adventure Reality Show will be held in Los Angeles in July 2023. 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. You can apply for the next 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. Contact HK to learn more.
Coinchange.io is a prominent platform in the DeFi market that generates yield through carefully crafted quantitative and systematic strategies. These strategies are combined into diversified portfolios, each with a unique risk-reward profile. Coinchange portfolios are distributed through direct-to-business and direct-to-consumer applications, utilizing APIs for partnerships and offering separately managed accounts for our institutional clients. Additionally, we operate an OTC desk, servicing institutional clients, crypto miners, and other entities in the blockchain and payment business sectors. Contact Max Galash to learn more.
Upcoming VNTR Capital events:
June 27 VNTR Investors Roundtable Toronto (During Collision)
July 11 VNTR Investors Roundtable Algarve (During Block Down Festival)
July 26 VNTR Investors Roundtable Tokyo (During WebX Asia)
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UPCOMING VC EVENTS
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 Asia, Tokyo, Japan (VNTR PRO members get complimentary passes)
July 26 Bloomberg Sustainable Business Summit, Singapore (with VNTR Members access)
Aug 16-18 VCiLat, Santa Cruz De La Sierra, Bolivia
Aug 24-25 Coinfest Asia 2023, Bali
Aug 28-29 World Blockchain Summit, 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 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 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 22-24 Money 20/20, Las Vegas, USA
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 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
VC decks that raised $500M+
In our last edition we shared advice on how to raise from LPs. In this edition we’re going a step deeper by sharing examples of 13 pitch decks that successfully raised over $500M from LPs in aggregate. In this post, we link to full decks (a picture is worth a thousand words, right?) and summarize patterns, tips, and best practices.
Fund managers are salespeople and pitch deck (or memo for some) is the primary sales tool. It’s often the hook to capture enough interest to secure a meeting with LPs. It also serves as support during and after a pitch meeting.
Crypto VC market flashes green amid macroeconomic recession alarms
Crypto venture capital investments were on the rise for the second month in a row in May despite the generally declining economic backdrop. Funding amounts surged 34% from April, and the number of individual deals jumped 62%, according to data from Cointelegraph Research’s Venture Capital Database.
Though inflation in the United States cooled from 4.9% in April to 4% in May — down from 9.1% in the summer of 2022 — the U.S. Federal Reserve still raised interest rates 10 consecutive times. Decreasing inflation tends to build trust among investors that inflation is controllable and that Federal Reserve measures will become softer, but the market is still in the waiting phase.
Boom-Era Excesses Haunt The Ghost Kitchen Space
It’s no surprise that the pandemic coincided with the rise in enthusiasm and financing for virtual kitchen startups. With restaurant dining largely closed, takeout was the only option for a while. Even when dining-in was back, one typically had to submit to masking protocols and/or worry about Covid risk. It was a perfect time to experiment with ordering delivery from a new place. And since no one cared about decor or customer seating, delivery-only kitchens — often called ghost kitchens, cloud kitchens, or virtual kitchens — sounded like a good idea. Startup investors certainly thought so. Top-funded companies in the ghost kitchen space raised more than $3 billion in venture financing between 2020 and 2022, per Crunchbase data.
China's top VCs warn dollar fundraising will only get tighter
China-focused venture funds are finding it increasingly difficult to raise funds from Western investors due to rising geopolitical tensions and a lackluster recovery in Asia's biggest economy, some of the top players in the industry are warning. Steven Wang, a Chinese biotech investor who manages some $2.6 billion, is among those sounding the alarm. Wang says he has been steadily cutting his reliance on U.S. investors for years after geopolitical tensions began to rapidly escalate in 2017. In an interview with Nikkei Asia, he was not optimistic about the situation improving anytime soon. "Our prediction is that getting money from the U.S. is [going to get] harder and harder. Not because of the economic reason, it's just pure political reasons," Wang said. His company, HighLight Capital, has invested in some 100 companies, mostly in medicine and biotech, since 2014. These days, Wang said U.S. investors make up 25% of its investor base, down from a peak of 35% a few years ago.
Africa's Rising Cities
How Africa will become the center of the world’s urban future
Growing at unprecedented rates, and shaped by forces both familiar and new, dozens of African cities will join the ranks of humanity’s biggest megalopolises between now and 2100.
Several recent studies project that by the end of this century, Africa will be the only continent experiencing population growth. Thirteen of the world’s 20 biggest urban areas will be in Africa — up from just two today — as will more than a third of the world’s population.
'The G-spot of Europe': how Vilnius is trying to attract international tech talent
In Vilnius, everyone knows how their city was founded: exactly 700 years ago Lithuanian king Gediminas sent letters around Europe, offering protection, privileges and tax exemptions to monks, merchants, doctors and artisans who would accept his invitation to settle in a new town that would later become the capital.
Fast forward to 2023, and history is repeating itself: in the midst of mass layoffs at tech companies, Vilnius city hall officials are on a charm offensive, posting all over social media and sticking up posters around King’s Cross station in London, where big international tech companies have their offices. The message they’re sending: “Got fired by Meta or Twitter? Move to Vilnius.”
Crypto and AI: Save Us From the Hype
We’ve seen this before. A radical technological breakthrough spins off applications that promoters insist will revolutionize whatever industry they happen to be targeting. Breathless conferences promise that nothing will ever be the same again. Funding floods in at back-of-the-envelope valuations based on exponential growth. I could be talking about the crypto circuit circa 2016-17. But today, I’m talking about artificial intelligence (AI). It’s hard to not be mesmerized by the AI attention is getting, and perhaps motivated by the inflated promises. The impact, even at this early stage, is exciting: The ability to interface with computing power using natural language is a massive productivity unlock, and the creativity boost through almost instant images and prose is both helpful and entertaining. And that’s just scratching the surface.
These Are The Sectors Where Hot Seed-Stage Startups Are Clustering In 2023
The clustering effect is clear in this year’s vintage of seed-funded startups. A handful of categories accounted for an outsized number of investments. What were some of the standout areas? Using Crunchbase data, we scoured through hundreds of the largest seed and pre-seed rounds in 2023 to identify trends. The following is an assortment of a few that stood out, from AI assistants to clean power to esports. Of course, we couldn’t make a list of trendy seed-stage categories without including Generative AI. So here it is. Below, we put together a sample set of 16 companies in the space that raised seed funding this year, in categories from coding to insurance underwriting to identifying AI-generated text.
The World’s Empty Office Buildings Have Become a Debt Time Bomb
From San Francisco to Hong Kong, higher interest rates and falling property values are bringing the commercial real estate market to a perilous precipice.
In New York and London, owners of gleaming office towers are walking away from their debt rather than pouring good money after bad. The landlords of downtown San Francisco’s largest mall have abandoned it. A new Hong Kong skyscraper is only a quarter leased.
The creeping rot inside commercial real estate is like a dark seam running through the global economy. Even as stock markets rally and investors are hopeful that the fastest interest-rate increases in a generation will ebb, the trouble in property is set to play out for years.
Do VCs need a geopolitical policy?
For a long time, VC has been blissfully separate from geopolitics. In Europe, the continent’s ecosystem wasn’t mature enough to come up against policy. And despite the bloc’s reliance on US giants for crucial infrastructure, tech sovereignty was low on the agenda. Now, that’s changing. The war in Ukraine has raised questions about sources of VC cash; Russia itself banned investors from the CIA’s VC arm from entering the country last month in retaliation against sanctions. US VC giant Sequoia recently split off its Chinese operation amid rising tensions. As more VCs on both sides of the pond dip their toes into sensitive areas like space and defence, more are asking: do we need a geopolitical strategy?
Interest in Japan Spilling Into Its Startups, VC Investor Says
Renewed overseas investor interest in Japan may help the country’s overlooked startups defy a global venture capital slump, according to early-stage investor Coral Capital Inc. Chief Executive Officer James Riney. Interest in Japan is surging as fears of sudden tech crackdowns in China prompt investors to reevaluate Tokyo’s slower pace of change. US investors including Warren Buffett are reallocating more of their Asia portfolios to Japan, helping to catalyze a shift that’s lifted the Nikkei 225 index for 10 straight weeks. Buffett’s interest has put the spotlight on Japan, prompting more investors to look at different asset classes there, including private equity and venture capital, Riney said in an interview with Bloomberg TV on Monday.
SoftBank Shifting Back To ‘Offense’ When It Comes to Investing — Thanks To AI
Just more than a year ago, SoftBank founder Masayoshi Son told investors there will be stricter investing criteria moving forward and a more defensive posture after SoftBank’s Vision Fund unit suffered massive losses. His tune was very different at this week’s shareholders’ annual general meeting, where he said the firm would shift from “defense mode” to “offense mode” and is looking at being the leader in the AI revolution. “Now, the time has come to shift to offense mode,” Son said. Son hedged his bets just a month ago, when he said the Japan-based investment giant would play both offense and defense as it sees significant opportunities in the rise of generative AI.
'Investor-friendly' terms rankle startups' early backers
Founders are increasingly turning to structured term sheets to secure cash without taking a down round, but these "investor-friendly" terms often come at the expense of early backers. This tension between past and present investors is straining deal negotiations and adding an extra hurdle to startups navigating a bone-dry dealmaking environment. "The fight that I've seen play out is: a company that's done a seed or a Series A where the documents called for everyone being 'pari passu' ('on equal footing'), and then somebody comes in with a term sheet and says, 'No, I want to stack my preferences,'" said Don Butler, managing director at Thomvest Ventures, the venture arm of Peter Thomson's family office.
JPMorgan bank deploys JPM Coin for euro-denominated payments
The United States-based investment bank JPMorgan is expanding the implementation of one of its major blockchain projects into traditional banking. JPMorgan has deployed its blockchain-based payment system, JPM Coin, to introduce euro-denominated payments for corporate clients, Bloomberg reported on June 23. A spokesperson for JPMorgan confirmed to Cointelegraph that the bank had expanded the JPM Coin blockchain platform from U.S. dollars to euros. According to Basak Toprak, JPMorgan’s head of coin systems for Europe, the Middle East and Africa, JPM Coin went live with euro transactions on June 21. German conglomerate Siemens conducted the first euro payment on the platform, Toprak reportedly said. The system enables wholesale payments for clients, including large multinational firms, to transfer euros to and from their JPMorgan accounts instantly and 24/7.
Corporates Are Getting Aggressive In AI Deals — Who Could Be Next?
Late last month, we took a look at the plethora of artificial intelligence funding deals some of the world’s biggest tech companies and their venture arms have been taking part in for the last several years. That has seemed only to accelerate this month, as Salesforce Ventures
— Salesforce’s venture arm — announced it will double the size of its Generative AI Fund to $500 million just three months after establishing it. That was followed by AI startup Synthesia raising a $90 million Series C at a $1 billion valuation that included an investment from NVentures — Nvidia’s venture capital arm. However, while everyone already knows Nvidia and Microsoft are making strong bids to be dominant players in the AI ecosystem with their startup investments, there are several other tech giants that also quietly have placed some bets in AI and others who have made surprisingly few.
Deal Dive: Maybe venture debt works for asset managers after all
Blackstone last August was looking to put $2 billion toward lending to startups and tech companies, according to The Information. But venture debt lenders remain skeptical that the asset class’s small checks are worth it for asset managers and their large LPs. Recently, a few lenders told me they didn’t think we’d ever see the large credit shops add a venture debt strategy. Now, BlackRock is saying, “Hold my beer!” Last week the absolutely sprawling asset manager BlackRock, with its $106 billion market cap, announced that it was going to acquire Kreos Capital, a London-based venture debt lender. Kreos lends to startups across Europe and Israel and has originated €5.2 billion (around $5.68 billion) worth of loans across more than 750 transactions. Terms of the deal were not disclosed, and BlackRock said that the Kreos team would be absorbed into its existing credit group.
Venture Capital Investment Market Anticipated to Garner $1,068.5 Billion By 2032
As per the report published by Allied Market Research, the global venture capital investment market generated $173.5 billion in 2021, and is projected to reach $1,068.5 billion by 2031, registering a CAGR of 20.1% from 2022 to 2031. The report provides an in-depth analysis of top segments, changing market trends, value chain, key investment pockets, competitive scenario, and regional landscape. The report is an essential and helpful source of information for leading market players, investors, new entrants, and stakeholders in formulating new strategies for the future and taking steps to strengthen their position in the market.
The Week’s 10 Biggest Funding Rounds: Aledade Rolls Up Huge Round, KoBold Metal Mines Big Money
After a slow week last week, there was a slight pickup in top-dollar rounds, with three hitting nine figures. Health care — or health care-adjacent — companies saw big money, taking three of the four top spots this week, with the second place round minting a new mining unicorn. That’s out of the ordinary, but the venture market has a way of being unpredictable. 1. Aledade, $260M, health care: Health care companies hit it big this week and none bigger than Aledade. The Bethesda, Maryland-based company raised a $260 million Series F led by new investor Lightspeed Venture Partners. The round comes just about a year after it locked up a $123 million Series E.
PE's exit slump hints at declining returns for LPs
A historically deep decline in private equity exits is threatening to put a long-lasting drag on LP returns, according to a new PitchBook analysis. The downturn in US PE exit value, which worsened in late 2022 and has carried over into 2023, is even bigger than what the market endured during the global financial crisis, resulting in an estimated $60 billion shortfall in deal value, PitchBook data show. Although the overall slump in dealmaking has been abundantly clear, the findings from PitchBook's latest Quantitative Perspectives report place the United States' drop-off in PE deals and steep fall in exit value into historical context. The authors of the report also point out the implications the trend will have for limited partners in PE funds. Relative to long-term trends, only the COVID-19 lockdowns-induced market shock in 2020 led to more lost exit value than the current decline, according to the report.
Banning crypto ‘may not be effective in the long run’ — IMF
The International Monetary Fund (IMF) has reiterated its calls for crypto regulation across certain countries but said an outright ban may not be the best approach. In a June 22 report on Latin America and the Caribbean, the IMF pointed to various approaches taken by local governments in addressing the adoption of cryptocurrencies and central bank digital currencies, or CBDCs. Bitcoin has been accepted as legal tender in El Salvador since September 2021, while the Bahamas was the first country to launch its own CBDC, the Sand Dollar, in October 2020. The IMF said Brazil, Argentina, Colombia and Ecuador — whose governments’ regulation of crypto was “in progress” — ranked among the highest countries in the world for the adoption of digital assets in an effort to help the unbanked, send faster and cheaper payments, and more. In addition, according to the fund, most central banks in the region “have or are considering adopting digital currencies.”
Why Venture Capital May Not Be the Right Funding Choice For Most Early-Stage Startups
Venture capital (VC) has long been viewed as the ultimate source of financing for startups, but according to Jay Wilson, Investment Director at U.K.-based investment firm AlbionVC, it couldn’t be further from the truth. “Venture capital is wrong for about 99% of businesses out there,” Wilson told PYMNTS in an interview, adding that “VC money is designed for very specific types of businesses with very specific types of ambition and in reality, it is a very expensive financing method.” He added that venture capital is at the top of the capital spectrum from a risk-return standpoint, operating on the principle of outliers and Power Law Returns, which states that an investor makes all of their returns from a small number of businesses in the portfolio.
And with a high cost of capital and double-digit rates of return required, some businesses, often because of structural reasons, cannot create value fast enough or grow into the global category-leading firms as expected in the VC space, he said.
SoftBank's Son is ready to invest again
SoftBank chief Masayoshi Son said Wednesday that after a period of refraining from making new investments the technology group is ready to make a big push into artificial intelligence. Son admitted that he had been "sad" because it seemed that he didn't achieve as much as he would have liked as an entrepreneur, but the recent advances in generative AI have reinvigorated his outlook. "I want to be a part of building [the] future," he said. "That's something I'm most excited about." Son said that the group didn't have spare cash three years ago, but after selling the majority of its shares in Alibaba, SoftBank has accumulated 5 trillion yen (about $35 billion). Additional capital could also soon come from an IPO of Arm, the UK chipmaker that SoftBank purchased in 2016 for $31 billion. Arm is in talks with Intel to anchor its upcoming IPO, and is reportedly preparing to debut in New York as early as September. Arm could raise $10 billion in the listing, Bloomberg reported.
Africa needs more ag biotech investment. Here’s why
With over half a century involvement in global agricultural research involving travel and projects with scientists throughout the globe wherever crops are cultivated, I was intrigued by a series of AgFunder reports about how private investment is being allocated outside the Americas, both by country and by market sector. I had certain assumptions in my head that did not match the realities of where investors are placing their money. That it would be worthwhile to invest where one could have the greatest margin of profit; That in whichever sector of agricultural R&D they invested, investors would want to be assured that there would be a reliable supply chain to support the industry where the investment was made.
Bankrupt SVB Financial still exploring options for venture capital arm
Bankrupt SVB Financial Group said on Wednesday it is continuing to evaluate strategic alternatives for SVB Capital, its venture capital and credit investment arm, as well as other assets and investments. The disclosure comes days after the company agreed to sell its investment banking division, SVB Securities, to a group led by the segment's chief executive officer. SVB Financial had collapsed into bankruptcy after former unit Silicon Valley Bank's failure in March triggered the worst U.S. banking crisis in 15 years. U.S. regulators had to step in to backstop a deal for regional lender First Citizens BancShares (FCNCA.O) to buy the failed Silicon Valley Bank. Jitters around the banking crisis have somewhat eased in the past few weeks as deposits stabilized, with the KBW Regional Banking Index (.KRX) gaining 8.3% so far this month up to Wednesday's close.
US investors ditch European VC for domestic deals
US investors are scaling back on European venture investments as they refocus their attention on domestic opportunities. At the beginning of this year, PitchBook analysts predicted that European VC deals with US participation would represent over one-quarter of 2023 deal count. It would have been the highest level ever. Yet as the numbers stand currently, US presence in European deals is likely to come in lower. As of May 31, US investors took part in 692 deals worth €10.3 billion ($11.3 billion), according to PitchBook's 2023 European Private Capital Outlook: H1 Follow-Up. This represents 19% of overall deal count, a drop from or 22% in 2022. It was anticipated that comparatively lower valuations and portfolio diversification would lead to more deals with US participation. But the intensifying downturn as well as the collapse of Silicon Valley Bank have led to a tighter liquidity market, and VCs are more hesitant to explore deals outside of their comfort zones.
Will BlackRock's Bitcoin ETF Take the Spirit Out of the Honey Badger?
Is bitcoin an alternative store of value, like gold, whose price to dollars is driven by its appeal as bulwark against monetary debasement in fiat currencies? (We could call this the Michael Saylor perspective.) Is it a payment vehicle for people who are, for whatever reason, locked out of the financial system? (The El Salvador perspective, perhaps.) It is in an activists’ tool, a mechanism for challenging power? Or is it best thought of with a more open-ended mindset, viewing it as an unstoppable record-keeping platform onto which users can inscribe a wide range of valuable content? (The Taproot Wizards’ perspective.) I like to think the answer is “all of the above.”
In VC Ranking, New & Small Firms Make The Biggest Splash
The 2022 HEC Paris-DowJones Venture Capital Performance Ranking, released June 14, showcases the world’s top VC firms based on their historic performance. Identifying the firms that have generated the best performance for investors and cumulatively raised over $100 million between 2009 and 2018 in terms of aggregate performance, it shows that exceptional returns are occurring at many new, smaller firms — and ranks one of those little guys in the top spot.
“In terms of size and vintage, the analysis shows a notable split at the top of the rankings,” Gottschalg says. “This surprising data suggest that these new VC firms deliver the greatest returns, followed by a group of stellar incumbents who have grown in size over the years while still outperforming the average VC.”