VNTR Capital News June 7th, 2022 - News, Events, VC Reads
Hello friends,
Happy Tuesday! We hope you are having a great week.
Scroll down to view Venture Capital news, upcoming VC-related events, and VC news/reads.
VNTR CAPITAL COMMUNITY NEWS
The past two weeks were very busy with our events in Davos during WEF, New Delhi, and Monaco during Monaco GP. You can see the photos on our social accounts: Instagram, LinkedIn, Facebook, and Twitter. Thanks again to our partners CoinsPaid, CoinsPaidMedia, Vauban, and Ampere for the support.
The summer is here finally! What are your travel plans? Do you want to join VNTR Capital VC Camp this summer? VNTR Capital VC Camp is a 4-7 day offsite retreat that brings active investors together in a unique destination with lots of experiences and bonding activities.
Join the VC Camp Telegram community to coordinate our next trip together. We are collecting votes for the best destination to travel to together. We have some candidate destinations - Georgia (country), Mykonos (Greece), Algarve (Portugal), Ibiza (Spain), Montenegro, and Croatia.
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VNTR Capital Investors Community has grown to 200 active VCs, angels, family offices, and HNWI. Members join the community to grow as an investor, co-invest, share deal flow, support each other and attend online and offline events together.
UPCOMING VC EVENTS
June 6-9 - AIBC Americas, Toronto, Canada
June 7-8 - Arctic 15 Startup, Helsinki, Finland
June 7-9 - Money 20/20 Europe
June 9-12 - Central Asian Venture Forum, Almaty, Kazakhstan
June 9-12 - Consensus 2022, Austin, Texas
June 8-10 - South Summit. Madrid, Spain (30% partner discount)
June 11 - VNTR Capital Breakfasts Baku, Azerbaijan
June 13-17 - London Tech Week, UK
June 15-18 - Viva Technology, Paris
June 16-17 - Europe Family Office Investment Summit, London, UK
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 13 - VNTR Capital Expert Session - Your VC Firm in a Matter of Clicks
July 13-14 - Unchain, Oradea, Romania
July 19-20 - Venture Summit West, Silicon Valley
July 20-21 - Impact Capitalism Summit, Nantucket, USA
Aug 22-25 - AIBC Balkans, Belgrade, Serbia
Sep 26-Oct 2 - Asia Crypto Week, 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
Want to submit VC-related events, please respond to this email or Telegram @byuric
Check out VNTR's upcoming events
VC READS
Tiger Global Declawed By Market Woes
Tiger Global, known for minting unicorns like Brex, Coinbase, and Peloton, saw its losses for the year hit 52% due to the massive tech selloff the market is going through, Bloomberg reported.
Tiger’s hedge fund dropped 14.2% last month after the firm reportedly invested heavily in tech giants such as Snowflake and Carvana just before the downturn started in the first quarter of the year. The firm sold off some holdings at a significant loss. “We take very seriously that our recent performance does not live up to the standards we have set for ourselves over the last 21 years and that you rightfully expect,” the firm wrote in a letter to investors. “Our team remains maximally motivated to earn back recent losses.”The New York-based firm is made up of both a hedge fund business and a private equity business that invests in the startup ecosystem and is known for its large portfolio of unicorn companies. The massive loss has caused a change to the business structure of the firm, according to the report. Tiger is cutting management fees by 50%. It is also offering to set up separate accounts for clients who want to redeem illiquid, private assets—i.e. startups—as valuations continue to take a beating.
The Good Times Are Over for Startups
Venture capital firms such as Sequoia Capital and Y Combinator are sounding the alarm for startup companies that the days of raising capital easily are over. The well-known VC sent 250 founders a 52-slide presentation via Zoom on May 16, alerting them to a “crucible moment” as higher rates of inflation, volatility in the stock market, and several geopolitical issues led to less certainty in the venture capital market. The presentation was seen by The Information. Sequoia told the startup founders that there likely will not be a “swift V-shaped recovery like we saw at the outset of the pandemic,” and instead recommended that they evaluate their companies for costs that could be slashed. “Don’t view (cuts) as a negative, but as a way to conserve cash and run faster,” Sequoia wrote.
Now is the best time in 5+ years to be a venture investor. A lot of people have made this point about how great companies are started in down markets. As a result, if you're investing in companies getting started right now you'll see some great businesses get built up.
Top Tech Dealmaker Warns China’s VC Winter Is Far From Over
Chinese startups will struggle to attract investment throughout 2022 and possibly beyond, one of the country’s most successful dealmakers said, adding to a chorus of warnings about a reckoning for global tech firms after years of easy money. Investors in private equity and venture capital funds, known as limited partners, are becoming a lot more selective before committing capital, Bao Fan, founder of China Renaissance Holdings, told Bloomberg News in Hong Kong. The industry may be witnessing the start of a longer-term shift in the geography and type of investor, as American and risk-averse backers begin to cool on China, he said in an interview.
“It’s very difficult for new funds -- especially the first-timers -- to raise capital under current circumstances,” the 52-year-old financier said. “No one knows when this will end.”
Binance raises $500 million fund to invest in ‘Web3’ as crypto slides into bear market
The company’s venture arm, Binance Labs, said it has raised $500 million for its debut start-up fund, securing backing from venture capital firms DST Global and Breyer Capital as well as unnamed family offices and corporations. It comes after Andreessen Horowitz last week announced a mammoth $4.5 billion fund to invest in crypto start-ups.
European VCs urge tech start-ups to slash costs and extend the runway
European venture capitalists are advising start-ups in their portfolios to cut costs and freeze hiring as economists warn that another recession is inevitable. Their counterparts in Silicon Valley are doing the same. Following a bumper 2021 that was full of IPOs and mega funding rounds, some of the most valuable start-ups in Europe are now laying off significant numbers of staff and drastically scaling back their expansion plans. “The general advice is to extend [the] runway,” Michael Stothard, an early-stage start-up investor at Firstminute Capital in London, told CNBC. That means they either need to cut their costs or try to raise more capital if they’re able to, he added. Nathan Benaich, a venture capitalist at Air Street Capital in London, said that the industry overall has been advising companies to be more conservative rather than encouraging the go-go plans of yesteryear.
Only 15% of VC general partners in Europe are women
A new report from European Women in VC reveals that female GPs also have less carry than their male peers. In 2021, European VCs were on a high. Startups on the continent raised €100bn, while investors themselves raised nearly €20bn for new funds. But, amid all the excitement, one thing didn’t change: the percentage of funding heading towards women founders. Last year, all-women founded startups raised just 1.1% of investment in Europe, while 8.8% of investment went to mixed-gender founding teams, according to Atomico’s State of European Tech report.
34 new unicorn companies joined The Crunchbase Unicorn Board, collectively adding $57 billion in value and $8.3 billion in equity funding raised. For the first time, the total count of current unicorns on the Unicorn Board is above 1,300 companies. Altogether, these startups are valued at $4.6 trillion and have raised $770 billion. Last month’s new unicorn count is down from May 2021, when 54 companies joined the board. It’s also a few companies short of the 36 new unicorn companies minted in April 2022. But if you cast your gaze back over time, May 2022’s monthly count still exceeds any single month in 2020. These new unicorns hail from 15 countries. Of those, 20 are headquartered in the U.S., Asia, and Europe each has five, three are from Latin America, and one from Africa.
After record growth, VC crypto investments decline 38% in May
This short-term decline in investments can be correlated to the recent market correction, which made Bitcoin (BTC) and other major cryptocurrencies lose 50% or more of their value.
According to new data released by Dove Metrics, total venture capital investment in crypto declined 38.2% over the past month, from $6.8 billion in April to $4.7 billion in May, while surging 97.8% since last year. Data on investment distribution showed infrastructure companies received 21% of the pie, while decentralized finance (DeFi) startups accounted for 14%. Centralized finance (CeFi) and nonfungible token (NFT) projects each accounted for 13%.
This goes to show that venture capital funds might be playing safe by investing in core technologies that actually bring innovation to the crypto space, instead of riskier projects.
SaaS acquisitions multiples update
VMWare is being acquired by Broadcom, which means we have another software M&A comp. Alongside multiples of publicly traded SaaS companies, public SaaS acquisitions are some of the most relevant you can look at for deriving SaaS revenue multiples. These transactions are all cash, the financials are public and audited, and these are all control transactions so the data is about as pure as it gets. Below is the data for all public SaaS company acquisitions since 2021.
Singapore tops the list in VC funding per capita
Singapore has attracted more venture capital investment per capita in 2022 than all other countries receiving over $1 billion. Startups in the Southeast Asian city-state pulled in $4.1 billion, equivalent to around $695 for each person, PitchBook data showed. Other small nations have performed well compared to their size at a time when the fundraising environment for startups across the globe has been more constrained. Israel has taken second place in the list, raising $506 per capita. Finland also performed well, coming in fifth. The US, the world's largest VC market, ranked third with $357 in VC dollars per person.
Venture capitals reroute funding to Web3.0, gaming startups amid dry spell
As venture capital (VC) funds and top investors squeeze the flow of money to traditional startups owing to multiple global macroeconomic conditions, they have now turned their attention to emerging tech like Web3.0 (Blockchain/Crypto/ NFTs) and gaming (Metaverse) where they see immense opportunities. Realizing that 'funding winter' has finally set in after a strong rally of more than two years in the pandemic that allowed Internet-driven startups to grow exponentially across the spectrum -- edtech, healthtech, e-grocery, food delivery, and online home services, they have decided to park their money elsewhere. Leading the pack is California-based investment firm Andreessen Horowitz (A16Z) which just announced two new funds -- a massive $4.5 billion fund for crypto and Blockchain companies and Web3.0 startups and a $600 million 'Games Fund One' that is exclusively focused on the gaming industry.
Tech Layoffs In 2022: The U.S. Companies That Have Cut Jobs
Tech companies as big as Netflix have slashed jobs this year, with some citing the effects of the COVID-19 pandemic and others pointing to overhiring during periods of rapid growth. Robinhood, Glossier and Better are just a few of the tech companies that have notably trimmed their headcount in 2022. To keep tabs, we’ve compiled a list of U.S.-based tech companies that have laid off employees so far this year. New additions in the past week include ClickUp, Lacework, and Bolt.
The Bitcoin-Stock Market Decoupling Isn’t Happening Yet, but It Totally Will
The Decoupling is the moment when bitcoin’s price diverges from equities and starts going up when equities go down (and vice versa). The Decoupling is the moment when bitcoin (BTC) and equities become negatively correlated to each other.
Funding winter descends on Indian startups
In January, the founders of a business-to-business e-commerce startup were looking to raise $20m, in exchange for a 15 percent stake. While they were talking to three to four investors to finalize the deal, a new investor swooped in with a better offer: $50m for a 17 percent stake, valuing the nearly three-year-old business at a hefty $200m. Two days later, the investor gave the thrilled founders a term sheet, which is a non-binding offer. But in March, citing reasons like “low margins” in their business, the investor pulled the deal, leaving the founders with no one else to raise money from and putting a sudden end to their aggressive expansion plans. That venture capital fund gave “random reasons” before pulling the deal.
Which Startup Investors Pulled Back The Most So Far In 2022?
Investors are sounding the alarm that the funding environment for startups has changed dramatically compared to last year. Y Combinator warned its portfolio companies to “plan for the worst.” Pete Flint at NFX recently listed 39 strategies for startups to deal with the downturn. “Only this downturn is different,” he wrote. “It’s bigger. And it’s likely to last much longer.” Sequoia Capital gathered its founders on Zoom to address this “crucible moment.” In its presentation, the firm said “the cost of capital has fundamentally increased.” It also noted that crossover funds active in funding private companies are significantly impacted and “are tending to wounds in their public portfolios, which have been hit hard.”
Crypto's One Unassailable Use Case: Helping Human Rights Activists
Attendees at Oslo Freedom Forum, a 13-year-old annual gathering for human rights and pro-democracy activists, might have wondered at times if they’d mistakenly wandered into a cryptocurrency conference. Bitcoin developer Jimmy Song’s signature cowboy hat could be spotted here and there at the Oslo Concert Hall, where the forum, organized by the Human Rights Foundation, took place. The erudite investor and entrepreneur Nic Carter strolled around with an umbrella cane. On stage, author and podcaster Laura Shin interviewed a non-fungible token (NFT) artist. The stalwarts of Bitcoin and Lightning Network development held workshops on using the currency, and crypto CEOs discussed hedging strategies for a potential ban on stablecoins backstage. A crypto conference, of course, would not normally feature human rights activists recounting their first-hand experience of political oppression, investigative journalists sharing how they fight propaganda, and cybersecurity specialists checking phones for traces of spyware.
VC fund Beenext tells startup founders how to adapt to the funding winter
Singapore-based early-stage investor Beenext which has backed companies like BharatPe, Open, Jupiter, among others, has joined the growing list of venture capital funds to issue cautionary notes to their portfolio companies asking them to reset and adapt to the current market downturn. Beenext has asked all founders to work together with their existing shareholders, and revise budgets across marketing and headcount while checking for the availability of additional capital. In a two-pronged plan, Beenext in its note has divided companies with less than 18 months and more than 18 months runway.
Why bootstrapping your startup is better than VC
In the present fundraising climate set against the backdrop of the tech market slowdown — the global investment community is looking to protect itself. There’s more pressure on investments, and on founders, as investors chase deliverables — fast. But turning to VC money isn’t the only option Europe’s founders have when they’re looking at early-stage growth — bootstrapping your startup offers a viable alternative without many of the downsides of working with VCs. Bootstrapping is the process of getting started solely with savings (and sometimes borrowed/invested funds from family and friends) and revenue you make yourself and could stand you in good stead for future growth. Now is an especially good time to bootstrap as you are less beholden to wider market trends and pressures, and instead, you can tap into your immediate, trusted network for support and backing; all of which can get your company moving from the offset.
How far will high-flying tech investors fall?
Free money is gone. Yesterday's valuations are fiction. Markets have sold the companies of the future. That's the assessment many tech investors have made in an uncoordinated information campaign comprised of decks, video calls, and blog posts aimed at portfolio companies. What has gotten less play is the sober outlook for their own bottom lines. In recent years, venture capital funds have enjoyed a phenomenal run. The asset class recorded an IRR of 30.5% over the past three years, according to the latest figures. Many of those gains were on paper only, a fact that will become obvious as company valuations are marked back down. Fund returns for the first quarter are starting to trickle in, and they're ugly. Venture firms, which pumped up valuations in line with euphoric public markets, may have some explaining to do.
Tech layoffs top 15K in a brutal May
It’s been a rough month in the tech sector. We’ve rounded up week after week of layoffs, and according to aggregator layoffs.fyi, more than 15,000 tech workers have lost their jobs this month. Hopefully, the sun will come out in June. A number of tech companies that enjoyed pandemic-related surges are facing a correction, due to a number of factors, from rising inflation, economic distress, war, and shifting consumer taste buds. Companies including Meta and Twitter have publicly announced hiring freezes, while Snap confirmed this week that it is slowing hiring as it misses revenue targets. It’s worth noting that a change in hiring cadence, along with the Great Resignation, could mean that headcount is net decreasing at the aforementioned companies, as people leave and companies are slow to refill those empty positions.
Venture funding for African crypto startups grew 11x in 2022: Report
As many in Africa continue to adopt crypto and blockchain, more venture funding flowed into the continent in Q1 2022 than in Q1 2021, according to a new report by blockchain investment firm Crypto Valley Venture Capital (CV VC) and Standard Bank. The report, titled “The African Blockchain Report 2021,” shows that blockchain startups were able to raise $91 million in the first quarter of 2022. Q1 2022 saw a 1,668% year-on-year increase in cash inflow compared with Q1 2021's growth of 149% — a jump of more than 11x, according to CV VC. While Africa has not yet seen a “blockchain mega-deal,” the report predicts that unicorns may emerge from the region’s crypto and blockchain scene within two to three years as more venture capitalists show interest in the region.
The Week’s 10 Biggest Funding Rounds: Clearway Energy Group Powers Up With $1.6B, SpaceX Receives Galactic-Sized Raise
Companies in the energy sector seem like the big winners this week. But startups in and around the enterprise software space also made a big splash with investors. Despite that, the chatter this week mostly focused on the large SpaceX raise because, well, it involves both space and Elon Musk. Clearway Energy Group, $1.6B, renewable energy: The biggest round this week was a large corporate one involving San Francisco-based renewable energy developer Clearway Energy Group. France-based TotalEnergies SE bought half of Global Infrastructure Partners’ stake in the firm for a cool $1.6 billion investment.
How Tokenized Governance Can Make DeFi More Resilient
Incorporating governance into decentralized protocols is controversial. Governance implies rules, hierarchies and control, which can be antithetical to the whole notion of decentralization. Paradoxically, history seems to have proven that organizations without rules cannot be sustainable. At present, there are two separate ways that DeFi (decentralized finance) projects and platforms are tackling this problem: They are either building a DAO (decentralized autonomous organization), or just minimizing governance. For most platforms, governance minimization is inappropriate. Building one immutable smart contract that never changes through a governance mechanism makes it fragile, as the underlying contract can never be fixed if problems arise. No project or product is perfect from day one and you will never be able to adapt to the operating environment or economic context.
The Market Minute: Halfway Through 2022 And The Outlook For SPACs And IPOs Isn’t Good
We’re nearing the end of the second quarter of the year, and it’s been unpleasant, to say the least. Inflation, rising interest rates and the war in Ukraine have caused a lot of volatility in the stock market, with the S&P 500 dipping into bear market territory last week. While last year was a record for both traditional IPOs and SPACs, 2022 so far has pretty much been the opposite.
The overall consensus: Activity is pretty slow, and not expected to pick up unless inflation numbers come down. So far this year, 38 SPACs have completed their mergers, per SPAC Track, and 67 SPACs have had initial public offerings, according to SPAC Insider. On the IPO front, 41 companies have priced their offerings this year, per IPOScoop.
Is plant-based protein still on the VC menu in 2022?
Venture capital appetite for plant-based protein startups has slowed this year amid a tougher environment for startup fundraising. VC investments in the market grew substantially over the past decade, as more people either eschew or reduce their meat consumption for health, climate, or animal welfare reasons. Alternative proteins—made of soy, pea or mushrooms, among other ingredients—often aim to imitate the texture and taste of meat, and have grown in popularity. So far this year, $585.8 million in venture funding has been invested worldwide across 52 deals, according to PitchBook data. At the current pace, investments are likely to fall short of last year's record high of nearly $3 billion in total deal value.
Under The Hood: Qualcomm Ventures Looks To 5G, IoT And Metaverse To Grow Ecosystem
In March, Qualcomm Ventures and its parent, Qualcomm, announced its new $100 million Snapdragon Metaverse Fund to invest in immersive experiences involving augmented, virtual, and mixed reality technologies as they relate to the metaverse. At first blush, the metaverse seems a long way from the wireless tech and chips the San Diego giant is known for. However, the deal is a good reminder of the deep reach Qualcomm has into varying sectors. That reach is due to its foundational technologies and the mission of its 22-year-old venture firm to continue to build out that ecosystem. “We supply most of the metaverse with semiconductors,” said Quinn Li, senior vice president and global head of Qualcomm Ventures. He oversees the firm’s $2 billion global venture investment portfolio of more than 150 companies.
Andreessen Horowitz raises a $4.5 billion crypto fund to take advantage of bargains in a down market
Andreessen Horowitz plans to plow billions of dollars into crypto start-ups while digital asset markets are in a rut. The Silicon Valley firm announced a new $4.5 billion fund for backing crypto and blockchain companies on Wednesday. It marks Andreessen’s fourth fund for the asset class and brings its total raised for crypto and blockchain investments to $7.6 billion. The firm plans to invest in both the cryptocurrencies behind projects and in company equity.
Andreessen’s first crypto-focused fund was launched four years ago, during a downturn now known as “crypto winter.” “Bear markets are often when the best opportunities come about when people are actually able to focus on building technology rather than getting distracted by short-term price activity,” Arianna Simpson, a general partner at Andreessen Horowitz told CNBC in a phone interview.