VNTR Capital News March 21, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - March 21 News, Events, and VC Reads
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Happy Tuesday!
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VNTR CAPITAL COMMUNITY NEWS
Weekly Highlights
Expert Session - Last chance to join the VNTR Expert Session with Bibop Greska, where we will learn about Hyperloop Technology and the future of mobility. RSPV here.
VNTR Membership — VNTR Community Membership is live and accepting new members.
Featured New PRO Members:
Paris — We are excited to host global investors at VNTR Investors Roundtable Paris this Thursday, March 23, during Paris Blockchain Week 2023.
Hong Kong — Our first event in Hong Kong will take place on March 30, VNTR Investor Roundtable HK, as a side event for WOW Summit Hong Kong.
Thank you to our partners:
Crypto Hunters TV Show is an innovative adventure-reality series that uniquely explores cryptocurrency and the blockchain world. 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. To complement their strategy for untapped markets, the Crypto Hunters Mobile Game App will also be available. The game will be directly connected to the Crypto Hunters TV show and advertised prominently. Learn more and contact HK.
Flowdesk is the leading Market-Making as a Service (MMaaS) technology provider. MMaaS offers a new approach to managing liquidity on secondary markets. Crypto projects can bootstrap their own liquidity using Flowdesk’s MMaaS infrastructure and its trading team’s global coverage. Learn more and contact Romane.
Changex is a unique personal finance mobile app that connects crypto and DeFi to the real world via in-wallet banking. The company is building a swiss knife financial solution by providing access to multi-chain crypto trading, proprietary products such as Leveraged Staking to leverage any POS asset, and a Crypto Debit Card for unprecedented utility. Learn more and contact Gary.
Paypolitan is offering an all-in-one payment app: users can add various wallets or existing bank accounts to the app and pay. Paypolitan is a non-custodial solution aggregating existing sources of funding. The users’ funds stay where they are and the Paypolitan app simply initiates the payment from the source of funding to the destination account. Paypolitan is therefore using Open Banking APIs (EU directive PSD2 compliant) and is one of the first movers adopting it in Europe. Contact Nils.
Upcoming VNTR Capital events:
Mar 21 Hyperloop Technology Introduction with Bibop Gresta (Zoom)
Mar 23 VNTR Investors Roundtable Paris (during Paris Blockchain Week)
Mar 30 VNTR Investors Roundtable Hong Kong (During Wow Summit)
Apr 12 VNTR Investors Roundtable San Francisco (During Startup Grind)
Apr 27 VNTR Investors Roundtable Austin (During Consensus)
May 2 VNTR Investors Roundtable Rio De Janeiro (During Web Summit Rio)
Jun 1 VNTR Investors Roundtable Marrakech (During GITEX Africa)
Jun 8 VNTR Investors Roundtable Madrid (During South Summit)
RSVP to Upcoming VNTR Capital Events
The VNTR Capital Investors Community has a growing membership of 350+ qualified investors, actively investing in high-growth technology companies as VC/Crypto Fund managers, angel investors, and family offices.
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UPCOMING VC EVENTS
Mar 29-30 WOW Summit Hong Kong
Mar 20 Global Startup Awards Grand Finale, Copenhagen, Denmark
Apr 11-12 Startup Grind, Silicon Valley, USA
Apr 19-20 Bloomberg New Economy Gateway Europe, Dublin, Ireland
Apr 20-23 Emerge Americas, Miami, USA
Apr 26-28 Consensus by CoinDesk, Austin, USA
Apr 27-28 TechChill, Riga, Latvia
May 9-10 OMR Festival 2023, Hamburg, Germany
Ma 12-14 TMRW Belgrade, Serbia
May 15-19 AIBC Americas, Sao Paolo, Brazil
May 16-27 Cannes Film Sestival, Cannes, France
May 18-20 Bitcoin, Miami, USA
May 24-25 Next Block Expo, Warsaw, Poland
May 25-28 Monaco Grand Prix, Monaco
May 30 - Jun 4 Tech Week San Francisco, US
May 30 - Jun 2 Innovex, Taipei, Taiwan
May 31 - Jun 2 GITEX Africa, Morocco
Jun 7-9 South Summit, Madrid, Spain
Jun 9-10 Epic Web3, Lisbon, Portugal
Jun 12-13 Metaverse Summit, Paris
Jun 14-17 Viva Technology, Paris
Jun 26-29 Collision, Toronto, Canada
July 6-7 Block3000, Lisbon, Portugal
July 19-22 AIBC Manila, Phillipines
Oct 7-8 DeGameFi, Tbilisi, Georgia
If you would like to submit VC-related events, please respond to this email or Telegram @byuric
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Check out VNTR Capital upcoming events
VC READS
What happens to Silicon Valley without Silicon Valley Bank?
The collapse of Silicon Valley Bank was a big deal. It didn’t just impact Silicon Valley businesses — or the many non-Silicon Valley-based businesses that banked there, including Vox’s parent company Vox Media. The end of SVB created ripple effects throughout the American banking and financial system.
It also showed how some of the practices that made Silicon Valley what it is today contributed to SVB’s demise. And it showed how Silicon Valley might not be the cradle of innovation and the pride of American business culture that it used to be. It was not a good look when some of Silicon Valley’s loudest voices — the same people who decried bailing out student loan borrowers — were begging, some in all caps, for the government to make SVB depositors whole. After days of prominent venture capitalists’ pleas, the government found a way to bail out SVB depositors without using taxpayer dollars. Nevertheless, plenty of people noticed Silicon Valley’s hypocrisy.
Mark Zuckerberg Ends the Tech Party
The party's over.
In tech, this amounts to saying that the cool and zen culture marked by an office transformed into a cozy lounge is over. Used to be we came, we entered and we were at home. The fridge was full; everyone helped themselves. The buffet was permanent.
The employee was in the center. Work-life balance was the principle. The well-being of the employee came first. Companies were required to do everything to put their employees at ease to get the best out of them.
No more.
Startups in Francophone Africa are on the rise
While the "big four" African startup markets are dominated by English-speaking countries, in the recent past Francophone Africa has made strides
African startups continue to shatter fundraising records, but those operating in English-speaking countries attract the majority of investment inflows. In the recent past though, there have been encouraging developments in the Francophone space.
Startups on the continent raised $4.8 billion in total funding in 2022, according to a report by Africa: The Big Deal. As expected, Nigeria led the pack with more than a hundred startups raising a combined $1.2 billion—including two $100 million+ mega deals—followed by Kenya, with $1.1 billion, Egypt at $820 million, and South Africa at $550 million.
Credit Suisse Also Played An Active Role In Startup Financing
When it came to startup funding, Credit Suisse was no Silicon Valley Bank.
That said, the troubled Swiss banking behemoth, which was just acquired by rival UBS, was no slouch in the venture investment and debt arena either.
Per Crunchbase data, Credit Suisse participated in at least seven venture or debt financing rounds for startups in the past year, including six that it led. Four of the financings were for U.S. companies, while three were for European startups.
Here Are 3 Big Areas Where AI Is Cropping Up In Agtech
While Silicon Valley has transformed every industry from health care to banking, agriculture has remained largely untouched — until now. Ever since OpenAI’s breakthrough with ChatGPT, the term AI has been thrown around so many times it’s starting to lose its meaning. Nevertheless, artificial intelligence has seeped into every industry from enterprise software to autonomous vehicles, taking around 10% of global venture dollars in 2022.
Agriculture has not been immune to the AI revolution that has gripped the tech world. It’s perhaps one of the most interesting use-cases for AI. While ethicists lament racism and bias embedded into algorithms — and ChatGPT gets weirdly perverse — AI in agtech is playing a much more consequential role in furthering two goals for agtech: making lots of food, and doing it sustainably.
Tiger Global Writes Down Venture Funds’ Bets by 33% in 2022
Tiger Global marked down the value of its investments in private companies by about 33% across its venture-capital funds in 2022, according to people familiar with the firm. The markdowns erased $23 billion in value from Tiger’s giant holdings of startups around the globe, one of the people said. Its private portfolio includes big bets on hundreds of companies including TikTok parent ByteDance and payments company Stripe. In the fourth quarter, Tiger’s newest venture funds lost between 9% and 25%. While substantial, the markdowns—including $9 billion in the second half of the year—highlight the lag in private markets compared with similar fast-growing public companies. Tech stocks fell sharply last year, yet large venture-capital investors have so far reported more modest declines.
Why does Europe have so few startup operators-turned-VCs?
In the ranks of European VCs, there are plenty of former bankers, consultants and, these days, founders. There are not — unlike in the US — so many former operators. People who looked after specific functions at startups — from marketing to finance or sales — are still poorly represented in European VC, save for a few high-profile examples like Sophia Bendz at Cherry (former global marketing director at Spotify) and Carlos Gonzalez-Cadenas at Index (former COO at GoCardless). The percentage of ex-operator partners at European VCs has been estimated to be as low as 1.8%. On the other hand, ex-founders make up close to a quarter.
The Silicon Valley Bank fallout is just beginning
Following the collapse of Silicon Valley Bank last week, a lot of companies and entrepreneurs have been making the flight to — at least perceived — safety. That means the biggest banks have been getting more deposits: JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo.
“Everyone is asking, ‘Where should we bank? Where is it safe to bank?’” Ryan Gilbert, founder of Launchpad Capital, told Silicon Valley Business Journal. “When you think you bank with the safest bank in your ecosystem, and they disappeared overnight, you realize it’s impossible to predict an earthquake.” He moved his account to Chase.
Survey Shows Startup Trust Damaged By Silicon Valley Bank Fallout Despite FDIC Involvement
Trust is a key pillar of the banking system, a pillar that has been shocked to its core over the past few days with the fall of Silicon Valley Bank. Despite the Federal Deposit Insurance Corp. stepping in, has trust actually been restored within the wider startup community? At Startup Snapshot, we collected data from over 100 startup founders globally over the past several days in order to assess founder sentiment. The data was collected in partnership with Intel Ignite, Consiglieri and the Zell Program at Reichman University. The data highlights one clear fact: The broken trust in the startup community is far from repaired as founders question the regional banks and the bankers who run them.
Fears of a global banking crisis, and other economy stories you need to read this week
Fears of a global banking crisis increased following a slump in the share price of Swiss bank Credit Suisse and the collapse of US lender Silicon Valley Bank. Credit Suisse's share price dropped 24% on 15 March after its largest investor said it could not provide the bank with more money. The bank has made multi-billion dollar losses associated with the collapse of investment fund Archegos and Greensill Capital. Stock markets subsequently fell around the world, with banking stocks seeing particularly large falls. The turmoil in banking stocks also triggered drops in yields for US Treasuries and Eurozone bonds, and gold prices renewed their recent rally as investors sought safe havens.
European Innovation Council equity fund to be fully externally managed by September
The European Innovation Council’s (EIC) equity fund is to move fully away from in-house European Commission management in September, when it will formally be put in the hands of the European Investment Bank (EIB). AlterDomus, a Luxembourg-based fund manager, will take the final decisions on which companies are invested in.
In practice this arrangement has been in place since last September, under a transitional agreement, but this only covered financing signed off in 2021 and 2022. The permanent deal covering all funding from 2023 onwards is still being negotiated between the two EU institutions.
3 Lessons Web3 Founders Can Take From ChatGPT’s Success
First impressions are everything for a startup trying to be taken seriously by top VCs and catch the attention of new users. But what happens if your project, or entire industry, gets off on the wrong foot? Many Web3 projects introduced themselves to the world during the metaverse boom a year and a half ago after Facebook’s rebrand as Meta Platforms. Instead of seizing the momentum to push forward the development of blockchain applications, too many of them fell into the hype trap. The crypto industry is littered with projects, protocols and corporations that made crucial mistakes, leaving a bad taste in the mouths of industry stakeholders and driving the market as a whole to stagnate.
Introducing The Billion-Dollar Exits Board: Track Large IPOs And M&A Deals From Boom Times To Downturn
It’s somewhat difficult to imagine today, but just two short years ago the IPO markets were booming, and startup founders, investors and employees enjoyed liquidity like they’d never experienced before. In fact, just in the U.S., 182 companies valued at $1 billion or more went public in 2021. Their collective value at their public debuts was $906 billion. But since then, billion-dollar exits have slowed dramatically. There were just 29 U.S. companies that exited in 2022 and counts have slowed to single digits per quarter. As IPOs and large M&A deals have waned, SPAC deals have dominated among startup exits. That’s all from an analysis of the The Crunchbase Billion-Dollar Exits Board, our new list of large IPOs, mergers, acquisitions and other exit deals by U.S.-based startups.
Venture Capital And Crypto Investors Eye Alternatives After US Bank Failures
The dramatic collapse of Silicon Valley Bank (SVB), Signature Bank and the voluntary liquidation of Silvergate Capital’s banking arm are significant setbacks for crypto investors that could speed the migration of crypto businesses to more accommodating jurisdictions such as the Middle East from the US. Moreover, in the wake of the crisis, US venture capital (VC) funds are also intensifying their focus on the region, driven partly by the banking fallout and huge cash piles of the Gulf petrodollar economies, according to analysts. What’s more, market watchers speculate that some Gulf sovereign wealth funds will move to consolidate their position in the VC space as a source of funding and active investors. It is unclear how Gulf funds view the demise of the banks.
Why Didn’t Regulators See Silicon Valley Bank’s Collapse Coming?
SVB’s rapid crash—the largest such failure since the 2008 financial crisis—grabbed headlines and generated concern: How could a bank with nearly $210 billion in assets fall apart in just a matter of days? And, perhaps more to the point: How worried should I be?
Ross Levine, an economist at the University of California, Berkeley business school who specializes in banking and finance, believes SVB’s collapse is a manifestation of other problems within the banking system, and among federal banking regulators, that have been growing for years.
Bitcoin market cap grows 60% in 2023 as top Wall Street banks lose $100B
The market capitalization of Bitcoin has added $194 billion in 2023. Its 66% year-to-date (YTD) growth vastly outperforms top Wall Street bank stocks, particularly as fears of a global banking crisis are rising.Moreover, Bitcoin has decoupled from United States stocks for the first time in a year, with its price rising about 65% versus S&P 500’s 2.5% gains and Nasdaq’s 15% decline in 2023. The six largest U.S. banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs — have lost nearly $100 billion in market valuation since the year’s start, according to data gathered by CompaniesMarketCap.com.
In Their Own Words: What Silicon Valley Bank Meant To The Valley
Uncork Capital, one of the earliest seed-stage funds in Silicon Valley, banked exclusively with Silicon Valley Bank. On Friday, it had its 11 bank accounts frozen as news came out that the Federal Deposit Insurance Corp. had taken over the bank.It was the end of a 15-plus year banking relationship with SVB for Uncork Capital.“For the last 30 years, they have been a prime facilitator and supporter of the innovation ecosystem,” said Jeff Clavier, founder and managing partner of Uncork Capital, which was previously called Soft TechVC, via email.“Of course, there are other banks,” said Clavier. “But no one has the deep connections that the SVB community had created over the years.” Clavier worked to convince SVB to lend to seed-stage startups, something other banks were unlikely to do based on the risk profile of startups.
Navigating the unpredictability of everything
We dramatically, repeatedly fail predict the future. Does that mean “strategy” is senseless? No, it means you need these techniques to navigate a volatile world.
Analysts at Goldman Sachs spend their whole life learning advanced mathematics, building sophisticated models of complex corners of the world, and are financially incentivized to predict the future accurately, because Goldman Sachs makes billions of dollars if they can be 10% more correct than the next firm (who also employs brilliant analysts).
So, how accurately did they predict economic metrics within their area of expertise? They got it very wrong, for 25 years, often not even directionally correct.
Ominous questions about what comes after SVB
The bankruptcy filing by SVB's parent company concludes the first chapter of the failed bank's collapse. But even as the dust settles, ominous concerns and unknowns remain about where we go from here. Silicon Valley Bank's blowup has left a gaping hole in the venture capital ecosystem and triggered a mass migration to alternative financial partners. Eventually, we will see a new version of SVB emerge—albeit under the auspices of new management that will likely have different priorities, and perhaps different values, than its predecessor. And the consequences will be far-reaching for the venture industry.
Is the global investment boom turning to bust?
Almost wherever you look, companies seem to be scaling back their ambitions. Meta, the owner of Facebook, recently said that it would invest less in 2023 than previously promised. Disney is slimming its capex plans for this year by a tenth, meaning punier investment in its theme parks. Calavo Growers, a huge producer of avocados and other fruit, intends to reduce its capital expenditures “while we navigate near-term uncertainties”. The anecdotes are part of an unfortunate broader trend. A global survey of purchasing managers tracks new orders of investment goods, a proxy for capital spending. After surging in 2021, it now points to demand in line with the 2018-19 average.
DIFC comes up with ‘Launchpad’ for venture builders targeting Middle East startups
Dubai: The DIFC is making it easier for UAE and regional startups to tap into venture capital – either to get going with the launch or seek funds to accelerate on the growth.
And the DIFC solution? The ‘Launchpad’.
The Dubai International Financial Centre is creating a cluster within the free zone dedicated exclusively for ‘venture studios’ to provide the kind of funding and support that startups will need.
Why A Recession Can Be Good Timing For Corporate Venture Capital
After years of rising real estate prices and a robust stock market, the economy started to slow down last year. Some experts say we are already in a recession; others say one could arrive soon. News headlines cite an increasing number of layoffs in the tech industry. Despite the negative environment, a recession may be a good time for corporate venture capital to thrive.
Mezzanine debt re-emerges as senior lenders turn more cautious
Mezzanine financing is making a comeback. In recent years private credit lenders, which have been gobbling up leveraged loan market share, have focused on other types of financing, like unitranche deals, which combined senior and junior debt into a single loan.
But as interest rates have risen and lending conditions have tightened, mezz financing, which is situated in a company’s capital structure between senior debt and common equity, has found new life. Recent turmoil at regional banks may further open up investment opportunities for mezzanine lenders. Fundraising in the segment has followed the growing demand. Last year, private credit managers raised billions of dollars of dry powder for mezzanine financing. A total of $30.1 billion was raised by global mezzanine funds in 2022, almost double that of 2021, and the most since 2016, according to PitchBook data.
Behind the surge in take-privates; PE investment in EU healthcare fades
Public markets wilted in 2022 under the heat of rising interest rates and simmering inflation, helping to spark a surge in take-private deals by private equity firms. Take-privates typically account for about 20% of private equity deal value, but that share doubled to about 40% in 2022 and has gone as high as 70% in the first weeks of 2023, according to Pete Witte, global private equity lead analyst for research and consulting firm EY. Witte called the surge "the most interesting statistic in private equity right now." Take-private deals are driven by lower public company valuations, as well as another trend shaping private equity activity in 2023: the rise of private credit.
India outpaces China in no. of unicorns created in 2022
India, for the second time in a row, added more unicorns (23) than China (11), with the addition of its 100th unicorn (Open Technologies) in May 2022. Funding momentum, however, softened in India in 2022, in line with the global slowdown as the total deal value saw a compression from $38.5 billion to $25.7 billion from 2021 to 2022, as per the latest edition of Bain & Company’s annual India Venture Capital Report 2023, written in collaboration with Indian Venture and Alternate Capital Association (IVCA). The decline in funding mostly took place over the second half of 2022 as global macro headwinds intensified over the year. In fact, investments grew 1.4x over the first half of 2021–2022 but saw a 70% decline in the second half of 2022 compared to the second half of 2021.
FTX inner circle received $3.2B in company funds
Sam Bankman-Fried, the founder of formerly VC-backed crypto exchange FTX, received around $2.2 billion in transfers from his company's entities, according to bankruptcy court filings. FTX's new management has identified more than $3.2 billion in funds, mainly from its trading arm, Alameda Research, that were sent to the personal accounts of Bankman-Fried and five members of his inner circle in the form of payments and loans. This sum excludes political and charitable donations, "substantial" transfers to subsidiaries, and $240 million spent on luxury property in the Bahamas. It is estimated that Bankman-Fried donated nearly $40 million to political candidates.
Banking isn’t the only ‘single point of failure’ entrepreneurs should be rethinking
Silicon Valley Bank is a good reminder that startups, often entrenched in the world of risk and scrappiness, sometimes forget to think about the obvious: single points of failure. But just like it makes sense to rely on a community-friendly bank, so does entrusting a single person to lead your business to success. Now that we’ve seen the former not really work out, perhaps it’s time to rethink the latter. TechCrunch+ polled a number of early-stage founders who are building companies that have raised a Series A or less, to understand how they think about succession. The consensus is that it’s not top of mind, or even top of the list, in a world where founders are more focused on runway, product-market fit and growth.
Can that be changed?
Diversified set of guardians required for safe self-custody: Vitalik Buterin
Ethereum co-founder Vitalik Buterin has emphasized the importance of having a varied set of “guardians” to maximize the safety of crypto asset self-custody via multisig and social recovery wallets. Given the ever-growing rate of crypto scams and hacks over the past few years, and several major crypto firms going bust in 2022, self-custody and maintaining sufficient wallet safety procedures have never been more critical. In a March 16 Reddit post on the r/ethereum community titled “How I think about choosing guardians for multisig and social recovery wallets,” Buterin gave a detailed run down of how he approaches wallet security.
This Crisis Will Define the Future of Money
Ten years ago, a strange new digital currency called bitcoin (BTC) caught my attention for the first time as its price surged during the Cyprus banking crisis. Local authorities had infuriated Cypriots by slapping a 10% tax on withdrawals, unwittingly encouraging some to warm to the idea of bankless digital money. Per Omkar Godbole’s reporting, I’m not alone in seeing parallels between the past week’s events. Again, bitcoin’s price has rallied on speculation that stress among U.S. and European banks will open people’s eyes to the leading cryptocurrency’s censorship-resistant, intermediary-free qualities. But if this is bitcoin’s “Cyprus moment,” the context is very different from 2013. With crypto now embedded in public consciousness – negatively, mostly – the industry faces its biggest ever test, one that involves an intensified struggle with the financial establishment.