VNTR Capital News March 7, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - March 7 News, Events, and VC Reads
VNTR Capital Newsletter is delivered to 30k+ investors weekly to share the latest news, events, and articles from the global VC and startup ecosystem.
Scroll down for VNTR Capital Community News, Upcoming Events, and VC News/Reads.
VNTR CAPITAL COMMUNITY NEWS
VNTR Membership — We are excited to announce that we have started onboarding our first members to the VNTR Community Membership, a platform designed to support our members’ investment objectives. Our mission is to provide the tools, resources, and network you need to achieve your financial goals and build a successful investment portfolio. Our initial roll-out includes several core programs and services that are tailored to meet your needs, including:
VNTR Platform — Offers exclusive access to carefully curated deals shared by our members, VNTR Syndicate deals, a comprehensive members directory, upcoming events, member requests, and partner offers.
Weekly Membership Newsletter — Members-only weekly newsletter with insider news, updates on new members and vetted deals, and invites to members-only events.
VNTR Chat Bot — Centralized communication channel for all your queries and introductions to the VNTR team and we offer personalized investment offers tailored to your unique needs.
Mastermind Groups — Join a group where you can connect with like-minded individuals to discuss investment opportunities, strategies, and challenges. These groups provide a supportive and informative forum for you to learn and share with others on the same journey.
Join VNTR Membership
Featured New PRO Members:
Dubai — We will participate at AIBC Dubai March 13-16, 2023 and side events:
March 13, 17:00 — Join us at Ikigai Retreat, where investors, C-level executives, and HNWIs will convene. Several of Ikigai's portfolio companies will also present their businesses on stage.
March 15, 9:00 — VNTR Investors Roundtable Dubai will bring together active investment decision-makers to network and discuss potential opportunities.
Paris — The upcoming Paris Blockchain Week is set to become the biggest crypto and blockchain event of the year in Paris. As part of this event, we are excited to host local and visiting investors at VNTR Investors Roundtable Paris on March 23.
Portugal — Those looking to acquire a Golden Visa in Portugal are urged to take immediate action, as the government has announced plans to terminate the program in the near future owing to a lack of affordable housing. With the new legislation expected to be ratified and enforced within two months, this represents a final opportunity for potential investors to apply before the opportunity vanishes. To apply for the program, investors can access the application process here.
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.
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.
UPCOMING VC EVENTS
Mar 10-19 SXSW, Austin, USA
Mar 13-16 AIBC Eurasia, Dubai, UAE
Mar 13 Ikigai Retreat Dubai, UAE
Mar 13-15 FinTech Week Tel-Aviv, Israel
Mar 13-15 W3summit Bengaluru, India
Mar 15-17 sTARTUp Day 2023, Tartu, Estonia
Mar 19-20 Crypto Expo Europe, Bucharest, Romania
Mar 20-24 Paris Blockchain Week, Paris, France
Mar 20-21 World Blockchain Summit Dubai, UAE
Mar 23-25 Art Basel Asia, Hong Kong
Mar 29-30 WOW Summit Hong Kong
Apr 11-12 Startup Grind, Silicon Valley, USA
Apr 26-28 Consensus by CoinDesk, Austin, USA
Apr 27-28 TechChill, Riga, Latvia
Ma 12-14 TMRW Belgrade, Serbia
May 15-19 AIBC Americas, Sao Paolo, Brazil
May 24-25 Next Block Expo, Warsaw, Poland
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
If you would like to submit VC-related events, please respond to this email or Telegram @byuric
VNTR Investment Platform streamlines participation in VNTR investment syndicates. You can view the investment opportunities and co-invest in a few clicks.
Former Facebook exec turned VC Chamath Palihapitiya has long been a controversial figure in the investing world. Both brilliant and combative, Palihapitiya came to be known most widely by ushering in the era of special purpose acquisition companies, or SPACs, beginning in the fall of 2019, when he helped Virgin Galactic become a publicly traded company through a SPAC he formed.
Palihapitiya went on to take five more companies public via SPACs before the boom ended abruptly last year, and while investors who followed him into some of his SPACs lost money — as did investors in many hundreds of others SPACs that materialized in 2020, 2021 and last year — Palihapitiya reportedly doubled the roughly $750 million he invested.
In today's digital age, digital identity is an integral part of our lives. From online banking to social media, we use digital identities to access services, interact with others, and manage our daily lives. Because of this, we are becoming increasingly vulnerable to exploits targeting our online identity.
Digital identity is a complex concept that requires a comprehensive understanding by everyone, from computer scientists and internet enthusiasts to digital natives and enterprise professionals.
This guide is for beginners who want to explore the multifaceted concepts of digital identity without going too deep into the subject matter.
We explore digital identity within the context of privacy and security providing practical tips on protecting your information online.
With IPOs Frozen, Startups Need To Worry About Ticking Options Clock
As the IPO pipeline remains frozen solid, more noise is being made concerning employees options expiring or being extended. On the day it was reported that payment titan Stripe put a tentative timeline on a long-awaited IPO, news also broke that the company would look to raise billions from private investors. The funds will be used, in part, to help offset a tax bill that will come due when it modifies employees’ stock grants that are set to expire. Geolocation startup Foursquare won’t have to face a similar tax bill, as it was reported the company is letting some employees’ options expire. Startup employees’ options typically expire in 10 years. Not long ago, that seemed far from a problem as companies typically would have some type of exit to give employees the liquidity they earned well before that time period ends. Now, with companies staying private longer, startups need to keep an eye on not just their runway, but also the option clock.
Startup Decoupling & Reckoning
During the last few years low interest rates and money printing led to a funding bubble in private technology. Many startups received pre-emptive extra “free rounds” and hired teams much larger then their stage or progress merited. In parallel, abundant money and secondaries meant companies that should have shut down or sold kept going (indeed - this was a pre-COVID phenomenon from ~2017 or 2018 on). There was always another round or extension to keep companies without real product-market fit going. Or founders sold secondary stock in multiple rounds instead of selling a company that wasn’t really working.
These trends have resulted in an overhang of companies that either (1) lived without product market fit and survived well past their natural expiration point, or (2) hired way ahead of progress and burned large sums with high valuations and now are stuck with little progress per dollar and a large preference stack.
There comes a time when dabbling in angel investing — or hanging out on a yacht — is no longer enough for successful founders. These are people who love running businesses, after all.
So they set up their own investment companies.
Some, like Skype and Atomico founder Niklas Zennström, go big — creating massive VC funds, deploying hundreds of millions of dollars and employing dozens of people.
Killing The ‘Must Have a Warm Intro To a VC’ Myth Will Be Good For Founders and Great for the World
How startup revenue growth is slowing across 4 sectors
Headwinds blowing at startups are intensifying. After years of favorable investments and a macroeconomic environment that led to increasingly higher valuations and faster revenue expansion, VC-backed companies now have to reckon with a double whammy of drastically falling prices and decreasing growth rates. While some companies continue to grow at a fast clip, accounting data shows that revenue growth declined substantially in 2022 compared to 2021. That data comes from Kruze Consulting, which keeps the books and prepares taxes for over 750 seed through Series C startups.
OpenAI launches an API for ChatGPT, plus dedicated capacity for enterprise customers
To call ChatGPT, the free text-generating AI developed by San Francisco-based startup OpenAI, a hit is a massive understatement.
As of December, ChatGPT had an estimated more than 100 million monthly active users. It’s attracted major media attention and spawned countless memes on social media. It’s been used to write hundreds of e-books in Amazon’s Kindle store. And it’s credited with co-authoring at least one scientific paper.
But OpenAI, being a business — albeit a capped-profit one — had to monetize ChatGPT somehow, lest investors get antsy. It took a step toward this with the launch of a premium service, ChatGPT Plus, in February. And it made a bigger move today, introducing an API that’ll allow any business to build ChatGPT tech into their apps, websites, products and services.
SEC chair implies crypto exchanges may not be ‘qualified custodians’ as new rule is drafted
Gary Gensler praises the SEC Investor Advisory Committee’s proposed rule on safeguarding advisory client assets but thinks crypto firms may not be up to snuff. United States Securities and Exchange Commission Chair Gary Gensler has again backed a proposed rule that would extend asset custody rules to more cryptocurrencies, saying investors need more protection. The commission’s Investor Advisory Committee has proposed expanding 2009 rule designed to reduce the risk of advisers embarking on Ponzi schemes to all asset classes, including crypto assets that are not funds or securities.
The new rule would enhance protections provided by qualified custodians in light of new authorities granted by Congress in 2010, Gensler said. The proposed rule would also require written agreements between advisers and custodians, add requirements for foreign institutions serving as custodians and explicitly extend the safeguard rules to discretionary trading.
Crypto Prices Spike As VC Funding In Web3 Continues To Plunge
Even as negative headlines around FTX, Silvergate, Genesis and other crypto-related businesses continue to swirl, something funny has happened to crypto prices. They’ve soared. Bitcoin — the largest cryptocurrency by market cap — is up 40% since the year began, and ether — the second largest — is up 35%. While still substantially off their highs from November 2021, the rally is one of the best either has seen in the last year-plus.
However, venture capitalists and investors still seem tepid as ever on the market. Thus far for the year, only $1.3 billion has come to VC-backed Web3 startups in 233 deals, per Crunchbase data. At that pace, final numbers for the quarter would even be lower than Q4 of last year, when Web3 funding cratered to $2.7 billion in 373 deals. The first two quarters of 2022 saw $17.5 billion invested in Web3 startups, according to Crunchbase.
10 Cool Tech Companies That Raised Funding In February
The pool of venture capital and other funding sources for IT companies seeking financial resources to maintain their growth continues to dry up. Whereas a year ago each month would see multiple companies announcing funding rounds of $100 million or more, such deals are becoming as rare as, well, unicorns. With one notable exception, none of the funding deals on the Follow the Money roundup for February exceeded eight figures. Only two, in fact, were more than $50 million. The major exception to the more limited availability of venture capital was cloud security company Wiz, which collected $300 million in a Series D funding round in February. Big data continues to be an active IT sector with InfluxData, Acceldata and OneHouse reporting successful funding rounds.
Startups Opt For Microcap Mergers To Tap Public Markets
Most years, at least a few buzzy startups manage to carry out high-profile IPOs. But lately, with the window for large new offerings frozen shut, those debuts aren’t happening.
Instead, what we do see are smaller deals in which venture-backed startups are tapping public markets through combinations with Nasdaq-traded microcap companies. Transactions, which take the shape of mergers, reverse mergers and M&A deals, involve companies in similar industries as well as disparate ones.
The vertical farming bubble is finally popping
Climate change might make growing produce indoors a necessity. But despite taking in more than a billion dollars in venture capital investment, most companies in the industry seem to be withering, unable to turn a profit on lettuce.
When workers arrived at Fifth Season, an indoor farm in the former steel town of Braddock, Pennsylvania, on a cloudy Friday morning last October, they expected it would be a normal day.
The farm, which had opened two years earlier, seemed to be running smoothly, growing tens of thousands of pounds of lettuce per year inside a robot-filled 60,000-square-foot warehouse. The brand was selling salad kits—like a taco-themed version with the company’s baby romaine, plus guacamole, tortilla strips, and cheese—in more than 1,200 stores, including Whole Foods and Kroger. Earlier in the year, the company had said that it projected a 600% growth in sales in 2022. The branding was updated in October, and new packages were rolling out in stores. Solar panels and a new microgrid had recently been installed at the building. A larger farm was being planned for Columbus, Ohio.
Calculate it: How long will it take to grow into old valuations?
It's a tough pill to swallow, but the entire VC ecosystem is slowly accepting that it will be a long slog to return to the peak of pandemic-era valuations. In 2021, it was not unusual for companies to raise capital with lofty valuations, in some cases more than 100x revenue. But those days are long gone. The best companies are now valued much lower. IVP, a major investor in VC-backed companies, says premier companies are more likely to fetch valuations of around 15x annual recurring revenue. Startups that raised capital in late 2020 and 2021 need to grow into their valuations—or face the grim reality of a down round. How long it will take them to catch up to their previous price depends on four factors:
Why Venture Studios Are The Perfect Fit For Venture Capital
VCs have been in the investing game for decades…And for the most part, they’re pretty good at it. They’ve been essential in scaling a multitude of companies that have vastly improved our lives. At this point in time, they’re an integral part of the ecosystem. But with the way our current global economics are shaping up to be, the landscape is vastly changing. Over the last few decades, VCs have evolved. With large amounts of capital to deploy, they’ve slowly scaled their way into earlier investment rounds, providing founders with massive amounts of capital to utilize for building their companies. The thought was that by investing in start-ups in the initial phases of building a company, they would get higher-yielding returns in the later stages.
Chicago’s Varied Startup Scene Takes A Breather After 2 High-Flying Years
If there’s no particular industry that comes to mind when you think of Chicago startups, then you’ve probably got it right. The Midwestern metropolis is known for having one of the most varied economies of any major U.S. city, with a heavy dose of health care, education, finance, manufacturing, retail and tech. That breadth of expertise seeps into the entrepreneurial culture as well. “Chicago’s startup scene is super diversified,” said Allison Weil Lechnir, a partner at Hyde Park Venture Partners, a Chicago-based seed and early-stage software investor with a local portfolio that spans industries including health care, logistics, legaltech and landscaping. A look at top venture-funded Windy City companies underscores this point. To illustrate, we put together a list below of nine of the most heavily funded private companies that raised financing in the past year.
There are still opportunities in VC firms despite a drop in funding, says 500 Global
Global venture capital firm 500 Global is bullish on the VC sector, even as venture funding took a hit in 2022 as economic uncertainties loomed. “There is definitely a drop in the allocation towards ventures this year, but it really depends on which markets you are investing in, and what the opportunities set in those markets are,” said Vishal Harnal, managing partner of 500 Global, on CNBC’s “Squawk Box Asia” Monday. According to data compiled by Crunchbase, global venture funding in 2022 totaled $445 billion — lower by 35% compared to the previous year. “But I wouldn’t go so far as to say that there is a funding winter,” Harnal told CNBC’s Martin Soong and Sri Jegarajah. The firm manages more than $2.7 billion in assets. Some of the startups they invested in during their early stages include Australian graphic design software Canva, Southeast Asia’s ride-hailing firm Grab and Indonesian fish farming tech startup eFishery. Grab has since listed on the Nasdaq.
UK government unveils £360m plan to become ‘tech superpower’
The British government has today announced a new £360m plan to increase investment in innovation, attract talent to the UK and position the country as a “science and technology superpower by 2030”.
The plan, dubbed the Science and Technology Framework, includes a £250m pot to invest in AI, quantum and biotech, £9m to help establish a quantum computing research centre and an extra £50m to help universities and research institutes improve their lab facilities.
The framework also mentions plans to set up a “supercomputer facility” to work on groundbreaking technologies like nuclear fusion and AI, and plans to create “hundreds of new PhDs for AI researchers”.
Regulators Are Bringing the Multichain Era to a Close
As firms add more and more blockchains to their strategic road maps, I grow more and more frustrated. Where, I keep wondering, do firms have the money to properly understand and implement such an enormous array of blockchains in their operations? At EY, it costs us about $500,000 to add a new chain to our Blockchain Analyzer platform and we spend between 10%-20% of that amount each year keeping up to date. While setting up network nodes may not be too difficult, understanding how networks operate and the mechanics of transfers and payments is another matter. When we add a network, we take a close look at the transaction processing model (how transactions are initiated, recorded, processed and reported); the cryptography that underpins those transactions; and the risks that might be associated with different steps in the process. When it comes to audits, we even identify control points where we can perform verification steps.
Bpifrance: Inside the machine powering French tech’s rise
To understand the secret of France’s entrepreneurial boom, take a close look at state bank Bpifrance, an economic beast whose tentacles reach into every corner of this nation’s innovation ecosystem.
Between direct and indirect investments, Bpifrance poured €1.6bn into French tech startups and venture funds in 2022 alone, up from €1.51bn in 2021. Since 2016, those investments total €7.2bn.
There’s barely a French startup it hasn’t touched. Last week, the government unveiled its latest French Tech Next40/120 list of the nation’s most promising startups. A closer look at the cap tables of the 120 companies reveals that 51 raised some kind of direct investment from Bpifrance, according to Dealroom.
And many more — if not all — received indirect money from Bpifrance via its fund-of-funds, which has made it a limited partner in at least 56 VC funds that operate in France.
'I can't get my money out': Billionaire investor Mark Mobius says China is restricting flows of capital out of the country
Mark Mobius, a pioneer in emerging markets investing, said China is restricting investment outflows from the country, a move that would be taking place as the world's second-largest economy is trying to shake off pressure from COVID-19 lockdowns.
"I'm personally affected because I have an account with HSBC in Shanghai. I can't get my money out. The government is restricting the flow of money out of the country," Mobius said on Thursday on the Fox Business show "Mornings with Maria". "So I would be very, very careful investing in China," the founder of Mobius Capital Partners said.
Mobius, who has spent decades traveling the world searching for investment opportunities, said he hasn't been able to get an explanation about why he's running into the restrictions in China.
Venture capital sows the seeds for a bumper Aussie agtech crop
A technological revolution has been taking place on Australia's farms in recent years, led by roboticists, agronomists and sustainability-focused thinkers, and backed by an investment pool that has grown in value by nearly $530 million since 2019. If the recent evokeAG conference in Adelaide, South Australia is anything to go by, Australia is on the cusp of being a leading exporter of game-changing agtech solutions to the world, supported by venture capitalists eager for a slice of the rapidly growing market. From robotics agpreneurs developing autonomous platforms for the establishment of 24-hour farms to developers harnessing ‘precision pollination’ techniques to boost yields, visual inspection technologies that remotely monitor livestock to ripeness sensors that detect the health of fresh produce in-transit, the startups on display at the conference exemplify the leaps and bounds the agriculture sector has made thanks to advancements in technologies like AI, computer vision and more.
As tensions build, Silicon Valley’s Chinese affiliates invest in sensitive space tech
Chinese subsidiaries of American venture capital firms are investing money from U.S.-based funds into Chinese space startups, even as the Pentagon warns of Beijing’s growing activity in the space arena, according to data reviewed by TechCrunch. The data, collected by PitchBook, includes information on past limited partners and investments of the Chinese units of Sequoia Capital, Matrix Partners and Lightspeed Venture Partners. Space industry investments represent a very small but notable portion of these firms’ portfolios, with Sequoia Capital China and Lightspeed China investing in two companies each and Matrix China investing in eight. Startups that have landed funding include companies working on launch, satellite manufacturing and Earth observation.
The hottest seed rounds of February 2023
273 startups drummed up seed funding in Europe last month, raising a total of €423m — a slight dip from January’s €462m across 286 rounds, but higher than the lows seen at the tail end of 2022.
The 10 largest pools of institutional capital set aside for new fund managers
Even amid a tough fundraising market, institutional investors' new-manager programs are continuing to be a saving grace for some first-time fund managers. Large LPs typically set aside pools of capital to dedicate to emerging and first-time fund managers. In today's market environment, these swaths of capital could be a saving grace for new GPs. Total private market fundraising declined in 2022 as firms grappled with the denominator effect, rising interest rates, mounting regulatory scrutiny and growing skepticism around their high valuations amid a public market downturn. As LPs become more conservative about their capital deployment in turn, new and less-established managers are getting left in the dust.
Dealmaking jumps as PE drives wealth-management consolidation
Private equity firms are driving record numbers of M&A deals in wealth management as the industry seeks to consolidate amid a tough economic environment. Wealth managers struck 341 M&A deals in 2022, an 11% increase from the previous year and at least a 10-year high, according to a report from investment bank Echelon Partners. Just about 70% of those transactions involved PE buyers or buyers backed by PE. "There are so many buyers out there, and there's a lot of PE money in the space," said David Barton, who oversees M&A at Mercer Advisors. "They're driving the demand." Buyers in the market include big platforms like Mercer, as well as regional wealth management companies that are using acquisitions to achieve inorganic growth. There are also PE firms targeting wealth managers to use as platforms in buy-and-build strategies.
What Now for Crypto Banking? Crypto banking is in a mess.
The collapse of the FTX exchange caused damaging runs on two U.S. regulated banks. One of them – Silvergate Capital Corp. – had to sell assets at a loss to repay depositors and lenders, and as a result has now warned that it may not be able to continue as a “going concern.” A third bank had to issue an emergency warning that those who had deposited fiat funds with its customer Voyager Digital did not have deposit insurance. U.S. regulators are pressuring banks to withdraw banking services for crypto platforms and exchanges. And in a decision that sent shock waves across the crypto world, the U.S. Federal Reserve rejected a membership application from Custodia Bank, a full-reserve bank providing payment and custody services to crypto businesses. Where can crypto-related banking go from here?
Meet The Whisperers: France’s mysterious tribe of super angels
If you’re an early-stage French founder, chances are you’ve tried to get in front of a business angel who is part of a mysterious new tribe: The Whisperers.
These 12 investors, many of whom are successful founders and already rank among France’s most prolific angels, joined forces last year hoping to stake an even bigger claim to dealflow as early-stage competition hots up in the booming French tech scene.
It seems to be working. Very quietly — as the name would suggest — this loose affiliation of founders, former VCs and friends, all with deep operational startup experience, is morphing into an important conduit for early-stage deals.
“The number of operators who enjoy investing is increasing in France,” said Renaud Visage, the former CTO of Eventbrite and an original member of The Whisperers. “It’s been pretty high in the UK from my experience, but we’re catching up.”