VNTR Capital News May 14, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - May 14 News, Events, and VC Reads
Hello friends,
Happy Sunday!
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Scroll down for VNTR Capital Community News, Upcoming Events, and VC News/Reads.
VNTR CAPITAL COMMUNITY NEWS
Weekly Highlights
Dubai — We launched VNTR Chapter Dubai on May 9th (pictures) to create a robust network of active investors in Dubai and MENA. As part of this initiative, we will host monthly networking and educational events that will provide valuable opportunities for investors to connect, learn, and grow.
In addition to VNTR events, we are excited to start investing in high-growth startups in the local area and providing access to our global community in the GCC region. Join Dubai Chapter Membership.Crypto Hunters Casting Party — On May 10th, we hosted an awesome party to celebrate the completion of Crypto Hunters Casting in Dubai. The party was a huge success, with over 700 members from 26 different communities in Dubai joining us for an evening of celebration and networking. The next destination is London June 12-14. Check out the video recap.
Miami — The highly anticipated Bitcoin Miami conference is just around the corner, and it's already shaping up to be the biggest event of the year for cryptocurrency enthusiasts.
With a line-up of top-notch speakers, including Michael Saylor, Executive Chairman at MicroStrategy, David Marcus, Chief Executive Officer at Lightspark, and Robert F. Kennedy Jr., a prominent US Presidential Candidate, attendees can expect to gain valuable insights into the latest developments and trends in the world of Bitcoin and beyond. We will host VNTR Investors Roundtable Miami on May 19 to provide a unique opportunity for active investors to network and connect.Bucharest — On May 28, we'll be hosting VNTR Investors Roundtable Bucharest to mark the launch of the VNTR Romania Chapter.
Marrakesh — We are hosting our first VNTR Investors Roundtable in Africa on June 1- an official side event for Gitex Africa. Approved VNTR Investors will get a complimentary investor pass to Gitex by Applying here.
June-July events — Join us at planned events in Amsterdam, Madrid, Lisbon, London, Paris, Toronto, and Algarve.
VNTR Weekend Summer Retreats — We're organizing 3-day weekend retreats in top European beach destinations so our community can come together and have fun. Apply to join
Featured new VNTR members:
Manmeet Singh Bhasin — Founder & Managing Partner at Punja Global Ventures. Serial entrepreneur with two exits. Co-founder and CEO at 5SikhSeva is a non-profit serving free meals daily.
Eran Elhanani — Co-founder of BullPerks - a top ranking Decentralized VC, Multi Chain Launchpad, and GamesPad. Founder of Partone Capital - an investment firm focused on Defi, NFT, and protocols on the blockchain.
Thank you to our partners:
Crypto Hunters TV Show is an innovative adventure-reality series that uniquely explores cryptocurrency and blockchain. 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. You can apply for casting in London on June 12-14 here. For those who can't make it to the casting events, we invite you to join the Crypto Hunters Telegram community. You can learn more and contact HK.
Changex is a unique personal finance mobile app that connects crypto and DeFi to the real world via in-wallet banking. The non-custodial wallet is live and the company continues building a swiss knife financial solutions by providing access to multi-chain crypto trading, fiat on/off ramp, proprietary products such as Leveraged Staking to leverage any POS asset, an IBAN account, and a Crypto Debit Card for unprecedented utility. You can learn more and contact Gary.
Paypolitan offers 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 initiates the payment from the funding source to the destination account. Paypolitan uses Open Banking APIs (EU directive PSD2 compliant) and is one of the first movers adopting it in Europe. Learn more and Contact Marco.
Upcoming VNTR Capital events:
May 19 VNTR Investors Roundtable Miami (During Bitcoin 2023 Miami)
May 28 VNTR Investors Roundtable Bucharest (During Bitcoin Bucharest 2023)
Jun 1 VNTR Investors Roundtable Marrakech (During GITEX Africa)
Jun 7 VNTR Investors Roundtable Amsterdam (During Money 20/20 Europe)
Jun 8 VNTR Investors Roundtable Madrid (During South Summit)
Jun 8 VNTR Investors Roundtable Lisbon (During Epic Web3 Conference)
Jun 13 VNTR Investors Roundtable London (During London Tech Week)
Jun 15 VNTR Investors Roundtable Paris (During Viva Technology)
Jun 27 VNTR Investors Roundtable Toronto (During Collision)
Jul 7 VNTR Investors Roundtable Lisbon (During Block 3000)
Jul 11 VNTR Investors Roundtable Algarve (During Block Down Festival)
RSVP to Upcoming VNTR Capital Events
Follow us on Social media: Instagram, LinkedIn, Facebook, Flickr, and Twitter.
UPCOMING VC EVENTS
May 16-18 SALT New York
May 16-18 ACA 2023 - The Summit of Angel Investing
May 16-27 Cannes Film Festival, Cannes, France
May 18-20 Bitcoin, Miami, USA
May 19-20 Glitch Korea, Seoul, South Korea
May 24-25 Next Block Expo, Warsaw, Poland
May 25-28 Monaco Grand Prix, Monaco
Mat 27-28 Bitcoin Bucharest 2023
May 28-29 Emerge Dubai, UAE
May 30-Jun 4 Tech Week San Francisco, US
May 30-Jun 2 Innovex, Taipei, Taiwan
May 31-Jun 2 GITEX Africa, Morocco (Apply for Investor Pass)
May 31-Jun 1 Dublin Tech Summit, Dublin, Ireland
Mat 30-Jun 4 SF Tech Week, San Francisco, US
Jun 5-Jun 11 LA Tech Week, Los Angeles, US
Jun 6-8 Money20/20 Europe, Amsterdam, Netherlands (€200 discount with VTN200)
Jun 7-9 South Summit, Madrid, Spain
Jun 12-13 SIGEF2023, Women Summit, Malta
Jun 13-14 Bloomberg New Economy Forum, Morocco
Jun 14-17 Viva Technology, Paris (30% discount with FP3UHDUJ4)
Jun 15-18 Art Basel, Basel, Switzerland
Jun 19-23 Cannes Lions, Cannes, France
Jun 25-25 Silicon Valley Comes to Tel-Aviv
Jun 26-29 Collision, Toronto, Canada
Jun 28-30 Blockchance, Hamburg, Germany
July 6-7 Block3000, Lisbon, Portugal
July 10-12 Block Down Portugal 2023, Algarve, Portugal (50% discount with VNTR50)
July 26 Bloomberg Sustainable Business Summit, Singapore (with VNTR Members access)
Sep 13-14 Token2049 Asia, Singapore
Sep 19-21 TechCrunch Disrupt 2023
Sep 20-21 DMEXCO, Cologne, Germany
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
Nov 13-16 Web Summit, Lisbon, Portugal
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
What every CEO should know about generative AI
Generative AI is evolving at record speed while CEOs are still learning the technology’s business value and risks. Here, we offer some of the generative AI essentials.
Amid the excitement surrounding generative AI since the release of ChatGPT, Bard, Claude, Midjourney, and other content-creating tools, CEOs are understandably wondering: Is this tech hype, or a game-changing opportunity? And if it is the latter, what is the value to my business?
CEOs have plenty of problems (at least 99…) that can kill their company, but a potential “down round” in valuation should not be one of them. For those who don’t know, the below image is of Stripe CEO who took a massive down round on Stripe’s valuation earlier this year - $95B → $50B.
At this point, we all know that valuation multiples have come WAY down - the average top 10 public companies were valued at 60x revenue in 2021 and have sunk to ~10x today.
After 18 Months, Your Investment Probably Isn’t Getting Marked Up
How markups can predict the outcome of a venture investment on a very short time horizon.
When you invest in a startup, one of two things is likely to happen: at some point, the startup investment will be marked up (i.e., raise a subsequent priced round at a valuation increase or exit at a gain, which we will call a “winning” investment), or it will be a losing investment and never get marked up. Of course, you don’t know which category your investment will fall into. If you did, you’d never make a losing investment.
However, the odds that an investment will be a winner decline with each passing month that the investment is not marked up. That’s because some fraction of winning deals get marked up with each passing month—while a losing investment is never marked up.
France looks to the UK for lessons on boosting business angels
As part of a relentless effort to turbocharge its startup ecosystem, the French government wants to triple the number of business angels backing early-stage startups. To pull this off, policymakers are looking for lessons from an unlikely source: the UK.
French officials want to adopt versions of two UK programmes, the EIS and SEIS, which provide early-stage tax incentives and have been credited with helping to make the UK Europe’s undisputed entrepreneurial leader.
The hope is that these proposals — which are still being firmed up, with a target of the 2024 budget — will encourage private investors to pump €3bn annually into startups and create 200k jobs by 2027.
US Investment In China Tech Scene Falls As Political Headwinds Strengthen
The strained tensions between the U.S. and China has affected nearly everything between the two superpowers — and venture capital and the tech startup ecosystem is no exception.
Just last month, it was reported President Joe Biden will sign an executive order to limit investment in sectors such as semiconductors, artificial intelligence and quantum computing in China by U.S. investors. The U.S. already has put a deeper restriction on exports of key American technologies to the country. However, even before any order is signed, tech investors in the U.S. seemingly already have backed away from The Red Dragon. This year is on pace for the lowest amount of dealmaking in China by U.S. investors in recent years, according to Crunchbase data. While 2019 and 2020 saw well over 300 investments deals in China, that number jumped to 426 in 2021 — when the venture capital market was at a fever pitch.
The IP Era’s Venture Capital Philosophy Has Poisoned Movies
Among so many heinous problems trickling down on our heads from the top of the film industry is that of intellectual property. It’s not that adaptations are new, but that the ability to make a living by creating anything else has only recently been destroyed. IP obsession has killed the mid-budget movie, it’s killed the movie star, and it’s coming for the rest of the industry. This is as much a problem for audiences as for filmmakers (at any level), and it all comes from the same place: Unchecked greed, and the familiarity with which we accept it. Tidy, consistent, sustainable profits—the kind of thing generated by movie studios that once offered a diverse slate of reasonably budgeted adult dramas, teen-date rom-coms, family films, and fence-swinging art movies—are a thing of the past for those in charge of the industry.
SoftBank mulls exit options as Vision Funds lose $39B
SoftBank's Vision Fund segment has filed a record loss of 5.3 trillion Japanese yen (around $39 billion) for the fiscal year ending March 31, and founder Masayoshi Son has said his company has switched to "defense mode," prioritizing exits over new investments. The report dwarfs the $27 billion loss posted a year ago, which at the time was attributed to a combination of falling tech stocks, rising inflation, interest rate hikes and the war in Ukraine. Many, if not all, of those issues remain factors that continue to batter the Japanese investment giant. The group, which reported an annual net loss of over $7.2 billion, also blamed rising tensions between the US and China and the failure of Silicon Valley Bank for worsening market conditions. Yoshimitsu Goto, SoftBank's CFO, said the group would be slowing down new investments and instead focusing on reducing debt and selling down assets: The firm was said to be selling early-stage VC unit SoftBank Ventures Asia in April. At the same time, Goto said the company remains ready to capture opportunities in the generative AI space.
The Acquihire Market for Early Stage Startups is Ice Cold. One Better Strategy? Announce You’re For Sale.
“Worst case scenario we’ll sell to a larger startup or public company for about ~$1.5m per engineer.” Yes, this was the ‘fallback plan’ for many team in the web2 era and they weren’t wrong. Especially in the early days of mobile/iOS engineering, if you hired strong technical talent into your early stage company, you basically created an acquisition outcome floor. I was on both sides of these transactions – buying startups for Google/YouTube and angel investing in high quality technical founders. Sometimes you’d even get lucky and receive stock in the acquirer, which was how I gained pre-IPO equity in high growth stars like Pinterest and Facebook.
"It’s difficult to raise Seed today, and those who succeed have to work harder for it"
"The slowdown in the industry is clear and proven. The number of funding rounds has fallen dramatically and so have the investment amounts. Early-stage companies find it difficult to raise Seed, and those that do succeed, have to work much harder for it. The rounds have become low and so have the valuations. This also applies to late stage companies, which raise at the same or lower valuations than the previous round. Unfortunately, as long as the situation continues like this, we will continue to see companies that will not make it through this period," said Adi Hoorvitch-Lavi, VP of Investments and Growth at Poalim Hi-Tech.
What Does Last Year’s IPO Class Have To Teach 2023’s Public Market Hopefuls?
Last year, tech IPOs slowed to a plodding walk. In 2023, they’re down to a crawl. The outlook for tech IPOs isn’t much livelier for the second half of this year either, with interest rates at their highest in 16 years and lackluster performance from last year’s IPO class further dampening enthusiasm for new public listings. However, there is a long list of high-growth companies that missed the 2021 IPO window and are waiting in the wings for the market to turn more favorable. If some of those companies decide to go public, they could help thaw the IPO pipeline. A large number of companies filed S-1 forms — the regulatory paperwork signaling an intent to go public — in 2021 and 2022, noted Tad Freese of IPO law firm Latham & Watkins in an email to Crunchbase News.
Venture Debt is Becoming a Key Growth Enabler for Indian Startups Amid Funding Winter
Due to the difficult economic environment, equity funding for growth and late-stage companies has dropped heavily, with Indian startups raising close to $800 million in venture debt last year. According to a report released by Stride Ventures, the amount of debt funding provided to Indian startups saw a considerable increase, rising by 2.6 times when compared to 2019, when the funding amount stood at roughly $281 million. "We see a growing demand for venture debt as startups look to optimise their capital structure and preserve equity for future rounds," said Apoorva Sharma, Managing Partner at Stride Ventures. "With the launch of our third fund, we're well-positioned to meet the unique debt requirements and global ambitions of Indian startups."
Greece sets dealmaking record, and other VC trends in Southern Europe
Venture dealmaking in Southern Europe has fallen since its peak in 2021, but some countries have fared better than others. So far this year, €1 billion has been invested across 271 deals in the region, according to PitchBook data. At its current pace, the annual total for 2023 is unlikely to surpass last year. While deal count and value fell overall with the downturn in 2022, a handful of countries set new records. Greece saw a 44% uptick in deals last year compared to 2021, while Italy's round count rose 2.6% over the same period. The small nations of Cyprus and Malta also registered a record number of deals in 2022 with gaming startup FRVR's $76 million round and crypto platform ZoidPay's $75 million deal among them. Spain still accounted for the majority of the region's VC activity with 658 deals last year worth €3.2 billion, including ecommerce delivery platform Paack's €200 million Series D and HR startup Factorial's $120 million Series C.
‘It’s going to get worse for banks’ — JPMorgan CEO on overregulation
The CEO of JPMorgan Chase — which recently took over failed First Republic Bank — believes there could be more pain ahead for United States banks if the Federal Reserve goes into crisis mode with overregulation. In a Bloomberg television interview on May 11, JPMorgan Chase Chair and CEO Jamie Dimon said he believes it's “going to get worse for banks” unless the Federal Reserve takes proactive measures beyond simply creating more regulations. In just the first few months of the year, three major U.S. banks collapsed — Signature Bank, Silicon Valley Bank and First Republic Bank. Dimon said that it’s “a supervision problem,” with the bank CEOs and board members the “people to blame,” as supervisors usually focus on if they are abiding by regulations.
Venture activity stays quiet in April; private equity pulls back from cannabis
Notwithstanding a headline-grabbing, $300 million round for ChatGPT innovator OpenAI LLC, the venture capital industry remains stuck in the doldrums. Global venture capital investment activity for every month of 2023 has fallen year over year so far, and April was no exception. The $15.74 billion raised in 959 funding rounds represented a greater than 61% decline from the global total of venture capital investments during the same month in 2022. Much like private equity, venture capital is still recovering from a serious case of whiplash. Rising interest rates and a worsening economic outlook put the brakes on investment activity in 2022, which suddenly decelerated from the record pace venture capital and private equity set in 2021. After peaking in December 2021, venture capital funding rounds have mostly trended downward.
Even In The Best Times Most Startups Will Fail: Here’s How to Beat the Odds Today
The last year has been frenetic and we will continue to see long-tail effects from recent events for some time. However, no matter the economic climate, most startups fail. For those that make it: What do they have in common, and how can first-time founders set themselves up for success now? According to Wilbur Labs’ founder survey, which we conducted in December 2020, startups fail due to a lack of resources, inadequate planning and loss of focus. While the current environment may feel demotivating, the good news is that even though market conditions change, what makes for a successful startup does not. Here’s how to beat the odds.
PE defense, aerospace investing falls despite global conflicts, rising travel demand
The defense and aerospace sector has seen a decline in private equity investment since 2021, even as the world sees a surge in defense spending alongside recovering demand for air travel. Deal activity peaked in 2021, with Carlyle's $4 billion acquisition of Ireland's aircraft leasing company AMCK being the largest deal announced that year. But deal value fell by more than half in 2022, and has been similarly slow in 2023. Over the past five years, however, the largest deal was Advent's $5 billion take-private of UK-listed Cobham, which was followed by its purchase of sector peer Ultra Electronics by Advent-backed Cobham for $3.6 billion in a bolt-on deal. The deal was completed in 2022 after Ultra Electronic made concessions in response to security concerns raised by the UK government.
Invest in Europe's “Investing in Europe: Private Equity Activity 2022” research has shown that 801 European private equity, venture capital, and growth funds raised 30% more in 2022 compared to 2021 (€170 billion in 2022 compared to €131 billion achieved in 2021).
Analysed separately, Venture capital funds raised a record €23 billion, while buyout funds reached a new high of €111 billion, and growth funds had their second-best year with €21 billion raised. Speaking of investments, with €130 billion in 2022 a decrease was recorded compared to 2021. However, these results also represent a 30% growth compared to the average of the previous five years. Such data emphasise the step-change in private capital investment taking place across Europe.
Music Albums as an Asset Class
The most significant advantage of NFTs in the music industry is the ability to grant unique ownership of digital content. With NFTs, artists can issue limited edition digital albums that have unique ownership and can be sold for a premium price. This enables fans to own exclusive digital content and gives artists an additional revenue stream. As a result, musicians may start to produce music that is more geared towards creating one-of-a-kind pieces that fans will want to own and collect. The traditional music industry model has seen artists receive a small portion of the revenue generated from music sales.
Q1 VC investment rises, with headwinds increasing for 2023
Two large deals fueled total VC dollars invested in Q1, while deal count dipped amid continued economic uncertainty and recent bank shakeups.
While VC investment in Q1 2023 improved by 37% over Q4 2022 — rising to $44.1 billion compared to $32.3 billion for Q4 2022 — recent bank failures and a weaker economic environment have dampened the overall outlook for the remainder of 2023.
Venture capital gets behind international education loans
The partnership is part of a growing investment portfolio from Goldman Sachs in education products, which already includes Prodigy Finance, which raised over US$2.1 billion in seven rounds of investment from funds like the Canada Pension Plan. Growing venture capital investment in fintech and lending in the education sector is attracting a wide range of new and existing players into the market, looking to diversify their income streams. Martin Baseri, one of the founding partners of ApplyBoard, recently attended the ASU-GSV conference promoting the imminent launch of a new loan-comparison platform called Passage, expected to come online later this year and attract investors. Increased outbound student mobility, especially from India to the major anglophone destinations has been fuelled by improved access to loans to pay for tuition fees and expenses.
CoFoundersLab is serious about helping workers caught in the tech industry’s mass layoffs.
The entrepreneur networking and skill-building site is offering free premium memberships to laid-off tech employees. “F’ Da Man,” the website says. “You’ve built it for them. Now build it for yourself!” Close to 140,000 workers at U.S.-based tech companies have been laid off in mass job cuts so far in 2023, per Crunchbase’s Layoff Tracker. The industry continues to reel from falling valuations, rising interest rates, a shuddering economy and troubles in the banking sector. Many large tech companies are also contending with shifts in consumers’ online behavior post-pandemic and paring their bloated employee rolls from years of frenzied hiring.
Crypto VCs made $2.6B worth of deals in the first quarter of 2023
While the crypto space suffers through a bear market, venture capital (VC) firms are still making deals in 2023, demonstrating that the space is alive and well despite the “crypto winter.” According to PitchBook’s Crypto Report for the first quarter of 2023, crypto companies raised $2.6 billion across 353 investment rounds. While it shows the space is still active, it’s evident that it’s not as strong as it used to be. The report revealed an 11% decrease in quarter-on-quarter deal value and a 12.2% decrease in total deals. In addition, the quarter also recorded the lowest amount of capital invested in the space since 2020. The report also noted that valuation trends have been mixed. Seed rounds are up 33.3%, and late-stage rounds are up 209.2% for the quarter compared with the entire year of 2022. However, early-stage rounds are down by 16.7%.
The global Venture Capital Investment Market size reached US$ 233.9 Billion in 2022. Looking forward, Global Market Vision expects the market to reach US$ 708.6 Billion by 2030, exhibiting a growth rate (CAGR) of +21% during 2022-2030. Venture capital investment is defined as an at-risk equity investment that enables investors to acquire equities of companies with perceived long-term growth potential. It relies on technical or managerial expertise to increase the growth of small startups and improve the operational efficiency of employees. It is provided by well-off investors, investment banks, and various other financial institutions to companies and startups with exceptional growth potential or organizations that have displayed rapid development and are inclined towards expansion strategies.
PE firms stick with enterprise software bets
Sales of PE-owned enterprise software companies got tangled up at the start of 2023, hitting the lowest deal level since Q2 2020. Between the decline in technology valuations, a dormant market for new listings and the scarcity of cheap deal financing, PE firms exited only 23 US-based enterprise software companies at a combined value of $4.2 billion in the first quarter. In Q2 2020, PE exits recorded $3.3 billion across 16 deals, according to PitchBook data. PE sales in the sector fell off a cliff in 2022 and have remained subdued this year. A frozen IPO market and the difficulty in securing financing for large transactions kept tech valuations at lower levels, prompting more sellers to hold on to assets longer, said Derek Hernandez, a senior emerging technology analyst at PitchBook. "Lenders, VC and PE investors, and corporates who are involved in these transactions had a higher cost of capital and weren't handing out cash the same way they did before," he said. "Because of that, you end up with smaller transactions on average."
Fly the Aircraft First: The Potentially Paralyzing Effects of Fundraising
Startup CEOs can learn an important lesson from pilots. Specifically, to always fly the aircraft first. Sounds obvious, like maybe you shouldn’t need to remind pilots to do this, but here’s what they teach them
Interest rates are the Federal Reserve's go-to treatment for an ailing, lethargic economy.
But the Fed's meds have a curious side effect – they're a shot of adrenaline for the venture market.
Low interest rates jolt the heart rate of venture capital, driving a manic frenzy of transactions and funding for startups.
On the other hand, high interest rates kill the vibe, causing deals to dwindle and prices to plummet.
Venture Capital Investments In Family Offices: Strategies For Turbulent Markets
Precursors Charles Hudson wants to be cautious but not too cautious. The venture capitalist was at an AI confab last month, but he has not yet made a new AI investment during the current hype cycle.
He’s one of many investors who have seen an inflection point take over a sector before, bringing in boatloads of capital, new founders and, at times, speedy and FOMO-driven deals. Historically, Hudson hasn’t minded sitting out. “With crypto, for example, I was OK being at almost zero,” he said. “I don’t think I’m OK with zero as the answer for AI. The question is where and how.”
VC investments in European projects rise in Q1 2023
Venture capital investment into European crypto projects increased almost ten times in the past year, going from 5.9% in the first quarter of 2022 to 47.6% in Q1 of 2023.
Circle Director of Research and Policy Patrick Hansen noted that this increase resulted from the region’s regulatory clarity following the European Union passage of the MiCA law.
The European Parliament passed the Markets in Crypto Assets Law (MiCA) in April but will not apply until July 2024. The law — which has garnered large interest from the crypto community — would allow the E.U. to have a unified approach to crypto asset regulation across 27 member states.