VNTR Capital News May 14th, 2022 - News, Events, VC Reads
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VNTR CAPITAL COMMUNITY NEWS
We partnered with CoinsPaid, CoinsPaidMedia, and Vauban to host our upcoming investor breakfasts and provide complimentary access to VNTR investors community members, and approved guest investors.
We are hosting 3 additional VNTR Capital breakfasts this month to connect and network with investors:
May 24th - 1st Breakfast in Davos during the World Economic Forum
May 28th - 1st Breakfast in Monaco during F1 Monaco Grand Prix
Want to co-host VC-related events, share events, or sponsor, please respond to this email or Telegram @byuric to discuss collaboration opportunities.
CoinsPaid provides a B2B payment gateway that supports more than 30 cryptocurrencies and 20+ fiat currencies, a SaaS solution that helps businesses to start their own digital currency payment business, exchange, and OTC desk. For B2C consumers the company developed its own hot wallet that allows paying for goods and services in crypto with a 0% fee.
In Q2, 2022 CoinsPaid crossed the $1 billion processing per month mark and became one of the biggest crypto processing services worldwide.
CoinsPaid launched its own utility token - $CPD that fuels the CoinsPaid ecosystem. $CPD holders receive up to 20% discounts on fees for staking and up to 50% discounts on fees that are paid in $CPD.
CoinsPaid Media offers the latest news and valuable insights from the crypto world.
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Vauban is the easiest way to launch & run your venture investing. An all-in-one integrated solution to form syndicates, VC funds, & co-investment SPV programs that are built for the next generation of global venturers. From fundraising to exits, Vauban provides an automated back-office that handles the legal, banking, investor onboarding, and administration, which allows our clients to focus on what matters: finding the next unicorn & building investor relationships. Vauban has facilitated over $1bn of capital invested in companies such as Revolut, Bolt, and Airbnb.
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UPCOMING EVENTS
May 19-20 - Latitude 59, Tallinn, Estonia
May 20-22 - DLD Munich, Germany
May 23-24 - Investment USA 2022 New York
May 22-26 - World Economic Forum Annual Meeting Davos
May 24-27 - Wolves Summit, Wrocław, Poland
May 26 - VNTR Breakfast New Delhi, India
May 28 - VNTR Breakfast Monaco Grand Prix
June 1-2 - Emerge Conference, Yerevan, Armenia
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 8-10 - South Summit. Madrid, Spain (30% partner discount)
June 20-23 - Collision, Toronto, Canada
July 19-20 - Venture Summit West, Silicon Valley
Check out VNTR's upcoming events
VC READS
VCs hit with 'fundraising pain' as LPs deal with venture overexposure
Venture capitalists started 2022 on pace for the industry to have its largest fundraising year on record, as an unprecedented number of firms hit the market to raise new and, in most cases, larger vehicles. Almost all funds, aside from the top 10 to 20 premier firms, are having a much harder time securing their latest vehicles, in large part because limited partners are overwhelmed by the sheer number of funds seeking capital this year, investors say.
Bitcoin and cryptocurrencies have crashed further overnight, dropping to levels not seen since the crypto market began surging in late 2020 and wiping away almost $1 trillion worth of value in a month as a serious "ripple" warning comes into effect.
Tech Layoffs And Hiring Freezes Appear To Accelerate
While earlier in the year, much of the talk in the tech sector focused on falling valuations, dropping stock prices, and slower funding rounds, a lot of chatter over the past two months has been around something that hits much closer to home for many people.
Many tech companies are slowing or outright freezing hiring, while others are going a step further and laying employees off—and the pace seems to be accelerating.
Just since April, companies ranging from personalized video platform Cameo to Facebook parent. Meta is altering their employment plans. Cameo is reportedly cutting 80 employees—25 percent of its workforce–per The Information, while Meta is freezing hiring through the end of the year, according to Business Insider.
The Week’s 10 Biggest Funding Rounds
Climate change and biotech ruled the list this week, as more traditional enterprise software solutions—once a favorite of VCs—were hard to find. However, the biggest bet was an extension of a round from a marketplace for retailers, and one of three rounds of a quarter-billion dollars or more this week.
Softbank To Become More Selective In Investing In Another Sign The Good Times Are Over
SoftBank, an investor in tech giants like Didi and Uber, announced a loss of $27.7 billion on investments in its Vision Fund for its just-ended fiscal year and told investors there will be a “stricter selection of investments” for the new year. In reporting earnings for its fiscal year ended March 31, SoftBank revealed a net loss for its Vision segment of $20.5 billion, compared to a profit of $31.4 billion for the previous year. The dramatic reversal forced SoftBank Chairman and CEO Masayoshi Son to tell investors there will be stricter investing criteria moving forward and a more defensive posture.
Tiger Global, hit by $17B in hedge fund losses, has nearly depleted its latest VC fund
Tiger Global is having a year. According to a new report from Financial Times, the low-flying-yet-seemingly-ubiquitous 21-year-old outfit has seen losses of about $17 billion during this year’s tech stock sell-off. FT notes that’s one of the biggest dollar declines for a hedge fund in history. As shocking, per FT, according to the calculations of a fund of hedge funds run by the Edmond de Rothschild Group, Tiger Global’s hedge fund assets have been so hard hit that the outfit has in four months erased about two-thirds of its gains since its launch in 2001. (Ouch.)
The question is whether that trouncing will impact the firm’s venture business, which — like that of many other venture businesses — has ballooned rapidly in recent years. In 2020, the firm closed its twelfth venture fund with $3.75 billion in capital commitments. Early last year, it closed its thirteenth venture fund (titled XIV for superstitious reasons) with $6.65 billion before closing its newest fund, fund XV, with a massive $12.7 billion in capital commitments in March of this year.
The best-case and worst-case scenarios for the VC market
Tech companies are having a rough month. Startups are announcing layoffs, valuations have dropped in both public and private markets, and venture capitalists are doing fewer deals.
So yes, the boom-time vibe is over, and tech Twitter is replete with tips on tightening the belt. But it’s easy to overstate the shift.
VCs still have an unprecedented amount of money to invest, and eventually, they’ll get back to investing it. If there is a recession, it may well be a mild one—not a cataclysmic event like the global financial crisis of 2008. And the demand for tech from consumers and businesses remains strong. It’s easy enough to imagine a “soft landing” for tech rather than the historic downturn some observers are warning about.
Yellen Call for 'Responsible' Crypto Innovation Is Right
Janet Yellen, recently speaking at American University, made erudite, sensible remarks about the right approach to regulate digital currencies and assets, innovation and the policies surrounding them. The U.S. Treasury Secretary noted the sector's explosive growth from $14 billion to $3 trillion in just five years and its origins, even touching on the original Bitcoin white paper’s solution for preventing the same digital assets from being spent twice, a key criticism of systems preceding Bitcoin. Yellen said that “the government's role should be to ensure responsible innovation – an innovation that works for all Americans, protects our national security interests and our planet and contributes to our economic competitiveness and growth. Such responsible innovation should reflect thoughtful public-private dialogue and take account of the many lessons we've learned throughout our financial history. This sort of pragmatism has served us well in the past and I believe it is the right approach today."
Startup ecosystem joins forces to empower innovative youth in Ukraine
Many Ukrainians have contributed significantly to famous innovations in the global startup scene. Jan Koum, Whats app co-founder, Max Levchin PayPal co-founder, as well as Grammarly and People.AI co-founders were all raised in Ukrainian families. Before Russia invaded Ukraine, the country had a thriving Startup ecosystem. Kyiv had become a European hub according to Startup Ecosystem Rankings 2020 by StartupBlink, which ranks the startup ecosystems of 100 countries and 1000 cities. Kyiv is the home base of over 1000 successful startups and product companies according to the official website of Ukraine. Many Ukrainians have contributed significantly to famous innovations in the global startup scene. Jan Koum, Whats app co-founder, Max Levchin PayPal co-founder, as well as Grammarly and People.AI co-founders were all raised in Ukrainian families.
Luna's Collapse Shows DeFi's Dire Need for Technical, Regulatory Controls
A "Black Swan" event is unpredictable beyond what is normally expected of a situation, is obvious in hindsight, and has potentially severe consequences. Examples include the subprime crisis and subsequent meltdown of the banking sector in 2008 and the market capitulation following the start of the global pandemic. In the financial markets, or in any industry for that matter, Black Swan events are mostly known as negative. Still, history shows that these events are also a pivotal point of positive systemic change. I believe that the same process will apply to this event. The downfall of UST as an algorithmic stablecoin is a Black Swan event and should never have happened. It was a project worth over $18 billion – practically too big to fail. Stronger regulatory controls overseeing the project’s automated trading system could have mitigated the situation a long time ago.
TerraUSD ‘stablecoin’ delisted from crypto exchanges
TerraUSD, the “algorithmic stablecoin” whose collapse prompted a multibillion-dollar selloff across crypto markets, has turned off its blockchain and been delisted from major exchanges, in effect shuttering the project for good. However, the wider impact of the project’s failure appears to have been constrained. TerraUSD was once valued at more than $40bn (£33bn). Shockwaves swept through cryptocurrency markets on Thursday as a tether, the largest stablecoin and a foundational part of the digital asset ecosystem, broke its peg to the dollar. On Friday, however, tether was back to within a fraction of a percent of its $1 peg and has successfully processed more than $3bn worth of withdrawals without issue.
Fintech at the forefront of 2022’s Hottest Startups list
Fintech has proven anew that it is a force to be reckoned with in Singapore’s startup economy by being able to amass approximately $5.40b (US$3.94b) funding in 2021, and dominating the eleventh edition of Singapore Business Review's Hottest Startups List. In this year's list, the vertical took over eight of the 20 spots, led by Spenmo which secured $45.70m in its latest funding, followed by Syfe ($40.33m), Volopay ($39.59m), Endowus ($35m), CyberHash ($26.96m), Xen Capital ($10.08m), Jenfi ($6.3m), and STACS ($4.85m). Capital not only poured into these eight fintech ventures but also into the entire Singapore startup economy as they gathered $11.2b in funding in the first nine months of 2021 alone, which was already double the amount raised for the entire 2020 at $5.5b, according to Enterprise Singapore.
Five Mid-Year Predictions for Web3
The past three days may be the most eventful in web3 ever. Crypto assets have fallen by half or more, following their software counterparts. The attack on an algorithmic stablecoin’s peg harkens back to Druckenmiller breaking the Bank of England.
All the tumult in the crypto markets will catalyze change. Here are my five mid-year predictions for the major evolutions that arise in response.
Where will venture capitalists look next?
Never has so much money poured into venture capital.
In the first quarter of 2022, US VCs raised more money for new funds than in the entirety of 2019, according to Pitchbook. But those new funds didn’t translate into more investments into startups. Instead, global VC investment fell sharply in the first quarter, down from record highs the year before.
A Framework for Navigating Down Markets
The market has taken a downturn, and every other blog or tweetstorm seems to offer the same general advice: conserve cash, extend the runway, and shift from focusing on growth to focusing on efficiency. We’ve advised many of our later-stage growth companies through market ups and downs, and we’ve realized that, when the market dips, founders crave advice that goes beyond the platitudes and provides a tangible framework to quantify the magnitude of the change in valuations and what it means for their next round and charting their future course.
In this post, we go through the diagnostic framework that we use when we sit down with founders: reevaluate your valuation, understand your burn multiples, and build scenario plans.
A venture firm gets rewarded for selling at the market top
It used to be that venture capitalists couldn’t sell their stake in a portfolio company before it sold or went public without raising questions about the outfit’s prospects. As startups began staying private longer, VCs and management teams grew more comfortable with selling some of their holdings to new investors, but many VCs are likely right now wishing they’d sold even more over the last year or so. One firm that’s happy it pulled the trigger on two of its own deals is YL Ventures, a 15-year-old, U.S.-Israeli venture firm that specializes in seed-stage cybersecurity investments and that just closed its newest and biggest fund to date with $400 million in capital commitments. In March 2021, when the now five-year-old cybersecurity asset management startup Axonius was raising a $100 million round at a $1.2 billion valuation, YL Ventures — the outfit’s first investor — sold its stake for $270 million to ICONIQ Growth, Alkeon Capital, DTCP and Harmony Partners.
This Silicon Valley-based VC tells us why falling Indian startup stocks are a boon in disguise
Months before the massive Black Friday selloff on May 5, listed stocks of former startups like Paytm, Zomato, Policybazaar, and Nykaa have been losing steam. That could have made startup investors jittery but not Nazar Yasin, the founder and managing director of San Francisco-based VC, Rise Capital. It invested in Latin American and African companies, along with Indian startups like the apparel brand Hopscotch; investment app TradeX, and fintech company SaveIn. Yasin believes that the huge market correction in startup valuations, a global phenomenon, is actually a boon in disguise. “In 2021, valuations went to unsustainable levels. We saw some publicly traded internet software companies trade at PEG (price to earnings to growth) ratio of 4-5X implying that they would grow at a 10-20% rate forever. That can never happen,” Yasir told Business Insider India, in an interview.
The Unicorn Report: A New $100 Billion Valuation Boosts The Board to $4.5 Trillion
Last month, 35 new unicorn companies joined The Crunchbase Unicorn Board, collectively adding $57 billion in value to the board and $10 billion in equity funding raised.
But a single company already on the board added almost twice that much - another $100 billion - in value to the board, all by itself. That was Chinese fast fashion company Shein, which raised between $1 billion and $2 billion in funding at a $100 billion dollar valuation last month, according to the Wall Street Journal, making the company the third most valuable company on the board.
The Market Minute: Is Investing Early In A Startup Always Best?
The conventional theory in the world of venture capital is that investing as early as possible produces the greatest returns. But that’s not always the case, according to a new report by Manhattan Venture Partners, an investment firm focused on late-stage private companies.
In fact, according to the firm’s analysis of annualized returns on pre-IPO and IPO investments over the past decade, later-stage investments outperformed early-stage investments. So while there are bragging rights that come with being one of the earliest investors in a company like Snowflake, Uber, or Airbnb, you’re not necessarily making more money than investors who arrived later to the game.
Canadian venture capital activity reaches record high in the first quarter
Venture capital activity reached an all-time high in the Canadian market, rising to US$3.5 billion in Q1 2022 from US$3 billion in Q1 2021, according to KPMG's Venture Pulse report.
The number of deals dropped to 213 deals, down from 276 deals in the same quarter last year.
Canadian VC firms raised US$824 million in Q1 2022 as investors grappled with uncertainty driven by Russia’s invasion of Ukraine, rising inflation and interest rates, supply chain problems, and a lingering Covid-19 pandemic. The bulk of funding went to Toronto-based software firm 1Password, which raised US$650 million in a Series C round.
The wider global VC market saw deal value drop to US$144.8 billion in the first quarter after a record-breaking 2021, as investors slowed deal-making amid growing global uncertainty.
Rise in PE-VC investments, Asian economy growth to ensure capital for Indian entrepreneurs
The private equity and venture capital investments continued to grow at a breakneck pace in January 2022, with a year-to-year growth of three times. This show of confidence by the PE-VC industry is quite significant, coming in an environment of rising complexities and uncertainties. It indicates the underlying strengths of the rising entrepreneurial ecosystem in India and the deepening symbiotic relationship between entrepreneurs and PE-VC investors.
This decade is going to be a decade of rapid changes in the world economy and order. The first critical element is the direction change in the Treasury yields of a developed market. It was in September 1981 when the USA 10-year government bond reached an all-time high of 15.82 percent and since then it continued to decline for almost forty years
As Markets Gyrate, Startup Investors Search for Success Where 'VC Meets D.C.'
Get ready for a seismic shift in the venture capital (VC) industry. Amid the downturn in the public markets, the swoons in the Nasdaq (down more than 20% YTD), the PYMNTS FinTech IPO Index is down even more, off a staggering 35% YTD through last year. That index could be used as a proxy for the new and emerging technologies tied to the great digital shift and the early-stage capital committed for companies that ultimately went public (which is a typical VC exit strategy). Call it the great fizzling. “VCs were getting greedy,” SineWave Ventures Founder/Managing Partner Yanev Suissa told Karen Webster, and backing funds worth billions of dollars presupposes that there would be 300 great companies to invest in. Executives in the startups themselves are sweating a bit, said Suissa, because they need the capital to underpin growth for the next two years without having to tap expensive financing options.
To Survive This Cycle, Think Like A Cheapskate: Down Is Good
To understand investor types, sometimes it’s helpful to think about shopping styles.
First, there’s the bargain hunter. This familiar type is a patron of thrift stores, discount chains, and garage sales who heads straight to the sales rack at traditional retailers. In the investment world, such a person might gravitate to private equity turnaround plays or value stocks.
Then there are the connoisseurs. This type might spend countless hours researching the best TV, laptop, or patio furniture set. While the price may be a consideration, it’s not the primary driver for the connoisseur, who gives great credence to the notion that you get what you pay for. As investors, such types lean toward venture capital or high-tech growth stocks.
73 of India’s 100 unicorns have at least one founder from IIT
In his book, The Golden Tap, serial entrepreneur Kashyap Deorah described how Lee Fixel, a former partner with Tiger Global, used to filter potential startups on the basis of the founders' caste and JEE (advanced) ranks. Only candidates with high JEE (joint entrance examination) ranks make it to India’s premier technical institutes -- the central-government-owned Indian Institutes of Technology, commonly known as IITs. “Fixel preferred North Indian Marwari Banias with single or double-digit JEE ranks who were young and first-time entrepreneurs. An analysis had probably revealed that such entrepreneurs were the best performers in the companies Tiger liked funding,” Deorah had written. Fixel had led negotiations for funding rounds for Tiger Global in unicorns like Flipkart and Ola, which were among the New York-based hedge fund’s largest bets in India.
Latin women in the US are the most unsupported founders
Historically, the venture capital industry has not set a good example for diversity, equity, and inclusion. Angélica Fuentes Téllez, businesswoman and capital investor, points out that ensuring equality of opportunity for entrepreneurs, regardless of race, ethnicity, or gender, is one of the main challenges in the industry. For Latin Women entrepreneurs, for example, one of their main barriers in the United States is getting the access to raise capital for their venture.
According to data from Crunchbase, in 2021, startups founded by women, or led exclusively by female teams, raised only 2.3% of that year's venture capital, with no exact figure on how many of those were Latin women.
By comparison, startups with mixed-gender co-founders raised 11.7% of the funds. However, it stands out that 86% of the venture capital went to male startups. Although the panorama indicates that more and more women entrepreneurs are accessing mega-rounds of financing at the macro level, Angélica Fuentes Téllez, a defender of gender equality in the business field, highlights that the financing figures are disproportionate, leaving Latina entrepreneurs behind.
5 VC firms for early-stage startups in India
In the last decade, the business landscape in India has seen startups across sectors mushrooming and blooming. New technologies, innovations, and investments have left the ecosystem buzzing, creating employment and inspiring more entrepreneurs to make the big leap, and India is now the third startup ecosystem in the world after the US and China.
The year 2021 was a watershed year for private equity (PE) and venture capital (VC) investments in India. In 2021, Indian startups raised a record level of funding of $42 billion across 1583 deals, and 42 startups joined the unicorn club. Seed-stage or early-stage funding alone crossed $1 billion in India. However, going from a disruptive idea to a successful startup is not an easy task - from founders rolling up their sleeves to investors believing in their mission - it’s a journey of will and willpower.
Apple, Google, and Microsoft are about to make passwords a thing of the past
What if you never had to type in a password again? Imagine. An international day of celebration. Children dancing in the streets. Soldiers laying down their arms and hugging tearfully across the battlefield. Or, at least, a mild improvement in your daily life. That’s what Apple, Google, and Microsoft are offering, with a fairly rare triple announcement that the three tech giants are all adopting the Fido standard and ushering in a passwordless future.