VNTR Capital News May 21st, 2022 - News, Events, VC Reads
Hello friends,
Happy Saturday! Have a great weekend!
Scroll down to view Venture Capital news, upcoming VC-related events, and VC news/reads.
VNTR CAPITAL COMMUNITY NEWS
We are leaving for WEF Davos tomorrow to attend side events related to Venture Capital and crypto. We will host our first VNTR investors' Breakfast in Davos on May 24th (sold out). If you are in Davos, let's meet and share this experience together.
On May 27th we will move to Monaco to attend the Monaco Grand Prix and host our first VNTR Investors Breakfast in Monaco on May 28th where we will learn about the innovation in the South of France.
The third VNTR Investor's Breakfast in New Delhi (sold out) will also be hosted this week on May 26th.
VNTR breakfasts are complementary to active investors thanks to the support of our partners:
CoinsPaid - Bitcoin payment processing and crypto wallet for businesses
CoinsPaidMedia - The latest news and valuable insights in the crypto world.
Vauban - The easiest way to launch your funds and SPVs.
Ampere - Crypto neobank uniting banking and crypto for SMBs in the UK and Europe.
We scheduled our June Investment Committee for June 1st where we will host 2 preselected startups to present their ventures. All the companies are referred by active VNTR community members
What is the plan for June? We will host VNTR events in Paris, London, and Berlin.
RSVP to Upcoming VNTR Capital Events
Want to co-host VC-related events or sponsor, please respond to this email or Telegram @byuric to discuss collaboration opportunities.
VNTR Capital Investors Community is growing with 150+ active VCs and angels who joined to grow as an investor, co-invest, share deal-flow, support each other and attend online and offline events together. We collaborate via online groups on Telegram and events.
UPCOMING EVENTS
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 26-28 - Take Off, Baku, Azerbaijan
May 28 - VNTR Breakfast Monaco Grand Prix
May 31 - Allocate 2022, London, UK
June 1-2 - Emerge Conference, Yerevan, Armenia
June 2 - Sifted Sessions Viena
June 6-9 - AIBC Americas, Toronto, Canada
June 7-8 - Arctic 15 Startup, Helsinki, Finland
June 7-9 - Money 20/20 Europe
June 9-12 - Central Asian Venture Forum, Almaty, Kazakhstan
June 9-12 - Consensus 2022, Austin, Texas
June 8-10 - South Summit. Madrid, Spain (30% partner discount)
June 15-18 - Viva Technology, Paris
June 20-23 - Collision, Toronto, Canada
June 23-24 - MBAN Summit 2022, Kuala Lumpur, Malaysia
July 13-14 - Unchain, Oradea, Romania
July 19-20 - Venture Summit West, Silicon Valley
Oct 5-6 - Sifted Summit, London, UK
Nov 1-4 - Web Summit, Lisbon, Portugal
Want to submit VC-related events, please respond to this email or Telegram @byuric
Check out VNTR's upcoming events
VC READS
Warren Buffett Spends Big as Stock Market Sells Off
The stock market’s selloff has been bad news for most investors. Not for Warren Buffett and his team. Mr. Buffett’s Berkshire Hathaway Inc. has used the slump as an opportunity to increase spending on stocks, deploying tens of billions of dollars the past couple of months after ending 2021 with a near-record cash pile. The Omaha-based company bought 901,768 shares of Occidental Petroleum Corp. last week, according to a regulatory filing. The move makes Occidental, in which Berkshire began buying shares in late February, one of its 10 biggest holdings. In the past few months, Berkshire has also boosted its stake in Chevron Corp.; placed a merger-arbitrage bet on Activision Blizzard Inc; bought shares of HP Inc., Citigroup Inc., Paramount Global, and Ally Financial Inc; and added to its position in Apple Inc., which remained its biggest stockholding. Citi, Paramount, and Ally shares all jumped early Tuesday, outperforming the S&P 500, following the disclosure of Berkshire’s purchases.
Y Combinator Warns Startup Founders Of Economic Downturn: ‘Plan For The Worst’
Startup accelerator Y Combinator is the latest investment firm to warn the good times may be coming to an end for startups and the venture market. “No one can predict how bad the economy will get, but things don’t look good, ” YC wrote in a letter sent to its portfolio founders this week titled “Economic Downturn.” The contents of the letter were first reported by TechCrunch. “The safe move is to plan for the worst,” the accelerator wrote. The letter comes just a week after SoftBank announced it would become much more selective in investments after it announced a loss of $27.7 billion on investments in its Vision Fund for its just-ended fiscal year. Earlier this year, reports emerged that large crossover firms such as Tiger Global and D1 Capital also were pulling back on late-stage investments. The venture market has already shown some softness, falling quarter to quarter for the first time in Q1 2022.
Tiger Cubs and the Danger of Hedge Funds Buying Too Many Unicorns
Last year, when the tech sector was all the rage, hedge funds raced to private markets, writing million-dollar checks in minutes, to get exposure to the next generation of unicorns before anyone else. As the Nasdaq selloff pummels their portfolios, it’s worth asking what their investments are worth now and if they have any second thoughts.
The most prominent crossover investor — industry jargon for hedge funds that also do venture capital — is Chase Coleman’s Tiger Global Management LLC. The firm’s public stock positions fell from $46 billion at the end of 2021 to just over $26 billion as of March.
Sequoia postpones close of $2.8 bn India, SEA fund amid probe into portfolio firm
Sequoia Capital has postponed the closing date of its $2.8 billion India and Southeast Asia (SEA) fund on the back of alleged financial irregularities and corporate governance misses at some of its portfolio firms, people in the know said. The move was communicated to Sequoia’s limited partners (LPs), or sponsors in the fund, through an email. ET has reviewed the contents of the email. “All LP subscription documents have been received. However, during the past weeks, shareholders in a company portfolio have received information about potential misconduct, requiring investigation. Given these events, we have decided to postpone the close date of the Funds. We will provide you with an update when our work is complete,” it said.
Top 10 Crypto Data and Research sites investors should know
Firstly, there are several cryptocurrencies in the market and most of them are declining in value. Different cryptocurrencies were created from different perspectives. So, it is essential on behalf of the investors to understand these distinct perspectives and invest accordingly, to get the desired return on investments. There are several crypto websites over the internet that provide information regarding the current state of the crypto market, how popular cryptocurrencies are performing, and which are the biggest gainers and loss-bearers of the market. There are also crypto research websites that can provide accurate information behind the formation of specific crypto assets so that investors can make informed decisions and invest according to their desired results. But investors should know that there are also some crypto information sites that are fake and give wrong information to the users.
Introducing the 2022 State of Crypto Report
A lot has changed in the state of crypto since we started investing in the area nearly a decade ago. This report is the first of what will be an annual overview of trends in the crypto industry, shared through the a16z crypto vantage point of both tracking data and across the countless entrepreneurs and builders we meet. It’s for anyone who seeks to understand the evolution of the internet, and where we are on the journey towards a decentralized, community-owned-and-operated alternative to the centralized tech platforms of web2 – especially as it touches creators and other builders. The top themes are distilled into five summary takeaways below, but be sure to dig into these 50+ slides (full deck for the 2022 State of Crypto Report available for download below); be sure to also sign up for the a16z crypto newsletter to continue getting insights as well as updates about upcoming resources.
Meet The 9 Newcomers To Join The Emerging Unicorn Board In April
Last month, nine companies joined The Crunchbase Emerging Unicorn Board, a curated list of global private companies on the path to achieving unicorn status. The board currently lists 305 companies, each with a disclosed valuation of $500 million or above, but less than $1 billion. The current cohort has altogether raised $62.6 billion and is collectively valued at $207 billion.
Of the nine newcomers to join the board, three each hailed from the United States and India, and one each from Israel, Brazil, and the U.K. Fewer companies achieved emerging unicorn status in April than in March, however, when 19 companies joined the board.
Analysis: Zombie unicorns - Indian startups go from feast to famine
The valuation of Meesho, the Indian e-commerce rival of retail giant Amazon, more than doubled last year to $5 billion, after marquee investors such as SoftBank and Fidelity pumped in hundreds of millions of dollars. They aimed to ride a boom in India's tech startups, which raised a record $35 billion in new funds in 2021, but the tide has since turned, as corporate governance concerns loom large for investors facing a new uncertainty in global markets. "We haven't seen a slowdown like this in at least five to six years. It is going to be brutal," said Anand Lunia of venture capital firm India Quotient, an investor in more than 70 startups since 2012.
"I expect to see a lot of zombie unicorns. Companies which became unicorns but have no business models have stopped hiring - they are not dying, but will become irrelevant."
Managing volatility ahead of clarity on the 3Rs
The S&P 500 fell for a sixth straight week despite a strong rally on Friday, and only narrowly avoided entering the bear market territory. While we continue to see positives for the market, investor sentiment isn’t likely to turn until we get greater clarity on the 3Rs—rates, recession, and risk. Until then, we favor parts of the market that should outperform in an environment of rising policy rates, slowing growth, and geopolitical uncertainty. The S&P 500 declined for a sixth consecutive week as the prospect of central bank tightening, China lockdowns, and the war in Ukraine all added to recession fears. On an intraday basis, the index came just 0.5 percentage points away from the 20% fall that would mark the start of a bear market. Even after a rally on Friday, the S&P 500 was still 2.4% down on the week and 16% from its all-time high in January.
After Record Year, Robotics Investment Stays Strong Even In Shaky VC Market
The robots are coming. Well, at least investment dollars to robotics are coming. Once considered pie-in-the-sky deep tech that was always years away, robots are seemingly everywhere from warehouses to hospitals to construction sites, and the market to invest in robotics remains hot. Last year more than $17 billion poured into VC-backed robotic startups, nearly triple the investment in 2020. This year is a little behind that pace, but the sector already has seen more than $5 billion flow to startups. Some of the biggest rounds this year include:
San Francisco-based autonomous vehicle maker Cruise closed a $1.35 billion corporate round in March from General Motors. France-based mobile robot developer Exotic raised nearly $306 million Series D. Austin, Texas-based Icon, a construction technology company, closed a nearly $185 million Series B in February.
SaaS valuations cratered in early 2022. But these startups thrived
VCs were still bullish on supply chain, recruiting and data startups despite the economic environment that chopped the valuations of newly public companies and late-stage enterprise startups. Despite a volatile tech stock market so far this year that has included delayed IPOs, lowered valuations, and declining investor sentiment, a few enterprise tech categories managed to keep getting funding. Data platforms, supply chain management tech, workplace software, and cybersecurity startups all dominated the funding cycle over the past quarter.
When it comes to enterprise SaaS, the number of mega-deals — VC funding rounds over $100 million — spiked last year, according to data from Pitchbook. Partially driven by the onset of a pandemic that accelerated the need for everything from contact centers to supply chains to move into the cloud, the number of large VC deals tripled between 2020 and 2021. That growth has extended into this year, where the number of mega-deals has already outpaced all of 2020.
Musk pauses Twitter buy until the platform proves less than 5% of users are spambots
Spambots holding up a Twitter deal: Elon Musk doubled down on his previous tweets this morning, basically saying that if Twitter CEO Parag Agrawal is unable to back up claims that the number of spam and/or fake accounts is around the 5% the company says, Musk’s deal to acquire Twitter will not move forward. It would be a shame, really, after we’ve devoted so much effort to follow the story, for it to not go through. The Twitter choice is up to you: Which then begs the question: “Does Elon Musk really even want to buy Twitter?”
Despite Recent Bumps in the Road, Stablecoins Will Stick Around
Over the past week, we’ve learned that stablecoins aren’t really all that stable. The major stablecoin terraUSD – more commonly referred to as UST – officially lost its peg to the U.S. dollar, causing a catastrophic devaluation in its accompanying cryptocurrency, LUNA. Eventually, Terra’s blockchain was frozen, it was delisted from most major exchanges, and the luna coin’s value declined to zero. This week, instability has already been noted in other major stablecoins, notably DAI. But that doesn’t mean stablecoins themselves are a doomed concept, says Ian Epstein, president of Enigma Securities, a digital broker-dealer serving institutional wealth clients.
What’s going on with European startup valuations?
We all know the score: tech stocks have crashed on the public markets, scaleups don’t want to IPO while the market is down and investors are questioning how and when they’ll start to see returns.
Throw in record inflation levels across Europe, the prospect of rising interest rates and a wider economic slowdown, and you have the recipe for a big dose of medicine for the continent’s founders after VCs splashed record levels of cash in 2020 and 2021.
But what is this all doing to European startup valuations, and how can businesses adapt as investors start to get the jitters?
Q1 European VC valuation trends in six charts
Europe's venture capital market remained robust in Q1, even as the macroeconomic backdrop threatened to cool investor appetite. Valuations across the board continued to climb from records set in 2021, but ongoing uncertainty, particularly in the public markets, may cause their growth to slow. Here's a closer look at six charts from our Q1 European VC Valuations Report showcasing the trajectory of Europe's valuations. Volatility in the public markets and rising inflation have not yet dampened late-stage pre-money valuations, with the median price tag increasing by 6.5% to €19.4 million in Q1. Late-stage deal sizes have also been trending upward, but macroeconomic uncertainty could slow valuations and deals down in the coming quarters.
Advice For Startups in Downturn
Tech is entering a downturn. After a 13-year bull market run, anywhere you look in the stock market these days, it’s mostly RED. The tech companies that have been stock market darlings, breaking new records, are struggling, many missing analysts' expectations. Rising inflation and interest rate hikes, growth in debt to GDP ratio, the war in Ukraine (and global instability), increases in prices of energy, changing consumer habits to a post-Covid-19 market, supply chain issues, etc, might be all contributing factors to the stock market (and tech in particular) declines. And the markets reacted to all of these.
Tiger Global increases early-stage bets through its largest-ever VC fund
New York-based Tiger Global, one of the world’s largest and most aggressive technology investors, has increased early-stage investments in private companies through its newest venture capital fund. The hedge fund company, which had raised nearly $13 billion for its latest and largest venture capital fund in March, told investors on May 16 that more than half of the fund’s investments were in Series A or Series B rounds, typically the first or second big financings for private tech companies, according to a report by the Financial Times.
This is a shift in strategy for one of the world’s most prolific tech investors, which usually invests in larger rounds at later stages in private companies.
Revolut CEO to launch ‘AI-powered’ VC fund
The billionaire co-founder and CEO of fintech giant Revolut, Nikolay Storonsky, is launching a new venture fund called the Quantum Light Capital Fund. Storonsky, along with several other investors, will be putting in around $200m (£161m) into the new fund, which has been described as powered by artificial intelligence (AI). With a total amount raised of $1.8bn (£1.45bn), Storonsky’s Revolut has become one of Europe’s most valuable startups, hitting a valuation of $33bn in July of last year. The Revolut boss is now looking to bring his knowledge of the tech startup ecosystem to investing. The Russian-born CEO said he was inspired by what he felt were the flaws in the traditional venture capital system.
Ethereum on Track for Testnet Merge in June
Ethereum’s Ropsten public testnet will undergo a “Merge” next month ahead of a rollout on the main network, developer activity on GitHub shows. The Merge refers to Ethereum’s long-awaited move to a proof-of-stake network from its current proof-of-work design. After the shift, transactions on the Ethereum blockchain would be processed and validated by stakers instead of miners, which would, in turn, create a faster and “eco-friendly” network. Switching the blockchain from one consensus mechanism to another is a complex change, which requires multiple tests on testnets like Ropsten before they are finally deployed on the mainnet.
SEC Announces Huge Crypto Enforcement Plan
SEC chair Gary Gensler said efforts are on to get a majority of the crypto initial coin offerings registered, in coordination with the crypto exchanges. He was speaking at the Congressional budget request questioning for FTC and SEC on Wednesday. Gensler said a majority of the coin offerings come under the SEC’s securities law. The tokens will be brought under a regulatory framework by deploying the SEC’s enforcement tools, he said.
Debunking 6 myths surrounding venture capital investment
The venture capital industry almost doubled in size between 2020 and 2021, resulting in $643 billion worth of investment into fledgling companies last year. Thousands of top-tier companies like WhatsApp, Facebook, Groupon, and other transformative businesses were launched with the help of venture capital investment, but many are still wary of an industry that can, at times, seem too good to be true. Many venture capital firms, like global group Dale Ventures, pair financial investment with personal growth opportunities for entrepreneurs and their teams, allowing for new businesses to not only get off the ground but soar long term. Navigating common misconceptions is critical for both investors and entrepreneurs in order to fully realize the benefits of partnering with a reputable venture capital firm.
Venture capital and microfinance firms should focus on startups, says Al Ahli Holding Group CEO
Mohamed Khammas, CEO of Al Ahli Holding Group, said that startup businesses are an excellent opportunity for investment in venture capital funds and microfinance banks.
During an interview with Arab News at the Top CEO event in Dubai, Khammas Mohamed Khammas, CEO of Al Ahli Holding Group, highlighted that startups are a good investment idea because the “ticket size is smaller, and the product ranges are higher.” Khammas pointed out the risks that arise for startups are not in their early stages but rather when they become successful. “The challenge is not when they’re trying to have a major impact on the economy; the problems occur when they become successful. All of those are calculated risks,” he said.
There’s more crypto destruction to come: Blockchain.com CEO
For cryptocurrency investors who experienced their first bout of crypto panic in recent weeks — witnessing not only big bitcoin declines but the crash in stablecoins, the collapse of Luna, Terra and the fall from grace for Terraform Labs founder Do Kwon — get used to it, according to Blockchain.com CEO Peter Smith. More pain is coming, Smith says, more risk will be exposed, but ultimately, it’s a good thing for the decentralized economy. For the crypto investor, he says the lesson of the past few weeks should be back to the crypto equivalent of the traditional market investing concept of dollar-cost averaging — slowly building a position in an asset over time so all your money isn’t exposed to any single bout of volatility.
For Tech Startups, the Party Is Over
Funding is suddenly scarce as venture capital firms grow stingy, forcing young companies to get frugal and focus on breaking even