VNTR Capital News May 26, 2024 – News, Events, VC Reads
Venture Capital, Web3, and Private Equity – News, Events, and VC Reads
Hello friends,
Happy Sunday!
VNTR Capital Newsletter is delivered to 90k+ 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
Spotlight
Conference Partnerships: We partner with Top Tech Conferences globally to provide a place for active investment decision-makers to meet and connect at VNTR Investors Roundtable side events. The VNTR Community can benefit from discounted/complementary tickets to GITEX Africa, Consensus, CC Forum Paris, Swiss Web3 Fest, London Tech Week, South Summit, and more major tech gatherings. We are onboarding conferences to the VNTR Platform on a new corporate membership designed to help conferences connect with investors, recruit speakers, and manage investor passes.
VNTR Podcast: The second episode of the VNTR Podcast is live on YouTube, Spotify, and Apple. Join us in exploring the World of Venture Capital with top VCs and capital allocators. Thank you to Lou Kerner, Founder of CryptoOracle Collective and Crypto Mondays, Partner at Blockchain Coinvestors, who joined us as a guest speaker, and Niko Leon, who joined us as a co-host. During our conversation, Lou discussed crypto's future, decentralized communities' power, the intersection of AI and Web3, and his networking strategies, and he shared his mindset. Upcoming episodes: Tim Draper, Founding Partner at Draper Associates and Dave McClure, Founder at Practical Venture Capital, 500 Startups.
VNTR Club Events: VNTR Club Members host workshops, fireside chats, and masterclasses to share their knowledge and expertise with VNTR Community Members. The recordings of Expert Sessions can be found in the Academy on the VNTR Platform. Book an intro call with Robert to join the VNTR Club. Upcoming online VNTR Club events:
June 04: VNTR Speed Networking Event. Thank you to Airmeet for hosting.
June 06: VNTR Club Member Andrey Kostyuk, Co-Founder and CEO of AAlchemy Ventures, will share How Mentoring Startup Founders Impacts Venture Performance.
June 11: VNTR Club Members Roundtable Online will offer an opportunity to network online.
VNTR Summit: We opened registration for the VNTR Summit, which will gather our global community in Lisbon on November 13 during the Web Summit. The summit will feature keynotes, panel discussions, and roundtables, offering opportunities to share insights, learn, network, and collaborate with investors worldwide. You can reserve your spot via VNTR. Companies interested in connecting with investors can apply for sponsorship or contact Lukas.
VNTR Syndicate: We launched a new AI syndicated deal to allow private investors and family offices to access top-tier companies and VC funds with small checks starting from $10k per deal.
Coming 2 weeks:
Marrakesh: May 30 VNTR Investors Roundtable, an official part of the program at GITEX Africa hosted by Yuri. (Investors can get a complimentary investor pass)
Austin: May 30 VNTR Investors Roundtable during Consensus. Thank you, Stellar, for sponsoring.
Paris: May 30 VNTR Investors Roundtable, an official part of the program at CC Forum (20% Discount using CCFPVNTR20VIP, or free using CCFPVNTRSTANDARD)
Vienna: June 3 VNTR Investors Roundtable, during the Vienna UP.
New York: June 5 VNTR Investors Roundtable during New York Tech Week. Thank you, E-PR, for sponsoring.
Amsterdam: June 4 VNTR Investors Roundtable during Money 20/20 Europe.
Zug: June 5 Venture Capital Investors Roundtable during Swiss Web3 Fest. Thank you to our partners: Inacta, Crypto Valley, and Crypto Oasis.
Madrid: June 7 VNTR Investors Roundtable during South Summit Madrid hosted by Yuri.
Thank you to our Partners:
Stellar Entreprise Fund is a venture-style fund that expands the open-source Stellar Network. At the Stellar Development Fund, investment in companies can transform the future of everyday finantial services through Web3 Innovation. Stellar advocates for Blockchain Technology potential.
E-PR is a New-York based digital PR Agency revolutionising the industry with its innovative approach tailored for SMBs. E-PR Online offers effective, transparent, and affordable PR solutions by combining smart media strategies with a vast catalog of 17,000+ outlets across 137 countries and leveraging AI for streamlined media selection. Whether you are aiming to launch a new product, announce a milestone, or enhance brand visibility, E-PR Online provides the expertise and resources to amplify your message globally. Contact Irina Proskurina to get started and use a VNTR to get a discount.
Upcoming VNTR Events:
June 11 VNTR Investors Luncheon Barcelona (Chapter gathering)
June 16 VNTR Investors Roundtable Tbilisi (DeGameFi)
June 18 VNTR Investors Roundtable Toronto (Collision)
June 26 VNTR Investors Roundtable Mexico City (Chapter gathering)
June 27 VNTR Investors Roundtable Clug (Techsylvania)
July 9 VNTR Investors Roundtable Brussels (ETHCC)
More events available on the VNTR Platform
Reach out to Lukas to sponsor VNTR events or join VNTR Corporate Membership.
Follow us on Social media: Instagram, LinkedIn, Facebook, Flickr, and Twitter.
UPCOMING VC EVENTS
May 27-31 CC Forum, Paris, France (20% Discount using CCFPVNTR20VIP, or free using CCFPVNTRSTANDARD)
May 29-30 Dublin Tech Summit, Dublin, Ireland
May 29-31 Consensus, Austin, UAE
May 29 -31 Gitex Africa, Morocco (Complimentary for approved investors, 25% Discount using COMNSGA25)
June 3-9 NY Tech Week, New York, USA
June 3-9 ViennaUp, Vienna, Austria
June 4-6 Hamptons Tech Week, USA
June 5-6 Blockchain Expo, Santa Clara, USA
June 5-7 South Summit, Madrid, Spain
June 5-11 Swiss WEB3FEST, Zurich/Zug, Switzerland (20% Discount using VNTRWEEK for all week pass)
June 10-14 London Tech Week, London, UK
June 13-14 LegalTech Talk, London, UK
June 15-16 DeGameFi, Tbilisi, Georgia (15% Discount using PARTNER15V
June 17-21 Cannes Lions, Cannes, France
June 17-20 Collision Conf, Toronto, Canada
June 24-26 Fund Forum, Monaco
June 26-27 Techsylvania, Cluj, Romania
June 26-27 FinTech Summit Africa, Johannesburg, South Africa
June 26-28 Mobile World Congress, Shanghai, China
July 25-27 Bitcoin2024, Nashville, USA
Aug 21-23 VCILAT, Santa Cruz De La Sierra, Bolivia
Aug 22-24 Coinfest, Bali, Indonesia
If you would like to submit VC-related events, please respond to this email or Telegram @byuric
Check out VNTR Capital upcoming events
VC Reads and News
View curated VC news and articles on the VNTR Platform
The 49-Year Unicorn Backlog
If the current sluggish pace of IPOs and acquisitions continues, it would take more than 49 years for every U.S. unicorn to generate an exit. That was the finding from an analysis of recent exits for American companies on the Crunchbase Unicorn Board. Over the past 12 months, just 15 private, venture-backed companies valued at $1 billion more have gone public or gotten acquired. Meanwhile, another 741 U.S.-based private, venture-backed companies remain in existence that met or exceeded the $1 billion threshold at their last reported valuation. If the exit tempo of the past 12 months stays the same, it would take just over 49 years to get through that backlog.
Does AI have a gross margin problem?
There’s no question about AI’s revenue potential. The traction is quite literally like nothing we’ve seen before.
OpenAI surpassed $1.6 billion in ARR to close out 2023, and is probably far past $2B as I write this. Anthropic is also on a roll - forecasting to hit $850M in ARR by the close of 2024.
But if we turn our eyes away from the sun for a quick moment and peruse the rest of the P&L, you’ll find that these models aren’t cheap to run.
It begs the question: What’s the longer term profitability going to look like for AI companies? Will they be fighting gross margin headwinds in perpetuity? Will anything ever “drop to the bottom”?
Bubble.ai
Five years ago, Nvidia was a second-tier semiconductor company known for giving Call of Duty better resolution. Today it’s the third-most-valuable company on Earth, with a dominant 80% share in AI chips, the processers underpinning the largest, fastest creation of value in history ($8 trillion). Since fellow AI supernova OpenAI released ChatGPT in October 2022, Nvidia’s value has increased by $2 trillion, or about the value of Amazon. This week, Nvidia reported monster quarterly earnings — its core business, selling chips to data centers, was up 427% year over year.
There is near-universal agreement on the AI market’s revolutionary potential, a historic consensus that explains the upward trajectory of AI stocks. In sum, everyone is barking up the same tree … which makes us stupid. It also inspires a question: Are we in a bubble?
The Week’s 10 Biggest Funding Rounds: Scale AI’s Massive $1B Deal Leads Slower Week
It was a slower week for big rounds compared to many of the past few. Nevertheless, the week saw a $1 billion round go to yet another AI startup, and biotech and blockchain also saw some big deals.
The Impact of Founder Personalities on Company Success
Traditionally, startup success has been linked to factors like industry, location, and the economy. Recently, there's been a growing focus on the internal dynamics of startups, particularly the impact of the founding team. Factors such as previous experiences, network connections, and team size have been explored, but the role of founders' personalities is still largely unknown.
Oxford research shows that founders' personality traits are crucial for a startup’s success. A study of 26,781 global startups found that founders' Big Five personality traits are significantly different from those of the general population. Successful entrepreneurs tend to be adventurous, enjoy being the center of attention, and have high energy levels.
Megadeals Explode Early In The Year As US Startups Gobble Up More $100M+ Rounds
Although venture funding seems to be stagnating, more and more startups seem to be having an easier time securing really big funding rounds — that seemed to dry up last year — from investors.
Rounds of $100 million or more — or megadeals — have exploded this year, as U.S.-based startups have collected 115 such rounds through mid-May, per The Crunchbase Megadeals Board. That is a 58% spike compared to the 73 megadeals raised last year at this time.
Health And Biotech Startups Now Get The Majority Of US Series A Funding
This year is shaping up as the first we’ve seen in which biotech and healthcare startups receive a majority of U.S. Series A commitments. So far in 2024, biotech and health companies have pulled in around $5.6 billion across 110 Series A rounds, per Crunchbase data. That accounts for 53% of all funding at the Series A stage, which is a closely watched barometer for the startup ecosystem. The biotech sector’s comparatively strong showing comes as overall Series A dealmaking looks on track to come in a bit above last year’s totals. However, funding remains down from 2022 and much, much lower than in 2021, which was a record-breaking year for startup investment overall.
The risks of letting your LPs ride shotgun
More institutional investors than you might think are hungry for venture exposure—as long as co-investing rights are on the table. I recently asked the CIO of a large public pension plan what terms they’re asking for from new prospective venture managers, and getting into GPs’ deal flow was what they cared about more than anything else. What would bring this CIO to the table? “Fee-free, carry-free co-investing,” the CIO said. Co-investing rights give LPs the ability to acquire an equity stake alongside the GP, often through a sidecar vehicle. This direct access to deal flow allows allocators to concentrate their portfolio in specific companies or an emerging technology—generative AI, for instance.
Global VC investment falls to lowest level in nearly five years despite two $4 billion+ megadeals
Global venture capital (VC) investment fell slightly from $83.8 billion across 9,458 deals in Q4’23 to $75.9 billion across 7,520 deals in Q1’24 amid geopolitical tensions, the extended drought in exits among VC-backed companies, and a continued pullback in investment at later deal stages. The level of VC investment in Q1’24 was the lowest since Q2’19, while the number of VC deals was the lowest since Q2’16.
a16z’s American Dynamism team launches program to introduce technical minds to VC
Andreessen Horowitz’s American Dynamism fund has established a new fellowship program aimed at introducing top engineers and technologists to venture investing, a move that could help the firm identify less obvious sources for VC talent. The American Dynamism fund launched in 2023 with the broad aim of supporting companies building in the nation’s interest across hard tech sectors, including manufacturing, robotics, space and defense. From a16z’s new $7.2 billion fund, around $600 million is earmarked for American Dynamism.
The State Of Saas: After A Positive Start To 2024, Founders Can Find Success In A Reset Market
SaaS businesses grew in 2023, but they did so at a much slower rate than the years of pandemic hypergrowth. At the same time, revenue growth was down and churn rates were at an all-time high, reflecting a period of “normalization” post-pandemic due to rising interest rates and enterprises cutting down on their software expenditures. After a year characterized by slowdowns and cutbacks, our analysis of real-time subscriptions data from more than 34,000 software companies in Q1 2024 shows that the SaaS market has started the year on a more positive note, with growth coming back, churn slowing down, and businesses adapting to the new realities of a recalibrated software market.
3 Questions About the SEC’s Abrupt ETH ETF Approval
The U.S. Securities and Exchange Commission (SEC) confirmed yesterday it has approved critical rule changes to allow for exchange-traded funds holding Ethereum’s native token, ETH. A lot of people were caught off guard, considering that just last week nearly everyone – from Bloomberg analysts to prediction markets – thought it was a lost cause. It never really made sense to me why SEC Chairman Gary Gensler would hold out on approving these spot ETH products, considering how the agency was embarrassed during its proactive fight over listing bitcoin ETFs.
European angel investing grows up
There are more than 40k angel investors in Europe, according to Janne Jormalainen, EBAN’s president. It’s fewer than in the US, but it’s a number he says is growing by “a few percentage points per year”. One of the biggest obstacles for angel investors in Europe, however, are the different investing rules and tax systems across countries.
The Goldilocks Scenario Every VC Is Hoping For
Over the past few years, we’ve witnessed the meteoric top of the venture and startup markets where valuations were through the roof, investors were competing with each other on speed (instead of due diligence), founders were exclusively focused on raising the next round, and startups had an almost unlimited source of capital to pursue growth at all costs. Those days ended with a series of significant blows to the ecosystem including the Silicon Valley Bank collapse, global wars and rising interest rates.
PE giants double down on Japan
The Carlyle Group is the latest private equity firm to bulk up its Japan exposure, raising 430 billion Japanese yen (roughly $2.8 billion) for its fifth Japanese buyout fund, as Asia’s second-biggest economy attracts a renewed wave of interest. Carlyle Japan Partners V—which will target buyouts in Japan’s upper middle market—is considerably larger than its predecessor, which reached a 258 billion yen close in 2020. Carlyle, which is led in Japan by Kazuhiro Yamada and Takaomi Tomioka, is not the only US firm that is putting more capital to work in the country.
How Bain Capital Ventures Incubates AI
Bain Capital Ventures is investing out of its 10th flagship fund of $1.9 billion announced in February 2023 after the launch of ChatGPT, the technology that took generative AI mainstream. Despite the firm’s many decades in the investment business and its sizable funds — it has $10 billion in assets under management — investing in AI companies comes with a new set of risks and a highly competitive funding environment.
Wake Up, Web3: Your Marketing Is Fueling a Bot Epidemic
Web3 marketing has one fundamental problem: it focuses mainly on hype and disregards true users. This happens because big rewards have become the core of Web3 marketing. But boosting vanity metrics through giveaways isn’t what Web3 marketing, or what we call MarketingFi, is and should be about. Right now, projects are distributing their marketing budgets to everyone who will come and like their Twitter post and give them a follow — think of quests like Galxe.
VCs Have Mostly Shut The Door On Smart Homes
Startup investors have not done especially well betting on smart homes. Over the years, a growing number of well-funded companies have folded or failed to thrive betting on adoption of connected-home technologies such as smart windows, lighting, security systems and kitchens. And the misses continue. Earlier this month, smart-home upstart Brilliant disclosed that it laid off its entire staff while it seeks a buyer. Founded in 2015, the San Mateo, California-based company had raised $64 million in venture funding to scale an in-wall control system for lighting, doorbells, locks, cameras and other home systems.
Elon says AI will ‘do everything better than you,’ make employment obsolete
Elon Musk recently doubled down on his predictions that humans would need a “universal high income” in the wake of artificial intelligence (AI)-driven job displacement. — this time claiming that without our jobs, our purpose in life may eventually be to “give AI meaning.” The bleak prognostication from the world’s richest person came during the VivaTech 2024 event in Paris as part of a winding speech wherein Musk made fervent claims that AI would provide all of our goods and services in the future. “My biggest fear is AI,” the mogul said.
Defense Tech Funding Slows At Start Of Year
Defense tech became a popular topic last year — especially as the likes of Gecko Robotics, Shield AI and True Anomaly racked up big rounds — but this year has not continued that hot streak for the industry. Through the middle of May, funding is less than half of what it was at the same point last year, per Crunchbase data, despite the war in Ukraine continuing into its third year and tensions in the Middle East running high. In Q1, funding to startups in the industries of military, national security and law enforcement dropped to $118 million, a 74% drop from the $459 million invested in such startups in Q1 of last year.
Peter Thiel’s Valar Ventures closes $300M fund, less than half the size of predecessor
Peter Thiel-backed Valar Ventures closed its ninth fund on $300 million, less than half the size of its two most recent vintages, according to a regulatory filing released this week. The fintech-focused VC firm has amassed over $2 billion of investor capital since its inception in 2010. But in recent years, its fundraising has slowed and its vehicles have shrunk. “Fundraising today is more challenging for sure than it was a few years ago,” James Fitzgerald, a founding partner at the firm, told PitchBook via email. “That said, we were very pleased with the response we received for Fund 9, which includes some of the most sought-after LPs in the world. Raising $300 million in fresh capital—especially in the current environment—was a significant vote of confidence in our team and strategy.”
Connected fitness is adrift post-pandemic
Over the past four years, the connected fitness space has experienced some of the highest highs and lowest lows in the venture world. According to figures from Crunchbase, funding — predictably — peaked in 2021. As a whole, the fitness category accounted for $6.4 billion raised over 376 rounds. In May of 2021, Peloton announced that it would be funding an Ohio-based production facility to the tune of $400 million. That was a drop in the bucket: The company generated $4.13 billion in revenue for the year, more than a 40% increase over 2020.