VNTR Capital News May 28, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - May 28 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
Highlights
VC Lab Cohort 11 — We have joined the upcoming VC Lab program in support of our rising venture partners and the launch of our upcoming co-investment funds that will co-invest with the VNTR syndicate and VNTR community.
Marrakesh — This week we are visiting Morocco to host our 1st VNTR Investors Roundtable in Africa on June 1 — an official side event for Gitex Africa. Approved Investors will get a complimentary investor pass to Gitex Africa by applying here.
Amsterdam — Join us in Amsterdam on June 7 at our Inaugural Investors Roundtable, where we will create a premier meeting for FinTech investors as a side event to Money20/20 Europe Annual Conference.
Lisbon — From June 7-9, Lisbon will become the hub for Web3, Crypto, and NFT enthusiasts visiting the Epic Web3 and Nonfungibale Conference. Lisbon Chapter members and visiting investors will gather at VNTR Investors Roundtable on June 8.
London — Crypto Hunters is hosting London Casting for the upcoming Crypto Adventure Reality Show on June 12-14. Apply for the casting and potentially secure a spot at the show, competing for the coveted grand prize of $1 million. VNTR will co-host the Investors Roundtable and Gala Dinner on June 13. These events will be official side events to London Tech Week, promising a week filled with tech innovation and networking.
Paris — We will return to Paris for VivaTech, Europe's largest startup and tech event, taking place from June 14th to 17th. We will host VNTR Investors Roundtable Paris on June 15, marking our second event in Paris for 2023.
Toronto — Our 1st Investors Roundtable in Canada will take place on June 27 as a side event for Collision 2023.
VNTR Membership — We launched our 2nd Mastermind Group to serve our growing membership and provide a place to share your progress, get support and grow as an active investor. Learn more about VNTR Membership benefits.
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 contact HK.
Partner with VNTR to connect with investors
Upcoming VNTR Capital events:
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 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
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UPCOMING VC EVENTS
May 30-Jun 4 SF 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
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 9 Epic Web3, Lisbon, Portugal (20% discount with VNTRCAPITAL)
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
This Chart Shows That Unicorn Valuations Are Just In Our Imaginations
Once upon a time, a startup valued at $1 billion was as rare as … well, a unicorn.
That’s not the case anymore. Not only because companies are staying private longer, or because the volume of venture dollars has only increased since the term “unicorn” was coined a decade ago. Now, 2021 feels like a land far, far away, where funding was plentiful and companies were able to raise a new round just months after another. Valuations climbed higher than Jack did the beanstalk — consider that 78% of the companies on The Crunchbase Unicorn Board had their valuations set in the past two years. But that chapter of the story is over, and some of those sky-high valuations now seem as real as unicorns. These days, we’re much more keen on looking at startups’ 409a valuations. These internal valuations determine the price of common stock in these companies and differ from the valuations set by investors during priced funding rounds. They’re meant to reflect how much stock would cost if these companies did go public, and from what we can tell, plenty of unicorns are itching to.
LPs gain bargaining power as fundraising tightens
Investors in US private equity funds have started to gain the upper hand in negotiations over fund terms in recent months. Several fund lawyers have highlighted a notable shift in bargaining power—from fund managers to their limited partners—in a tight fundraising environment. As general managers scramble to raise new capital, increased competition for investor capital is handing power back to LPs, which are able to obtain investor-friendly fund terms—including those that allow dissatisfied LPs to break up with their GPs more easily, attorneys said. "We began to notice increased LP leverage over the last six months or so," said TJ Bright, a partner at law firm K&L Gates. For a long period, GPs had been able to negotiate terms in their favor. Now more of them are willing to accept LP-friendly provisions, added Kenneth Holston, another partner at K&L Gates.
Emerging Fund Manager Report - Q1 2023
The entire tech ecosystem is adjusting to a new reality in 2023.
Dealmaking is down. The rate of investment activity on AngelList, a proxy for the broader market, was the lowest they’ve ever measured. VC-backed companies recorded only $5.8B in exits during Q1 this year, less than 1% of the exit value generated in 2021, building up pressure within the ecosystem.
As is VC fundraising. 2023 is on pace to have the lowest fundraising total since 2017. Things are especially difficult for emerging fund managers with commitments concentrated in larger-size vehicles. LPs are moving to risk-off in VC, passing on emerging managers in favor of established managers.
SoftBank exploring offering credit funds to tech startups
SoftBank Investment Advisers, which manages two Vision Funds, is exploring launching a private credit strategy that provides debt or debt-like structured financing for late-stage tech startups, people familiar with the matter told Reuters. The fund aims to offer liquidity options to tech startups, including some of SoftBank's own portfolios, amid a slow venture funding environment and a weak market for IPO exits. It targets returns in the mid-teens, one of the sources added. The plan, which was still in its early stage and could change, was first reported by Bloomberg News earlier on Monday. SoftBank declined a Reuters request to comment. In recent weeks, several major investment and private equity firms have stepped in to fill the chasm created in tech funding, especially debt financing, by the collapse of Silicon Valley Bank
Is The AI Hype For Real? $20B In Investments Says Yes
As every investor and their French Bulldog scrambles to get in on the AI action, we look to the data for answers. Ironically, we can’t even define “AI” as a sector per se since almost every startup looking for some coin or decent press suddenly identifies as an “AI-centered-something-or-other.” But for the purists, the numbers don’t lie — or in the very least they tell a clearer story than the prevalent “AI will save the world” narrative. In fact, early this week investors poured $700 million into two AI startups — Builder.ai and Anthropic — and followed up mid-week with another $105 million to AI marketing platform Insider. It seems we’ve reached another level of the AI craze that has dominated the private markets since late last year. Overall, $20 billion has been raised by startups using “AI” in 2023. (Fun fact: $20 billion could pay the salaries of 307,266 teachers for one year.) But let’s definitely keep making those AI-generated selfies.
Investors from 21 nations exempted from angel tax
India exempted investments by non-resident entities such as sovereign wealth funds and pension funds from 21 countries from the so-called 'angel tax', leaving out Mauritius, Singapore, and Luxembourg among others that account for significant equity inflow into the country.
Private equity and venture capital investment into closely held companies routed through jurisdictions not mentioned will have to undergo scrutiny under the angel tax provisions for valuation, as per a notification by the Central Board of Direct Taxes on Thursday.
Full-Stack Startups in American Dynamism
The full-stack startup, as previously written about by our partner Chris Dixon, is an approach taken by some startups to bypass incumbents by building a complete, end-to-end product or service. This approach is in contrast to the traditional approach, in which startups aim to sell or license their technology to existing companies in their industry. We believe that there are tremendous opportunities in American Dynamism categories for these full-stack companies to be built; moreover, we think these companies can enable a thriving ecosystem of new technology companies to grow in industries that were previously more difficult for new entrants.
Why the Biggest Emerging Markets Are Turning to Crypto
With the U.S. mired in political stasis while other regions build crypto frameworks, it’s worth looking at the evolution of, and outlook for, on-the-ground demand for crypto assets. This is getting more and more relevant as many large countries struggle with skyrocketing inflation, shaky currencies and autocratic control over financial access, and as populations become increasingly crypto-aware and a lack of trust in centralized institutions grows. Last week, the government of Pakistan (the fifth largest country in the world in terms of population, with over 239 million inhabitants) was reported to have said that cryptocurrencies “will never be legalized” in Pakistan, in order to avoid FATF penalties. This may sound on the surface like an overreaction to FATF’s crypto stance – last Thursday, the organization’s president published a letter titled “An end to the lawless crypto space” which urges crypto regulation rather than a total ban.
Who Made the Most U.S. Unicorn Acquisitions Since 1997?
The elusive unicorn is no longer a myth in the U.S. startup world, with over a thousand private startups reaching a $1 billion valuation in the last 25 years.
While some of these startups eventually go public and go on to become household names, it’s also common for founders to exit through mergers and acquisitions (M&A), by selling their startup to another organization. In fact, over half of the 1,110 unicorns in the U.S. have made some sort of an exit—either through an IPO, a direct listing, a SPAC or an acquisition—since 1997.
Timing is Everything
Timing matters tremendously. Companies like Pets.com, an online retailer of pet food and accessories, and Webvan, an online grocer, failed spectacularly during the dot com bubble. Ironically, 20 years later companies offering similar products like Chewy.com and Instacart are doing very well. The ideas were sound. However, the market was lacking a lot of the infrastructure, technologies, and demand to make them viable at the time. The same is true for many ideas that failed in the dot com bust but are now successful: video streaming, online gaming, local delivery, and countless others.
How to land a job in venture capital, according to 4 top VCs?
Securing a job in venture capital was never exactly easy, but in the wake of SVB's collapse and the broader venture slowdown, candidates are having to work harder than ever to stand out. And even though the venture industry has been through a rough time, there's still huge opportunity for those looking to break into the upper-echelon of Silicon Valley. But no question, venture can feel intimidating to break into, particularly for women, people of color, or anyone who didn’t graduate from Stanford University.
Why aren’t venture capitalists flocking to fund cybersecurity startups?
On the back of pretty strong earnings reports and valuations, public cybersecurity companies are outperforming the broader technology segment. Yet, funding for cybersecurity startups has flatlined. It’s an interesting issue that is worth taking a moment to consider. This morning, let’s look at how cybersecurity companies have performed, as well as a number of datasets regarding Q1 2023 venture capital investment to understand why investments have been tepid in this sector despite stellar results from the companies.
Even With Venture Slowing, Debt Numbers Not Seeing Dramatic Increase
Many wondered after the collapse of Silicon Valley Bank and with interest rates continuing to creep up, if the debt market would turn sour for startups. It hasn’t turned, but seems to have stagnated. Despite some recent debt rounds from well-known startups that garnered headlines, VC-backed startups in the U.S. have been raising about $5.5 billion on average through the last few quarters, according to Crunchbase data — which tracks publicly announced debt financing rounds. (It is important to note companies sometimes do not announce debt raises or the exact ratio in equity and debt mixed rounds.) The recent quarterly numbers are below the second quarter of last year, when the market seemed to hit a high of nearly $11 billion in debt financings right as the venture market was cooling.
Memecoins: From memes to multibillion-dollar pumps, scams and rug pulls
Memecoins, or meme cryptocurrencies, started as a cultural phenomenon with the launch of Dogecoin in 2013, inspired by an internet meme and a critique of the wild crypto market at the time. Dogecoin was developed by software developers Billy Markus and Jackson Palmer as a joke to mock what many saw as an irrational investment hype surrounding cryptocurrencies. Memecoins started as a form of social token. They were often created and promoted by online communities or individuals with a shared interest or sense of humor. The social element of memecoins played a significant role in their success and adoption. Other reasons for their popularity could be the sizeable total supply and low token prices. A decade later, memecoins are a multibillion-dollar ecosystem, popular as a high-risk, speculative investment. From DOGE to Pepecoin (PEPE), memecoins have come full circle. From their initial inspiration as parodies of cryptocurrencies to now being the same parody they were mocking, attracting irrational speculative investment to drive up prices.
Corporate VCs ride AI startup wave
Generative artificial intelligence is all the rage in startup-land, and corporate venture capital investors don’t want to be left out.
State of play: A small but growing number of companies’ venture arms are rolling out efforts, in various forms, that are focused on investing in the current AI startup boom.
The big picture: Generative AI and large language models are getting a lot of attention for their potential to automate many business tasks, big and small.
CEE VCs are getting ready for a 'tsunami' of local startups to start scaling
The startup ecosystem in central eastern Europe is maturing — and the local venture market needs to keep up, or risk missing out on some big wins. CEE investment has historically been concentrated at the early stage. That’s now changing; fast-growing startups are raising sizeable later-stage rounds — take the $30m Series A of Latvian robot-maker Aerones, the $70m Series B of Polish crypto payment startup Ramp or the $185m Series C of Czech hospitality SaaS Mews — but they’re often being led by VCs based outside of the region. VCs from CEE are now trying to pull together bigger funds to back growth-stage companies. Poland’s OTB Ventures has raised €140m to back Series A deeptech companies, bValue VC is now also investing in growth stage with its €100m fund and Orbit Capital is raising a €200m growth stage fund — which would be CEE’s largest.
Outlook for the Global Venture Capital Market & the Need for Bipartisan Regulations
Spring is in the air, but it is a challenging time to understand which way the wind is blowing in the emerging companies space. On the one hand, we saw a pause in investment activity at the end of 2022 and the first few months of 2023. On the other hand, we have seen a noticeable uptick in investment activity in the last six weeks. Again, on the one hand (a different set of hands), we recently saw a significant market correction in terms of valuations. But on the other hand, we have not seen a lot of the more punitive investment terms, such as multiple participating preferences or pay-to-play provisions that we witnessed in the great recession in 2009 and the post-bubble period in 2001. So what should we make of all this? Despite the fact that there have been layoffs in many tech companies, unemployment remains at historically low levels. Interest rates have increased, but business activity remains robust.
The Week’s 10 Biggest Funding Rounds: Anthropic Generates Another Huge Round, Biotech Has Big Week
The week can be summed up pretty succinctly by just saying AI and biotech. Another AI startup — one we’ve seen before — had another huge raise, and biotech had three huge rounds and a lot of good-sized ones. In general, it does seem like venture investing has been creeping up the past few weeks — at least when analyzing big rounds — but we’ll see what the summer holds.
Will The Ripple Deal Create Waves In Stagnant Web3 M&A?
Even with crypto prices slowly creeping up, any kind of dealmaking involving blockchain and crypto startups has been slow. While funding is way down — plummeting 82% year to year, to only $1.7 billion in the first quarter — M&A deals through the early part of the year seem to be lacking punch, per Crunchbase data. Although M&A deal numbers in the Web3 space are on a similar pace to the past two years, big deals seem to be at a premium. So far this year, only 16 startups in the space saw an M&A transaction — compared to 44 for all of last year. However, the only deal with a notable announced price tag happened last week, when San Francisco-based Ripple made its first acquisition, buying Switzerland-based Metaco for $250 million in cash and equity. That deal was the only one to break $100 million this year, whereas previous years have seen a handful of such acquisitions.
Endowments tap alumni for PE opportunities, but does it pay off?
Last weekend, on my usual jog through Central Park, every iconic mile marker— Shakespeare Garden, Bethesda Fountain, Bow Bridge—was engulfed in violet. NYU's graduation day had sent hoards of students in satin gowns and mortar board caps to every corner of the park, sweaty photographers in tow. More than a third of NYU's MBA graduates go into financial services. For colleges and universities, this stream of alumni offers a point of connection to tomorrow's decision (and money) makers. Many endowments, eager to employ this competitive advantage, tap into that sea of violet when deciding where to invest. That's certainly the case in private equity, where the alumni network offers endowments favorable fees, greater transparency into fund mechanisms, and access to stronger deal sourcing. But the network's benefits don't always show up in the institutions' annual returns.
Overseas VC Global Funds for Korean Startups Total 1.3 Trillion Won in Q1 Alone
The cumulative amount of overseas VC global funds which are used as overseas venture capitalists (VCs) to prime the pump in investing in Korean startups exceeded eight and a half trillion won. This eclipsed the Korean government’s target of eight8 trillion won for this year. According to the Korean Ministry of SMEs and Startups on May 22, overseas VC global funds grew to 8.55 trillion won (US$6.52 billion) through March. By the end of December 2022, their total amount reached 7.28 trillion won (US$5.56 billion), but in the first quarter of 2023 alone, about 1.3 trillion won (US$991 million) in additional funds were formed, already exceeding this year’s target of eight trillion won. The ministry explained that three of the nine overseas VC global funds selected for investment projects last year were formed earlier this year, with French fund Cathay Innovation Global Fund increasing its size to 880 billion won (US$671 million).
A Bessemer Partner On What’s Driving The Firm’s Billion-Dollar Bet On AI
Bessemer Venture Partners, one of the oldest and more established venture firms in the U.S., earlier this year said it was earmarking $1 billion of its most recent fund solely for investments in artificial intelligence. The firm’s massive bet on the future potential for AI reflects its belief that the technology is a seismic shift that will fundamentally change the way billions of people work, said Sameer Dholakia, a partner on the firm’s growth team. “Literally trillions of dollars of value gets created when you have these massive tectonic shifts,” Dholakia said in an interview. “We’re creating an ecosystem around the entrepreneur and around our firm broadly, where we’re getting some of the best and brightest minds from generative AI to partner with us,” he said.
European unicorn valuations succumb to market pressure
For the first time in over five years, the aggregate value of European unicorns has fallen as the number of €1 billion-plus companies stagnates. In recent years, as the European venture market has matured, the number of unicorns has significantly increased. But continued pressure on valuations with current market conditions has caused that trend to reverse. The aggregate post-valuation of all of the continent's €1 billion-plus companies now stands at €471.2 billion (about $507.3 billion), a 0.3% fall from last year's €472.7 billion, according to PitchBook's Q1 2023 European VC Valuations Report. The decline doesn't seem like much, but it marks a notable shift in investor sentiment toward highly valued startups. In each of the last five years, the aggregate value has risen by at least 50%—and in some years, by over 100%.
Beyond networking: What immigrant founders in the UK want from VC office hours
After facilitating more than 300 office hours for immigrant entrepreneurs entering the UK market, what have we learned about who these founders are and the challenges they face?
Introductions for a soft landing can be crucial, but the real value lies in gleaning substantive feedback from experienced investors. It’s about what your network can teach you and help you obtain (e.g., an opportunity to pitch), not just the number of connections you have. We ran the first version of the Blue Lake International Office Hours in 2022, which showed initial evidence that the trend of VCs offering office hours can deliver real value, especially to immigrant founders entering the UK ecosystem. In the second edition, which ran in March 2023, we wanted to continue making helpful introductions, but we also wanted to more systematically understand just what, exactly, was so useful about office hours.
Apple's VR debut to fire up stagnant sector, investors say
When Osso VR CEO and co-founder Justin Barad raised his seed round, the investor had one question: "How much money do you need?" They promptly wrote a check for $100,000 and told Barad to call them in a year for an update on their investment in the company, which offers a virtual reality training platform for surgeons. "It was the peak of the VR hype: 2016. If you had 'VR' in your name, you would get funding," Barad said. "I thought, 'This is going to be easy.'" Months later, when attempting to raise a Series A, Osso VR and Barad faced an opposite reception: Having "VR" in a startup's name resulted in rejections and refusals to meet. It was one of the first big downturns in VR investing, following several hardware failures and a lack of consumer interest in 360-degree video content.
One thing that didn't fall in 2022: Peter Thiel's investments in Europe
Venture deals are down in Europe but at least one person seems to still have an appetite for the continent’s tech companies: Paypal and Palantir cofounder Peter Thiel. Funds linked to Thiel did more deals in Europe in 2022 than the year before, according to data from Dealroom — bucking the broader downtick in investment. Thiel is a partner at four US-based VC firms: Thiel Capital, Valar Ventures, Founders Fund and Mithril Capital. Across them, deal count in Europe rose 16% between 2021 and 2022. Outside of Europe, the four Thiel-backed funds did 33% fewer deals last year than the year before. In general, American funds did 2% fewer deals in Europe in 2022 than the year before. Deal count in general in Europe fell 13% year-on-year.
Both, crypto and AI, have seen remarkable progress in the past few years. Crypto celebrated successes like DeFi, and more recently DeSci. AI celebrated successes like AlphaFold2, and more recently ChatGPT. Back in 2018, Peter Thiel pointed to the tension between the decentralizing forces of crypto and the centralizing forces of AI, coining the term “Crypto is libertarian, AI is Communist.” Here I want to argue that we may learn something by combining the two. Why? Because skills and approaches honed by the security and crypto community have the potential to unlock useful applications of AI and mitigate AI risks.
Is the Government Pushing More VCs to Set Up Funds in India's GIFT City?
In a notification on Wednesday, the Central Board of Direct Taxes (CBDT) announced a list of 21 source countries that will be outside the angel tax provisions. Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Iceland, Israel, Italy, Japan, Korea, New Zealand, Norway, Russia, Spain, Sweden, the United Kingdom, and the United States are all included on the list. However, this list makes no mention of countries like Singapore, Ireland, the Netherlands, and Mauritius, from where the majority of investment flows to India. "India gets the highest FDI from these countries and the move to exclude them appears to be targeted towards pushing more VCs to set up funds in the IFSC GIFT City in India," according to Vaibhav Gupta, Partner, Dhruva Advisors.