VNTR Capital News Nov 20, 2022 - News, Events, VC Reads
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VNTR CAPITAL COMMUNITY NEWS
Weekly Highlights
Learnoverse will host Web3 & Metaverse Education Forum Asia on Nov 24 in Singapore. RSVP here.
Next week we will host our last offline event for the year on Dec 2nd during Art Basel Miami, where art connoisseurs will gather to explore the latest trends in art and mingle at side events.
VNTR Investment Platform design phase is almost complete. The platform will provide investors with access to late-stage investment opportunities and participation as LPs in top VC funds with small checks. Join VNTR Platform.
Partner with VNTR for 2023 to get exposure and connections with global investors through 40+ VNTR Investors Roundtable Breakfasts as side events for major tech conferences and 2+ VNTR Capital Summits in Dubai and Lisbon. We are looking for annual sponsors to engage the global investors' community: car brand, watch brand, fashion brand, crypto exchange, VC tools, and services for investors or their portfolio companies. Companies that wish to partner with VNTR can apply.
Thank you to our partners for their valuable collaboration and support:
BitDegree is the leading Web3 Learning Hub, helping 20 million learners annually start their journey in crypto and discover awesome Web3 projects.
Cudos provides highly scalable decentralized cloud computing capacity, powering metaverses and the web3 economy.
Learnoverse is the first Learning Metaverse powered by a leading Web3 Learning Platform with 1.3 million learners, launching Learn & Earn token economy and Metaverse NFTs for social status.
Wois is a wisdom-sharing platform for speakers, thinkers, and thought leaders. Wois collects diverse opinions from experts in all sorts of different fields and gives them the possibility to share their opinions on important user-generated questions. You can download their beta apps to view opinions on iOS or Android.
Upcoming VNTR Capital events:
Nov 24 VNTR Breakfast Roundtable / Berlin (during Next Block Expo)
Dec 2 VNTR Breakfast Roundtable/ Miami (during Art Basel)
Jan 14 VNTR Breakfast Roundtable / Zurich (during World Crypto Conference 2023)
Jan 17 VNTR Breakfast Roundtable / Davos (during WEF 2023)
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UPCOMING VC EVENTS
Nov 23-24 Next Block Expo, Berlin, Germany
Nov 23-24 Global Blockchain Congress, Dubai, UAE
Nov 28-29 DCENTRAL Miami, USA
Dec 1-3 Art Basel Miami, US
Dec 20 3rd Annual Miami Gala with Andrea Bocelli by United Hatzalah of Israel
Jan 5-8 CES 2023, Las Vegas, USA
Jan 12-14 DLD Munich 23, Munich, Germany
Jan 11-13 Crypto Finance Conference, St. Moritz, Switzerland
Jan 16-20 World Economic Forum, Davos, Switzerland
Jan 16-19 AIBC Africa, Nairobi, Kenya
Feb 9-11 World Artificial Intelligence Cannes Festival, Cannes, France
Feb 27 - Mar 3 Mobile World Congress, Barcelona, Spain
Mar 10-19 SXSW, Austin, USA
Mar 13-16 AIBC EURASIA, Dubai, UAE
Mar 19-20 Crypto Expo Europe, Bucharest, Romania
Mar 20-24 Paris Blockchain Week, Paris, France
Mar 23-25 Art Basel Asia, Hong Kong
Mar 29-30 WOW Summit Hong Kong
Apr 11-12 Startup Grind, Silicon Valley, USA
Apr 26-28 Consensus by CoinDesk, Austin, USA
May 15-19 AIBC Americas, Sao Paolo, Brazil
May 31 - Jun 2 GITEX Africa, Morocco
Jun 26-29 Collision, Toronto, Canada
If you would like to submit VC-related events, please respond to this email or Telegram @byuric
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VC READS
Theranos founder Elizabeth Holmes sentenced to more than 11 years for defrauding investors
The harsh ruling sends a message to Silicon Valley that the government will hold founders accountable for what’s promised. Elizabeth Holmes, founder of Theranos, has been sentenced to more than 11 years in prison over her role in the blood testing firm that collapsed after its technology was revealed to be largely fraudulent.
Holmes was convicted in January on four counts of defrauding investors. She appeared on Friday afternoon at the San Jose, California, courthouse where her nearly four-month-long trial began in August 2021, alongside relatives and supporters, including her partner, Billy Evans.
Why It’s A Good Idea To Invest In a Second- Or Third-Time Founder
The best VCs identify and support the world’s best founders. This is at the core of what they do.
Creating and growing a startup to scale is an extremely difficult task that can be derailed by a myriad of circumstances outside of a founder’s control. So even when great founders fail, the best VCs are waiting in the wings to support their next idea. The U.S. has an extremely positive mindset toward failures like these, but that same appetite for risk and the celebration of attempts at creating big ideas doesn’t exist in the same way in most of the world. In Silicon Valley, startup founders who fail gracefully are celebrated as heroes - people who have bravely attempted the impossible. Their failures aren’t seen as personally attributed negative marks on their records, but rather learning experiences that will inform and enable them to be successful on their next attempt. However, in Europe, Canada, and other huge markets, these failures are viewed in a more embarrassing light that can stand as valid reasons to withhold capital from failed founders.
This perspective gives U.S. founders and investors a distinct edge and is responsible for some of the smashing successes the U.S. market has seen in every industry across the board.
We Can't Rely on Venture Capital Funding to Build a Just and Thriving Entrepreneurial Economy. Here's What to Do Instead
The venture capital (VC) funding model is often portrayed as the new version of the American Dream — a plucky start-up founder invents a disruptive new technology, catches the eye of venture capitalists, sells the company for hundreds of millions, and spends the rest of their days sailing the Mediterranean. It's a nice story for the 0.01% of business owners who can — or want to — achieve that outcome. But the VC model is tremendously flawed. Simply put, it will never support a just, inclusive, or innovative economy. What's more? Most social entrepreneurs have no interest in starting the kind of business that meets VCs' definition of success. The many problematic issues with the VC model are well-documented. Most VC funders are white males, and startups funded by the top VCs are nearly 90% male and 72% white. Women entrepreneurs are at a particular disadvantage. While women-led enterprises are shown to drive more revenue, they receive less than 3% of VC funding. Women founders also receive less money when backed by VCs and often face higher scrutiny compared to their male counterparts. Even at the pre-VC stage, where angel investors jump in, women CEOs' percentage of the pie is steadily decreasing year over year from 2019 through 2021.
London loses position as most valuable European stock market
Britain's stock market has lost its position as Europe's most-valued, with France taking the top spot, data shows.
A weak pound, fears of recession in the UK and surging sales at French luxury goods makers are thought to be behind the shift, according to data from Bloomberg.
It's the first time Paris has overtaken London since records began in 2003.
It comes as the UK is expected to fall into recession this year, although the French economy is also under pressure.
Real assets fund returns reach decade-plus high
Capital returns for real assets investment funds have reached a post-global financial crisis peak. Rolling one-year IRR for real assets—which includes oil and gas, infrastructure, metals, timber, and agriculture—rose to 22.5% through Q1 2022, according to PitchBook's 2022 Global Fund Performance Report. Infrastructure investments account for the bulk of the capital pouring into real assets funds, but the swinging values of oil and gas assets—which shift in time with volatile commodities prices—also impact overall real assets IRR. Oil and gas one-year IRR peaked at 45.9% through Q4 2021 and continued showing strong performance through Q1 2022. While wage inflation and the rising cost of raw materials have squeezed real assets under development and construction, investing in infrastructure projects—especially core investments, which tend to provide steadier cash flows than strategies such as VC and PE—is regarded as a natural hedge against inflation. Many projects, such as toll roads and telecommunications infrastructure, experience steady demand for their services and, once built, tend to have low operating costs.
Zennström calls the end of high-valuations era, says founders and VCs must remove stigma of down rounds
As the world moves into economic headwinds and geopolitical uncertainty, European founders must get used to taking tough decisions to ensure the survival of their startups. This will include getting used to “flat” or “down rounds” of funding after experiencing the high valuations of the last couple of years.
That was the message today at the Slush conference in Helsinki from Niklas Zennström, the iconic Skype co-founder, Atomico CEO, and one of Europe’s most famous tech players.
The End of the 'Centralization Era' in Crypto
When we look back at November 2022, we may well view it as the end of the "Centralization Era" in crypto. Centralized crypto exchanges offered consumers an appealingly convenient way to invest in crypto. However, the centralization era also led to disregard for consumer protection and massive meltdowns that have affected tens of millions of people and hundreds of billions in assets. Consumers are learning very hard lessons about the risks of centralization. You can draw a straight historical line from Mt. Gox to Voyager Digital, Celsius Network and now FTX. The inevitable conclusion is that centralized entities pose a systemic risk to the crypto ecosystem. It is well past time that we as a collective crypto community come together to demand better.
‘The reset has arrived’ for the technology industry, VCs warn
The technology industry is facing a fundamental overhaul with rising geopolitical tensions and dwindling investor appetite for money-losing startups, according to a panel of leading venture capital partners. “The reset has arrived,” said Jenny Lee, a managing partner at GGV Capital.
The venture capitalist warned that money is harder to come by for startups, and valuations have dropped 30% to 50% in some cases. She said the “wake-up” has already hit many smaller startups, though larger private companies may be able to wait out the painful market turn.
The sentiment was echoed by other investors on the panel at the Bloomberg New Economy Forum. In recent years, startup valuations surged to record highs, but many companies have struggled to maintain those levels. “Valuation became disconnected from fundamentals,” said Bill Ford, chairman, and chief executive officer of General Atlantic. “Capital felt free.”
FTX Collapse Will Reverberate Throughout The VC World For A Long Time
The sudden rise and fall of FTX seemingly caught everyone by surprise. However, as fast as it happened, the effects of FTX’s collapse are not just sudden but likely will be continuous and long-lasting. For perspective, Theranos had raised about $1.3 billion in funding and had a $10 billion valuation at its peak before the walls came tumbling down, and a story started to unfold that everyone still talks about now and gave us a movie. By comparison, FTX and FTX US had raised a combined $2.2 billion at a $32 billion valuation and $8 billion valuation, respectively, before everything fell apart. With valuations that large, it’s unsurprising that some of the largest names in VC and investing took part. Fellow crypto exchange Binance was one of the company’s first lead investors, taking part in a round of undisclosed value in late 2019, according to Crunchbase data. Rounds became much more significant quickly for the failed crypto exchange. In July 2021, Sequoia Capital took the lead in a $1 billion round, FTX’s largest round. That round had dozens of investors, including big names like NEA, Lightspeed Venture Partners, Insight Partners, Temasek, SoftBank Vision Fund, Thoma Bravo, SoftBank Vision Fund 2, Coinbase Ventures, Ribbit Capital, Blackstone, Multicoin Capital, Paradigm, and Altimeter.
Why More Sexual Wellness Startups Are Turned On By Retail
The sexual health aisle at CVS is getting an update: Among condom boxes, pregnancy tests and vaginal hygiene products sitting in packaging that hasn’t been updated since the early ’90s is something fresh; bright bottles of lubricants with cheeky names like Tush Cush or So-Low Lotion. Tush Cush and So-Low Lotion are just a tiny slice of the lubricants made by Cake, a 2-year-old sex health startup that began as a niche, direct-to-consumer brand and now finds itself in one of the largest drug stores in the country. CVS isn’t the only one embracing this upgrade: Sephora, Nordstrom and Bloomingdale’s began stocking up on vibrators as sales of sex-related products blew up during the pandemic. That’s thanks to an increased cultural shift that embraced sexual pleasure as a crucial component of physical and mental health.
Niche, direct-to-consumer sex startups are quickly entering the mainstream and gaining favor with big retailers and consumers.
Binance chief says crypto exchange doesn’t see viable business in India
Scores of crypto-focused venture capital firms have raced to India in the past two years, hoping to turn the world’s second-largest internet market’s large developer community into a key web3 powerhouse. But what does Changpeng “CZ” Zhao, arguably the most powerful and influential figure in the crypto industry, think about the potential of India? Not much, as of today. “To be honest, I don’t think India is a very crypto-friendly environment,” said Zhao at the TechCrunch Crypto conference Thursday. Zhao is not alone with such a grim view about the Indian market. Dozens of investors and startup entrepreneurs I have spoken to have privately shared similar concerns, but Zhao’s comment is remarkable because nobody else with such stature has publicly expressed such a view. Zhao blamed the country’s high tax environment for making the market not so viable for global players. “If you are going to tax 1% on each transaction, there is not going to be that many transactions,” he said. To be sure, Binance, by far the world’s largest crypto exchange by volume, is operational for users in India.
4 Pitfalls of Raising Venture Capital and How to Avoid Them
When you raised your last round of funding, you probably expected that you would be ready for your next fundraise in 18-24 months. As that timeframe approaches, you might feel pressure to raise again from your board and current investors who are worried that you're not making enough progress. If you succumb to this pressure before your startup is ready, you're likely to increase spending to chase vanity metrics and top-line growth, even as your core metrics suffer and cash burn accelerates. You'll quickly lose sight of product-market fit and pull precious resources away from potentially higher-value initiatives that need more time to play out.
Set key milestones that will support another round of funding. React to data that suggests your original assumptions were off, and give yourself time to find a better growth path. Leave room for the possibility that your startup won't reach venture scale, recognizing that it could still be personally and financially rewarding. Don't treat getting to your next round of funding as a Hail Mary pass. The concept of "go big or go home" sucks if you're the one going home.
First-time European VC funds face uphill struggle
Launching a first-time venture fund in Europe has become increasingly challenging compared to previous years as fundraising activity favors more-established firms. In the first nine months of the year, 39 first-time vehicles were closed in Europe, worth a total €2.6 billion (about $2.7 billion), according to PitchBook data. At its current pace, the year's fund count could be at its lowest since 2015. Of the total number of VC vehicles reaching a final close, the percentage of first-time funds has also dipped. In the first three quarters of 2022, 26.9% of European venture funds were debut vehicles, compared with 28.1% for all of 2021. The VC downturn is currently showing no signs of relenting, and limited partners appear to be betting on more established managers. Without a proven track record or experience with previous market declines, LPs are becoming more hesitant to entrust their capital to first-time funds. For new managers, the lack of pre-existing relationships with LPs is also a hindrance when coming to market. Emergent sectors, including cleantech and mobility, are proving to be more-attractive industries for first-time vehicles to target, as there is often less competition and capital at work in those sectors.
Metaverse ‘explosion’ will be driven by B2B, not retail consumers: KPMG partner
The Australian arm of Big Four accounting firm KPMG could soon be holding executive meetings and closing multi-million dollar deals with clients in the Metaverse, with the firm now exploring how the revolutionary technology can transform its business model. In a recent interview, KPMG’s James Mabbott, Partner in Charge at KPMG Futures said the firm sees real potential in the technology creating new and more efficient ways for businesses and consumers to interact with each other: Mabbott also stated that virtual interactions on Metaverse platforms could not only revolutionize client engagement and service delivery but potentially also open up additional revenue streams for the firm. “What we're looking to do is explore the opportunity to create new business models and new assets with technology that fundamentally transforms the way we deliver our services,” he told Cointelegraph.
Investors are ready to invest in Indian climate startups
Recently, Solar Square raised ₹100 crore as part of its series-A funding, on the back of a ₹30-crore seed round three months earlier. This may well be a story of a tech startup, except for the fact that it took Solar 7 years of operations to reach this milestone. This is typical of climate startups. It takes them time to generate sufficient traction to become attractive to investors. While investment in climate solutions is growing rapidly, climate startups account for less than 5% of venture capital (VC) funding in India, as estimated, and it largely goes to tech startups. Thankfully, climate startups have become more attractive to VC investors, though many founders remain unsure how exactly to go about raising capital. Why are climate startups becoming attractive? Mainstream climate technologies have little technical and market risk: VC investors typically seek to invest in firms that address large opportunities that can grow multifold in 6-7 years.
Where Amazon’s Layoffs Rank Among Largest Tech Job Cuts Of 2022
This week was certainly not a prime day for Amazon workers as the e-tailer turned everything-tailer continued laying off employees to the tune of 10,000 jobs. Though huge, that number reportedly represents only about 3% of the company’s estimated 1.5 million full- and part-time workers worldwide. Cuts are planned for the behemoth’s devices, retail, and human resources sectors.
The Amazon cuts also aren’t the largest in layoff headlines for tech this year. That nefarious award goes to Meta, which earlier this month announced plans to lay off 11,000 workers. At the time, Meta CEO Mark Zuckerberg attributed the cuts to over-hiring during the pandemic. Yeah, no kidding. As word of Amazon’s intended layoffs broke Monday by The New York Times, Amazon’s PR team likely scrambled to also heavily promote Amazon CEO Jeff Bezos’ “exclusive” sit-down interview with CNN in which he discussed his intention to give away most of his $122 billion fortune during his lifetime.
VC investment for impact pulls back in 2022 worldwide – new research
Global venture investment in impact startups has dropped in 2022 after a record high last year amidst a general slowdown in the venture capital market, the latest figures from startup data platform Dealroom reveal. However, venture investment in 2022 is still expected to outperform 2020 as the general trend continues upwards. The report, Impact Startups 2022, bases its findings on the Dealroom Impact database, which gathers information on nearly 10,000 “impact startups”, defined as companies that address one or more UN Sustainable Development Goal (SDGs) at the core of their business and have the potential to scale. The platform says its “litmus test” to determine whether a company is an impact startup is: “if you remove the impact you also remove the business”. Companies included on the Impact Database range from plant-based cheese company Willicroft to Kenyan social enterprise Copia Global and electric carmaker Tesla. The report, released at ImpactFest in the Hague this week, shows impact startups raised US$35bn in 2022 so far, down from a record US$68bn in 2021 but already above the amount raised over the whole of 2020. Researchers estimate that the total figure for 2022 will reach more than $47bn – representing a 30% drop year on year.
VC funds bid era of double-digit returns goodbye
The yearslong era of venture capital outperforming other private market asset classes is likely coming to an end. An abundance of near-free capital and a robust IPO market allowed venture capital funds to post double-digit percentage returns in nearly every quarter from Q4 2017 through Q1 2022, according to PitchBook's 2022 Global Fund Performance Report. But by this year's second quarter, the venture funds' internal rate of return turned negative. Preliminary data shows that VC funds recorded a -2.3% IRR in Q2, marking the first time that venture funds returns have fallen below zero since 2016. "Some VC firms have been proactively marking down [companies]," said Sean Engel, a managing director with Top Tier Capital Partners, a VC-focused funds-of-funds manager. "Year over year, we are seeing about a 10% decrease in holding values." It will be several months before it becomes clear, but VC fund performance seems likely to decline further over the next few quarters. That's because venture firms generally are slow to mark down the value of their late-stage portfolio companies, and most early-stage startups don't get repriced until they raise another round of financing.
Venture capital investors see an 'R' word coming for tech — and it isn't just recession
Tech-startup investors expect a big 'reset' that creates 'a two-year period of both pain and opportunity,' with money still flowing to early-stage startups while older ventures face an uneasy road. As tech workers face mass layoffs for the first time in more than a decade, venture capitalists foresee a "period of both pain and opportunity" and believe it could be a time for the industry to reset. Tens of thousands of software engineers and other tech employees have lost their jobs so far this year, but VCs see silver linings in economic downturns: the potential for a rise in people starting their own companies. In discussions with MarketWatch after announcements of job cuts at powerhouse tech companies such as Amazon.com Inc. (AMZN) and Facebook parent Meta Platforms Inc. (META), some VCs said they expect the downturn to last for the next year or so -- as is typical of recessions -- as the tech industry, which they believe had become overheated, goes through some adjustments. According to data compiled by Challenger, Gray & Christmas, there have been about 59,000 tech-industry layoffs announced so far this year.
Investors pay up for decarbonization deals, bucking VC downtrend
In a year when VCs have slowed their investment pace in most sectors, their growing appetite for companies that help reduce carbon emissions stands out as a bright spot. Through Q3, carbon and emissions tech startups have raised $10.7 billion in VC investment across 517 deals, according to PitchBook's latest Carbon & Emissions Tech Report. That puts dealmaking in this vertical on track to surpass last year's record of $13.6 billion across 656 deals. Startups in the carbon and emissions tech vertical develop technologies that capture and store carbon and reduce emissions from sectors such as manufacturing and agriculture. Money into this vertical has been flowing in response to a higher frequency of climate-related natural disasters, scientists' warnings about the planet's future, and growing interest from consumers, according to John MacDonagh, an emerging tech analyst at PitchBook. There was no shortage of sizable carbon and emissions deals in Q3, and private equity investors and corporations have been particularly active in recent large VC deals.