VNTR Capital News Nov 6, 2022 - News, Events, VC Reads
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VNTR CAPITAL COMMUNITY NEWS
Weekly Highlights
VNTR Investors Breakfast Roundtable during Web Summit in Lisbon was a great success, thanks to the participation of the 100+ remarkable participants who contributed to engaging discussions as well as venture capital insights to the Wois Platform. The event was held in partnership with WOW Summit at the beautiful SUD Lisboa, with stunning views of the 25 de Abril Bridge. Watch the video overview of the event.
The 1st VNTR Investors Breakfast Roundtable in Istanbul during Istanbul Tech Week gathered 35 local active investors to discuss venture capital trends and challenges in the startup ecosystem in Turkey. Thank you to our partner Finberg for hosting the event. Check the reel from the event.
Our 2nd event in London will gather 50+ Web3 investors at VNTR Investors Breakfast Roundtable in London on Nov 10 at a side event for Token2049 London to connect and explore investments into Web3 startups.
Our 9th event in India is getting a lot of attention in the startup community in New Delhi. VNTR Investors Breakfast Roundtable New Delhi on Nov 23 will host 50+ investors and community leaders.
Preparation continues for our events in Malta on Nov 16 during AIBC, SLUSH in Helsinki on Nov 18, and the Next Block Expo in Berlin on Nov 24. Companies who would like to connect with active investors can apply to sponsor.
We are very excited to be holding our 1st VNTR Investors Breakfast Roundtable in Doha, Qatar, during the World Cup. The date and details will be provided in the coming week.
We postponed VNTR Investors Breakfast Roundtable in Tel Aviv to Feb 16, 2023, where we will gather international and local investors who will attend OurCrowd Summit on Feb 15, 2023.
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.
Evercash is the first-ever crypto Neobank based on Everscale, that allows users to transact in crypto, CBDCs, fiat, or cash.
Finberg is a corporate venture firm investing in fintech, retail tech, crypto business models, deep tech, B2B SaaS, and gaming sectors.
Kikimora Labs is a venture studio, and tech hub focused on incubating next-generation technological projects in web3, education, and other areas.
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.
Upcoming VNTR Capital events:
Nov 10 VNTR Breakfast Roundtable / London (during Token2049 London)
Nov 16 VNTR Breakfast Roundtable / Malta (during AIBC Europe)
Nov 18 VNTR Breakfast Roundtable / Helsinki (during SLUSH)
Nov 24 VNTR Breakfast Roundtable / Berlin (during Next Block Expo)
Dec 2 VNTR Breakfast Roundtable/ Miami (during Art Basel)
Dec TBD VNTR Breakfast Roundtable / Doha (during FIFA World Cup Qatar 2022)
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The VNTR Capital Investors Community has a growing membership of 310+ qualified investors, actively investing in high-growth technology companies as VC/Crypto Fund managers, angel investors, and family offices.
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UPCOMING VC EVENTS
Nov 9-10 Token2049, London, UK
Nov 10-11 Pacific Bitcoin, LA, US
Nov 14-18 Abu Dhabi FinTech Week, UAE
Nov 15-19 AIBC Europe, Malta
Nov 17-18 SLUSH 202, Helsinki, Finland
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 6-7 NOAH Zurich 2022, Switzerland
Dec 20 3rd Annual Miami Gala with Andrea Bocelli by United Hatzalah of Israel
Jan 11-13 Crypto Finance Conference, St. Moritz, Switzerland
Jan 16-20 World Economic Forum, Davos, Switzerland
Jan 16-19 AIBC Africa, Nairobi, Kenya
March 13-16 AIBC EURASIA, Dubai, UAE
March 29-30 WOW Summit Hong Kong
May 15-19 AIBC Americas, Sao Paolo, Brazil
May 31 - June 2 GITEX Africa, Morocco
June 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
Another Month When Fewer Unicorns Were Born
Last month again saw fewer unicorn companies join The Crunchbase Unicorn Board compared to months past, paralleling the continued decline in venture dollars invested in companies globally this year. Fourteen unicorns — private businesses valued at $1 billion or more — joined our unicorn board in October, bringing the total new entrants to the board this year to 295. That’s down sharply from the 614 new unicorns in 2021, but still well above the 173 minted in all of 2020. October marked the fourth month since July when fewer than 20 companies joined the board. Recent months have had the lowest counts of new unicorns created since August 2020, when nine new companies joined the board. The 14 new unicorns added $36 billion in value to the board this past month. That compares with September, when 12 companies joined and added $19.6 billion in value. In contrast, 50 companies joined the board in October 2021, adding $98 billion in value. Last month’s new unicorns hail from nine countries. Of those, six are U.S.-based, and five are from Asia — one each from China, Japan, Indonesia, India and Israel. Three hail from Europe with one new unicorn each from the U.K., Spain and Liechtenstein.
China’s Venture Funding Tumbles Precipitously After Crackdown
Venture capital investments in China are falling sharply this year, making it one of the worst-performing countries globally after the Communist Party’s crackdown and an overall decline in tech valuations. The value of venture capital deals in the country tumbled 44% to $62.1 billion through October, compared with the same period in 2021, according to research firm Preqin. China once rivaled the US for capital invested in startups, before Xi Jinping’s administration embarked on sweeping efforts to reform the practices of giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. In addition, venture firms have pulled back globally as investors sour on money-losing technology companies and publicly traded stocks tumble. Still, China is among the worst performers, with a venture investment drop that is worse than the global decline and the pullback in the US.
JPMorgan creates venture capital team to target life science growth
JPMorgan has launched a healthcare venture capital practice, entering the market at a time when innovation in the life sciences remains high but investment has pulled back from last year’s record pace. The largest US bank by assets has created a venture team targeting the life sciences through JPMorgan Private Capital, a growth-equity and private-credit investment group within JPMorgan Asset Management. JPMorgan Private Capital, launched last year, previously created venture teams to invest in early- to growth-stage companies in the consumer and technology and climate-technology sectors. It took about 18 months to launch the new healthcare venture team, Life Sciences Private Capital, said Brian Carlin, chief executive of JPMorgan Private Capital. As it turns out, JPMorgan is entering the sector when life-sciences venture funding and initial public offerings have slowed, creating opportunities to invest at relatively low valuations. “The entry point for the life-sciences space is probably one of the best we’ve seen,” Carlin said.
The Europas Tech Startup Awards 2022
Congratulations to all our 2022 winners!
How Elon Wins - Twitter needs to pursue the algorithmic feed
To purchase Twitter, Elon loaded the company with over $13B in debt. That means he has to increase Twitter’s cash flow—fast. The company will be paying $1B a year just in interest payments. One of many problems is that the company only did $632M in operating cash flow last year and has averaged roughly $1B over the last five years in yearly operating cash flows. Meaning that Elon will have to increase Twitter’s last year’s cash flow by roughly $380M just to cover the costs of the loans. Add in all the other costs of running Twitter and the company is in a tough financial spot. They need to scale revenue, increase productive investment, and simultaneously decrease costs. Typically in finance you can only pick two of those.
Elon has two levers to turn Twitter into the cash machine he needs it to be in order to service his debt payments. He can raise advertising revenue or add a subscription component to the business. Unfortunately, both of these are bad options.
Twitter's advertising machine is broken and unsalvageable because of Elon’s brand risk and the inability to build a direct response platform. Subscriptions will only serve to disincentivize creator behavior and thus will make the product worse. Even if he does figure these things out, the elephant in the room is that the dominant social paradigm has shifted to video.
Investors Pour Into Venture Capital Funds Even as Markets Cool
Investors who fund venture-capital firms continue to plow money into the sector, eager for access to hot technology startups even as the industry lurches into a bear market. Venture-capital funds raised $151 billion in the first three quarters of this year, exceeding any prior full-year fundraising, according to recently released information from PitchBook Data Inc. The money has been concentrated in fewer, larger funds, such as Sequoia Capital’s $2.25 billion and Lightspeed Venture Partners’ $7.1 billion hauls from July. But even first-time fund managers, who tend to struggle in downturns, have so far been resilient. Funding for newcomers is on pace to match or exceed nearly every year before 2021, according to PitchBook. The surge has added up to a record of nearly $300 billion in so-called dry powder, or money that is available to spend. Many family offices, sovereign-wealth funds, fund of funds and other so-called limited partners remain steadfast backers of venture-capital firms, convinced that technology trends such as cryptocurrency and artificial intelligence will outlast any economic downturn. Historically, venture capital has offered better returns than other asset classes, even in a recession. Venture-capital firms are still stockpiling larger-than-ever mounds of money, despite the broad decline of tech stocks and persistent inflation.
The 10 Biggest Rounds Of October: LanzaTech Locks Up $500M, Form Energy Powers Up With $450M
September saw a couple of $1 billion rounds lead the way. However, the rounds were smaller in October, as cleantech and energy saw big raises but not at the billion-dollar level. Just like September, however, biotech played a starring role as investors kept the faith despite the sector’s typically long product development cycle. LanzaTech, $500M, cleantech: Cleantech continues to hold investor interest, especially cleantech companies that deal in carbon. Illinois-based carbon recycler LanzaTech locked up the biggest round last month, closing a $500 million commitment from Brookfield Renewable to finance upcoming projects using its technology. The deal size could double if certain milestones are met. The company’s tech takes the carbon out of emissions and converts it into things such as sustainable fuels and material. Founded in 2005, the company has now raised more than $800 million, according to Crunchbase data.
After A Lot Of Hype, (Useful) AI May Finally Be Here
Artificial intelligence has once again become a hot buzzword in tech, even somewhat knocking off the malaise the venture capital markets have been under in the last several quarters.
However, this time around it may have real staying power as advancements in generative AI seem to be riding a wave of excitement some have compared to what cloud computing saw nearly two decades ago. “About two years ago, we realized (AI) had crossed a threshold,” said Dave Rogenmoser, co-founder and CEO of Austin, Texas-based AI content platform Jasper. “It started producing better end results.” Last month was filled with news about big rounds at bigger valuations by generative AI startups — basically companies that use AI to produce content.
London-based AI-driven visual art startup Stability AI became a unicorn after locking up a $101 million raise. Rogenmoser’s Jasper announced a $125 million Series A led by Insight Partners at a $1.5 billion valuation. Sam Altman’s AI powerhouse OpenAI led an investment in San Francisco-based AI video and audio editing tool Descript at a $500 million-plus valuation, per a report. Even Google got into the act, as it was reportedly in talks to invest at least $200 million in Toronto-based artificial intelligence startup Cohere.
Energy sector PE exits flowed in Q3 while others faltered
Private equity exits were down across the board in the third quarter, but the comparatively solid volume of energy industry exits in the period provided a glimmer of light for investors in an otherwise gloomy landscape. The energy sector hasn't been immune to the broader downturn in PE exit activity in 2022. But unlike healthcare, IT, and financial services, where exit activity slowed dramatically from Q2 to Q3, energy dipped only slightly, according to data in PitchBook's Q3 2022 PE Breakdown.US crude oil and natural gas prices climbed to their highest points since 2008 in the past few quarters. Crude prices rose gradually throughout 2021, then spiked following Russia's invasion of Ukraine in late February. Natural gas followed a similar trajectory and then jumped again in the third quarter. Those rises helped prop up the value of oil and gas assets and created an attractive environment for energy PE exits. "They've come down a little bit, but energy prices are still very high, so a lot of these PE firms are looking to capitalize off that," said Kyle Walters, an associate PE analyst at PitchBook and co-author of the latest PE Breakdown. "For the PE firms, it makes sense. Why would you hold on to an asset and wait for prices to potentially come down?"
Goldman Sachs creates a digital asset taxonomy system for subscribing investors
Goldman Sachs, MSCI and Coin Metrics announced on Nov. 3 that they have devised a digital assets classification system to increase the transparency of market movements and help market participants analyze the digital assets ecosystem. The new system is called “Datonomy” and is available by subscription from the three companies. The new taxonomy divides the digital assets world into classes, sectors and subsectors according to their use to make it possible to view those assets in a more granular way, a Goldman Sachs spokesperson told CNBC. The system is intended to provide a consistent view of the market, screen assets using different filters and help market participants “understand aggregated properties of these assets at the portfolio level,” according to a statement. Coin Metrics CEO Tim Rice said in the statement, “This collaboration represents a significant leap forward for the industry as a whole, establishing a coherent and future-proof structure to monitor and analyze the digital assets ecosystem.” Coin Metrics provides crypto reporting and analytical software.
Coinbase Deal Shows Google Is Committed to Crypto – How Much Depends on Whom You Ask
Going by recent headlines and what the company says, one would assume Google is diving into crypto. Yet, some see the tech giant’s choice of partner – Coinbase – as proof Google is just dipping its toe. A couple of weeks ago, Google and Coinbase put out a joint press release titled, “Google Cloud and Coinbase Launch New Strategic Partnership to Drive Web3 Innovation.” A few days later, Google Cloud introduced its Ethereum blockchain node engine. This comes months after the search engine giant’s cloud computing section started a digital assets team. The hiring of former PayPal exec Arnold Goldberg to run Google’s payments division in January was touted as “a broader strategy to team up with a wider range of financial services, including cryptocurrencies,” in a Bloomberg article and echoed in a lot of crypto press, including here.
On the surface, it would seem Google is getting aggressive in its approach to crypto. However, some see this as a clear sign Google isn’t betting the farm on Web3 the way Meta has, but is instead looking to treat crypto the way it treats other many industries – a customer for its services.
Elephants in the Room by Scott Galloway
In 2017 I wrote a book about Amazon, Apple, Facebook, and Google called The Four. After working my ass off for 25 years, I became an overnight success: speaking gigs, appearances on cable news and talk shows, book and podcast deals. I spent a bunch of time with elected officials, and powerful people wanted to have lunch with me. People were fascinated — shocked, even — by this simple observation: Big Tech is powerful, maybe too powerful.
Much of the concern was a function of the ad-driven nature of platforms — algorithms that tapped into good/bad aspects of human nature to addict us. Most people knew how Facebook and Google made money, but not how they actually worked, how the ad revenue was fueled by the collection of data and the harvesting of attention. In fact, the phrase “Big Tech” was barely known back then. (Check the Wikipedia entry for Big Tech and see which NYU professor is credited with defining the category.) I just read the last sentence and realized I still crave other people’s affirmation. #Pathetic.
What are the major perils of Web3 as an industry?
Several risk factors are common in most decentralized applications nowadays. One is a reliance on Web2 software distribution channels such as centralized CDN, DNS and Apple's App Store. A hacker can hijack the administrator account of a CDN or DNS server and alter the distribution secretly, so the alteration will be discovered only after some portion of the user base downloads the infected version and becomes exposed to the malicious alteration. Such attacks happened with the MyEtherWallet web application, the Enigma ICO campaign and more recently with the Premint NFT platform. One of the approaches to address the issue is to use technology such as IPFS and Filecoin that make it easier to ensure the integrity and availability of an application. However, it mitigates the above mentioned attack vector only to some degree. Apple's App Store is the only distribution channel available for iOS devices, and numerous cases are known when crypto-related mobile applications were denied listing or updates due to internal policies. While this practice is directed to protect iOS users and revenue streams, such a monopoly impedes the development of Web3 applications. However, both US and EU regulators are trying to change the rules of the game.
Why America Must Develop Space, and How We’ll Do It
Facebook LinkedIn Twitter Table of contents Reaching new frontiers A supply chain, in space A space partnership Space Race 2.0 The new sea For some of us, the echo of the Space Race remains a catalyst for our daily pursuits. But a changing world demands more, and we stand today at the dawn of a new age. Sixty years later, we are in the early innings of the Space Age, and control over this new arena will be the driver of economic growth and measuring stick of power for the coming centuries, perhaps millennia.
To grasp the weight of this, we must understand the source of America’s strength today, and the potential that a new frontier holds. Through looking at the past, we can also materialize a framework for space exploration and development — one that is not just a science-fiction future, but an increasingly tangible reality.
Doctors And Patients Still Complain About Health Records. Who Can Fix It?
Here’s what happens in a health care utopia: You, the patient, have one health record documenting every allergy, vaccine and family history of disease since you were born. Instead of filling out new patient intake forms whenever you see a specialist or switch primary care physicians, your doctor can access your health record, add to it, and send it to the necessary health professionals in your life. Building such a platform isn’t a particularly difficult technological task. And yet, most people can’t access their childhood vaccination records. Crunchbase data shows funding around health record startups is at $367 million, the highest it’s been since 2021, and 2022 isn’t over yet.But despite rapid innovation in the space, electronic health records continue to be a thorn in the sides of physicians, raising doctor burnout rates, which slows their adoption and prevents us from reaching that health care utopia. The problem, it seems, is not one startups can solve, at least not without mass cooperation between the many doctors, labs clinics and other health startups the technology tethers. “When you hear clinicians constantly complaining about the increasing administrative burden and complexity; it became burdensome and complex because the technology allowed it to,” said Paul Chung, a Kaiser Permanente physician and UCLA health policy professor.
VCs unfazed by rising inflation, says Web Summit survey
Over a third of venture investors aren't changing their investment strategies despite rising inflation across the globe, according to a survey conducted by PitchBook and the Web Summit tech conference. Globally, rising inflation and interest rates have coincided with a slowdown in VC fundraising; PitchBook data shows that US VC deal count was down nearly 20% from Q1 to Q3, while Europe saw a more than 37% drop in the same time period. On Wednesday, the US Federal Reserve bumped up interest rates by another 0.75 percentage points to between 3.75% and 4%, the highest since January 2008. Nevertheless, the joint survey shows that of 142 global VC firms interviewed at the conference in Lisbon this week, 35% said that rising inflation has not resulted in any strategy change, and only 8% reported that they have significantly pulled back on investments. "There's so much dry powder that needs to be deployed, it's no wonder that inflation is having such little impact on investments," Paddy Cosgrave, co-founder and CEO of Web Summit, said. "The majority of dry powder available can't possibly create the type of value that is needed. Everybody is chasing something that doesn't exist anymore, which is a 10-year return."
Cathie Wood’s VC fund is doing LBOs
Cathie Wood has strong views on INNOVATION. Earlier this year she launched the ARK Venture Fund to invest in both public and private technology companies, “doubling down on innovation” as she told CNBC at the time. Fundraising has been tepid, with the fund only managing $8.3mn at the end of October. Ark Invest’s Hall-of-Fame capital incineration doesn’t seem to have put off investors — the flagship ETF kept attracting masochists punters this year in spite of a 61 per cent drawdown — so it might be the 2.74 per cent management fee (!) and the 4.22 per cent overall expense ratio (!!) that’s holding back asset gathering. Anyway, Ark Invest remains admirably transparent about what it’s doing. The latest factsheet reveals an interesting joint-top holding (aside from cash and alongside Freenome, a private UK biotech company).
SaaS Class Of 2021 Is Down But Not Out
A lot of factors conspired last year to make it a crazy bullish period for software as a service offerings. These included rising tech stock prices, broadly better-than-expected SaaS sector performance, and an investment environment more fixated on growth than short-term profitability. This year, most of those factors have reversed. That goes a long way to explain why SaaS companies that debuted to multibillion-dollar market caps in 2021 are now almost universally trading well below their offer price. How low? A Crunchbase analysis of 18 funded SaaS companies that debuted on U.S. exchanges last year shows an average decline of 58% from their offer prices. The worst performer, ON24, a provider of software for webinar and online engagement tools, is down 88%. The only one that’s trading higher is cybersecurity provider KnowBe4, which is up 66%. While U.S. SaaS valuations are down, the drops are milder than the carnage we’ve seen among recently public companies in other sectors, including autonomous vehicles and real estate.
Gartner: SaaS Spend In the Enterprise Will Grow 17% to $195 Billion in 2023
Gartner has its latest report out, talking to hundreds of CIOs, and it breaks down projected SaaS spending in the enterprise in 2023:
Gartner predicts SaaS spend in the enterprise will rise to $195 Billion in 2023, up 17% from $167 Billion in 2022
Platform and infrastructure spend will grow even faster, at 23% (which makes sense, see, e.g. Snowflake, etc)
SaaS overall represents about a third of total Cloud spend
The Web3 Twitter Fixes Elon Musk Could Actually Try
Elon Musk is now “Chief Twit” after taking Twitter private last week, and the transition period seems as wracked with uncertainty as the months-long buyout negotiations. Musk, who is also CEO of Tesla and of SpaceX, has brought on a number of advisers with familiar faces in the crypto industry as he looks to revamp the social media platform and turn it profitable.
Although the world’s richest man didn’t mention crypto among the reasons for doling out $44 billion to take Twitter off the public markets, there are real indications that Twitter is edging towards Web3. Binance helped finance the buyout and the crypto exchange’s CEO, Changpeng Zhao, is stepping up as an adviser. That’s alongside Andreessen Horowitz general partner Sriram Krishnan, a known crypto enthusiast, and member of the PayPal mafia David Sacks, who isn’t allergic to bitcoin either. Musk's buyout is "a chance to take a prestigious Web2 platform and use it as a sandbox to start taking apart some of the challenges that we've seen become synthetical in the Web2 space," Binance Chief Strategy Officer Patrick Hillmann said on CoinDesk TV. He told the tech blog Protocol the buyout is a "once-in-a-lifetime opportunity."
Some LPs show support as VCs stray into stock market
Pension plans, endowments and other limited partners of the private markets allocate a substantial part of their total assets to public equities. Those investments are usually made with the help of traditional asset managers. But this year, an unexpected group of investment managers has also begun to dabble in the stock market: venture capitalists. Amid a dearth of private market deals stemming from a valuation disconnect between investors and founders, some VC firms are buying public equities directly in the open market, via secondary offers or through private investments in public equities, known as PIPE transactions. Meanwhile, these firms are slowing their venture investing. Since most LPs already have public market investors, why would they want their venture managers to allocate to the same asset class, with a much higher price tag? Venture capitalists generally charge their LPs a management fee of 2% or more, about double what it may cost to have capital managed by a traditional public investor.
Europe VC Dealmaking Slows in Q3, Startups Turn to Buyouts as Markets Cool
Despite a continent-wide economic slowdown and comparatively deflated financial markets, Europe is on track to match last year’s record-breaking venture capital (VC) activity, which saw over 12,000 deals raise over 100 billion euros, according to PitchBook’s latest European Venture Report. The report cautions, however, that although VC investment managed to sustain the pace of 2021 in the first half of the year, total European deal value dropped 36.1% in the third quarter (Q3) as compared to the same period last year. There is also the matter of declining valuations among late-stage startups. From 2016 onward, late-stage deals accounted for a greater share of all VC investment in the European ecosystem but on the current trajectory, that trend is set to either level out or reverse in 2022. For now, at least, this change appears to mark the end of an era defined by mega-deals that enabled companies to burn through cash at an unprecedented rate in pursuit of growth at all costs. And although late-stage investors are still signing multi-million-euro cheques, valuation haircuts, down rounds and cost-cutting have been constant so far this year. In turn, VC-backed startups have shifted their focus to efficiency, sound unit economics, cost cutting and a growing emphasis on profitability.
Canada to examine crypto, stablecoins and CBDCs in new budget
The Canadian federal government is set to launch a consultation on cryptocurrencies, stablecoins and central bank digital currencies (CBDCs) as revealed in its new mini-budget.
The government’s “2022 Fall Economic Statement,” released on Nov. 3 by Deputy Prime Minister Chrystia Freeland, works as a fiscal update in conjunction with its main yearly budget.
The statement included a small section on “Addressing the Digitalization of Money” that outlined the government’s crypto plans. It said the rise in cryptocurrencies and money digitalization is “transforming financial systems in Canada and around the world” and the country’s financial system regulation “needs to keep pace.” The statement opined that money digitalization “poses a challenge to democratic institutions around the world,” highlighting cryptocurrencies’ use in sanctions avoidance and illicit activity financing both domestically and abroad. In the statement, the government said consultations with stakeholders on digital currencies, stablecoins, and CBDCs are being launched on Nov. 3, although exactly which stakeholders will be engaged remains unclear.
Venture capital will soon be brimming with ghosts
“Discipline is the new scale.” (OK, OK, I made that last one up, but didn’t you kind of believe it?).
The tech industry loves generalizations — and don’t worry, I enjoy my fair share too — but as the downturn continues to play out, it’s increasingly important to think about the structural changes that may be forming in the venture capital landscape. Venture firms, unlike unicorns, often don’t have hundreds of employees to cut. Instead, venture firms cut costs in quieter ways.
At TechCrunch Disrupt last week, General Catalyst’s Niko Bonatsos said that venture firms have to go through natural selection cycles and that it will be “survival of the fittest.” “It’s a very painful activity for anyone who has gone through that stuff,” Bonatsos said on stage with Coatue’s Caryn Marooney. He talked about how the hundreds of new VC firms will either decide to merge with each other to “build a more enduring franchise,” saying some will leave the VC profession and others will lose senior partners to retirement and have tp figure out what the future of their firms will look like.