VNTR Capital News Oct 15, 2023 – News, Events, VC Reads
Venture Capital, Web3, and Private Equity – Oct 15 News, Events, and VC Reads
Hello friends,
Happy Sunday!
VNTR Capital Newsletter is delivered to 50k+ investors weekly to share the latest news, events, and articles from the global VC and startup ecosystem.
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Scroll down for VNTR Capital Community News, Upcoming Events, and VC News/Reads.
VNTR CAPITAL COMMUNITY NEWS
Spotlight
VNTR Platform — We crossed 600 approved VNTR LITE and VNTR PRO members on the VNTR Platform. Activate your investor account to connect with qualified investment decision-makers, share deal flow, co-invest, get helped by peers with your requests, attend offline and online events, and enjoy partner offers.
VNTR Speed Networking — The October Investors Speed Networking event is scheduled for October 23rd. VNTR LITE and PRO members will have the opportunity to engage in one-on-one networking sessions, fostering valuable connections with their peers. We expect 100+ members to network and create hundreds of new relationships.
Flagship VNTR Events — sponsor slots available at our flagship events:
Companies can Apply as a sponsor to connect with investors and receive a personalized data-driven plan to achieve their goals.
We are recruiting Chapter Directors in key locations such as Dubai, Riyadh, Berlin, and Los Angeles to collaborate with us in expanding the VNTR Capital community. Chapter Directors will serve as super connectors to the global Venture Capital community. Interested candidates can apply here.
This week
Dubai — We hosted the VNTR Investors Cocktail in Dubai on Oct 10 as a side event to the Future Innovation Summit (see photos)
Dubai — Join us for the largest investors gathering on Oct 17 at VNTR Investors Roundtable Dubai, a side event to GITEX Global and Expand North Star. Apply for the Investors Program and get complimentary investor passes.
New York — We are launching the VNTR New York Chapter during NY Tech Week with our VNTR Investors Roundtable NY on Oct 18 at The Penn Club, #2 City Club in New York.
Miami — The launch of the VNTR Miami Chapter with Investors Cocktail will take place on Oct 20 and bring the local investors together.
Upcoming
Las Vegas — Our first VNTR Investors Roundtable in Las Vegas will take place on Oct 23 as a side event to Money 20/20 (Member discounts available), sponsored by Stellar Foundation. We have an additional 1 sponsor slot available.
Barcelona — VNTR Barcelona Chapter will gather international investors visiting the European Blockchain Convention on Oct 25.
Hong Kong — VNTR Investors Roundtable on Nov 1 will mark the launch of the Hong Kong chapter as a side event to Hong Kong FinTech Week.
Thank you to our Partners:
Stellar is a decentralized, fast, scalable, and uniquely sustainable network for financial products and services. It is both a cross-currency transaction system and a platform for digital asset issuance, designed to connect the world’s financial infrastructure. Financial institutions worldwide issue assets and settle payments on the Stellar network, which has grown to over 7 million accounts. The Stellar Development Foundation (SDF) is a non-profit organization that supports the development and growth of Stellar, an open-source network that connects the world’s financial infrastructure.
Lingo is a Web3 start-up poised to disrupt the loyalty rewards programs of the vacation industry by leveraging blockchain and real estate. Lingo is easy to understand: Buy Lingo, Receive loyalty points, and Claim points for rewards in real life (vacations, flights, shopping etc). Lingo's unique ecosystem is backed by Real World Assets, and its utility is integrated with 100,000+ hotels worldwide. You can contact Hassam-Moussa Rawat to learn more.
Hawex is a global bank that combines the reliability of traditional financial services with the innovation of web3 technologies. Hawex's core mission is to simplify financial management and democratise access to economic opportunity for more people, regardless of their income or where they live. Our products are based on the philosophy of open opportunities for all. You can contact Max or Ilya to learn more.
EHP is the only three-phase heat transfer technology that contains nanoparticles and a miraculous way to reduce energy consumption. EHP Technology (watch video) is the world's first and only known 5th-generation heat transfer technology, the world's fastest, most affordable, and most efficient heat transfer technology. EHP is the first recycling technology that can reduce up to 70% of our world's global waste heat to go to the air, saving up to 40% of the world's global energy problem. You can contact Anil to learn more.
River North is a global strategic communications agency built on transparency, trust, and results. We fuse 30+ of combined experience, creative thinking, and the latest trends to deliver meticulously researched and carefully considered brand positioning narratives that align your value proposition, core values, and customers' needs. You can contact Kelly Ferraro to learn more.
VNTR Capital events:
Nov 12 VNTR Investors Roundtable Melbourne (During Australian Crypto Convention)
Nov 14 VNTR Investors Roundtable Lisbon (During Web Summit)
Nov 16 VNTR Investors Roundtable Singapore (During Singapore FinTech Festival)
Dec 1 VNTR Investors Roundtable Helsinki (During SLUSH)
Dec 5 VNTR Investors Roundtable Berlin (During Next Block Expo)
Dec 10 VNTR Investors Roundtable Miami (During Art Basel Miami)
RSVP to Upcoming VNTR Capital Events
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UPCOMING VC EVENTS
Oct 15-18 Expand North Star Dubai Harbour, UAE
Oct 16-20 GITEX Global, Dubai, UAE
Oct 16-22 NY Tech Week, New York, USA
Oct 19-20 Bitcoin Unleashed, London, UK
Oct 19-20 CoinAgenda, Dubai, UAE
Oct 19-21 VC Weekend, Dubai, UAE
Oct 20-23 Plan B Forum, Lugano, Switzerland
Oct 22-23 Share Algarve, Vilamoura, Portugal
Oct 22-24 Money 20/20, Las Vegas, USA
Oct 23-24 SOCAP23, San Francisco, USA
Oct 24-26 Digital Nigeria, Abuja, Nigeria
Oct 24-25 Blockchain Life 2023, Dubai, UAE
Oct 25-26 Urban Tech Forward, Warsaw, Poland
Oct 26-27 Indonesia Bitcoin Conference, Bali
Oct 30-Nov 3 Solana Breakpoint, Amsterdam, Netherlands
Oct 30-Nov 5 Hong Kong FinTech Week, Hong Kong
Oct 30-31 AIM Summit Dubai, UAE
Oct 31-Nov 2 Singapore Week of Innovation and Technology
Nov 7-10 Nearcon, Lisbon, Portugal
Nov 8-9 Wolves Summit, Vienna, Austria
Nov 11-12 Australian Crypto Convention, Melbourne, Australia
Nov 13-16 Web Summit, Lisbon, Portugal
Nov 13 Europas, Lisbon, Portugal
Nov 13-17 AIBC Europe, Malta
Nov 14-16 SALT iConnections Asia, Singapore
Nov 15-17 Singapore Fintech Festival, Singapore
Nov 30-Dec 1 SLUSH, Helsinki, Finland
Nov 30-Dec 1 TechEx Global, London, UK
Dec 4-5 Next Block Expo, Berlin, Germany
Dec 4-8 West Tech Fest, Perth, Australia
Dec 6-7 FinTech Connect, London, UK
Dec 8-10 Art Basel, Miami, USA
Dec 12-13 New England Venture Summit, Boston Dedham, MA, USA
Dec 21-22 Web3 Beyond Borders, Tokyo, Japan
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
View curated VC news and articles on the VNTR Platform
VC funding in Europe rose in Q3 2023, but favoured late-stage startups
In the third quarter of 2023, European startups raised $16.4bn (€15.6bn) in VC funding — a 28% increase quarter over quarter. The findings are based on an analysis by Crunchbase, which also unveiled that the fresh capital has mostly favoured late-stage rounds. In contrast, funding for seed and early-stage companies hit its lowest points since Q3 2022. Specifically, late-stage funding doubled quarter over quarter, reaching $10.5bn (€10bn) in total. Notably, VCs invested large sums in the sustainable energy sector, with big rounds raised by Sweden’s H2 Green Steel, battery manufacturers Northvolt and Verkor, and London-based battery storage startup Zenobe Energy.
Over 500 VC firms voice support for Israeli startups amid war
Over 500 global venture capital firms, including several from Asia, signed an open letter on Thursday voicing support for Israel and its tech community amid the war with Hamas. Israel has risen to become one of the world's biggest technology hubs, attracting over $3.3 billion in venture investment this year as of Oct.10, according to data provided by PitchBook. The city of Tel Aviv, on the Mediterranean coast, came 20th in a ranking of most developed tech ecosystems in the world, a PitchBook report shows. The open letter, dated Oct.12, highlighted the importance of Israel in global innovation. "The nation's contribution to the world in terms of technology, research, and entrepreneurship is invaluable, and we hold deep respect for its unwavering commitment to progress," the letter said.
Latin America Sees Late-Stage Rebound, But Early Stage Declines
Venture funding to Latin America increased a bit in the third quarter of this year, as later-stage dealmaking returned to the region. However, reported seed and early-stage investment was down sharply, indicating greater wariness around backing less-established startups. Altogether, investors put roughly $699 million to work across reported seed to late-stage financings in Q3, per Crunchbase data. That’s an 8% increase from Q2 2023 and a 46% drop from Q3 2022. For perspective, we chart out total funding and round counts for the past 11 quarters below.
State of Venture Q3’23 Report
Global venture funding reached $64.6B in Q3’23 — an 11% increase from the previous quarter, driven by massive deals in areas like electric vehicles, sustainable manufacturing, and AI.
Overall deal count, on the other hand, fell for the sixth straight quarter, reaching 6,111 — the lowest quarterly level since 2016.
What happens if SEC doesn’t appeal Grayscale spot Bitcoin ETF ruling?
The United States Securities and Exchange Commission will soon reach its deadline to appeal the court decision that ruled in favor of Grayscale Investments, forcing the regulator to review the fund manager’s application for a spot Bitcoin fund. While many observers don’t believe the securities regulator will attempt to appeal the court’s decision, analysts say there could still be ways for the SEC to delay approval of Grayscale’s spot Bitcoin ETF conversion. On Oct. 13, the SEC must either appeal the D.C. Circuit Court of Appeals decision to the U.S. Supreme Court, request the Appeals Court revisit its ruling, or follow the court’s August order and review Grayscale’s bid to change its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.
Israeli Tech Workers Prepare To Mobilize In Wake Of Attacks
Employees of Israel’s tech sector are among the 360,000 reservists in the country’s military being called up to mobilize for an expected ground invasion of Gaza following weekend attacks by the terrorist group Hamas. Israel’s tech sector punches far above its weight, powered in large part by its lauded cybersecurity sector. Startups in the country received $8.8 billion in investment last year, Crunchbase data shows. In addition, a number of large U.S. tech companies have operations in Israel, including Intel, Microsoft, IBM and Meta. For investors in Israeli technology companies, the possibility of employees being called up to military duty is an established risk factor. In Jerusalem-based Mobileye’s IPO registration last year, for instance, the company warns that “operations may be disrupted by the obligations of personnel to perform military service.”
Biden's $7B bet on hydrogen could supercharge private investment
The Biden administration has announced the recipients of $7 billion in new federal funding distributed to renewable hydrogen hubs across the US in a landmark move backing the zero-emissions fuel. This massive injection of federal money is the culmination of a race by states to attract the promised funding and comes on the heels of several years of strengthening private investment into developing hydrogen energy technology. So far this year, VCs have invested $2.5 billion across 187 deals for hydrogen startups, while private equity firms have logged $6.9 billion across 29 deals, according to PitchBook data.
Goldman Sachs strategist expects LBOs to return in 2024
Goldman Sachs' chief credit strategist anticipates a return to the leveraged buyout in 2024. Lotfi Karoui said the record amounts of dry powder paired with more deals financed with equity and cash will stimulate a return to a traditional LBO structure. At this inflection point in transaction financing, Karoui expects PE investors to target cash-generating businesses, improve operations during the holding period and flip them in a series of exits—the textbook buyout.
China And Israel Venture Funding Rebound In Q3
While venture funding in Asia is still off even last year’s pace, it has slowly crept up from earlier in the year. In the most recent third quarter, two of the countries that helped push funding higher are the pair perhaps facing the greatest geopolitical tensions in the region — China and Israel — per Crunchbase data. Total funding in Asia fell 8% from Q3 last year to $22.3 billion — however, that’s an 8% increase from the $20.6 billion in funding in the second quarter of 2023. One of the main drivers of the region’s quarter-to-quarter growth was investment in China.
'FOMO fundraising' and 'orange flags': Bankman-Fried's lust for risk was obvious
Ellison, 28 and Bankman-Fried's former on-and-off girlfriend, oversaw many of Alameda's risky bets from the infamous FTX house in the Bahamas, allegedly under SBF's direction. She's now part of crypto lore. Following the courtroom drama alongside me has been a mix of press, tech founders, hacks and passersby. Even "pharma bro" and convicted fraudster Martin Shkreli has come down to the courthouse. Ellison's lengthy testimony this week revealed Bankman-Fried's remarkable capacity for risk-taking from the viewpoint of one of the people who knew him best. Bankman-Fried would brush aside company governance questions and insist upon quick-turnaround term sheets, playing into investors' FOMO while cultivating an image as a Zuckerberg-esque eccentric.
How to fundraise when your deep tech startup sounds like sci-fi
Wait, is this even physically possible?” Fundraising is hard for every startup, but only deep tech startups face questions like this from VCs. Innovation often does not come without issues, and there are problems regardless of how good your concept is, or how superior your technology is. Your pitch may well be the first time a VC has even heard of a concept, so how can they possibly work out how to invest in your idea when it sounds like sci-fi? A VC’s job is to find the next biggest company. To do this, they need to understand what the company does and how it makes money. VCs hear big claims every day and don’t want to be taken for fools.
For much of the last year, it’s felt like Large Language Models (LLMs) have been the only game in town. While the State of AI Report predicted that transformers were emerging as a general purpose system back in 2021, significant advances in capabilities caught both the AI community and wider world by surprise, with implications for research, industry dynamics, and geopolitics.
Last year’s State of AI report outlined the rise of decentralization in AI research, but OpenAI’s GPT-4 stunned observers as big tech returned with a vengeance. Amid the scrabble for ever more compute power, challengers have found themselves increasingly reliant on its war chest. At the same time, the open source community continues to thrive, as the number of releases continues to rocket.
VCs: Did Your Portfolio Companies Potentially Commit Tax Fraud?
The IRS just froze the Employee Retention Credit after paying out $230 billion in credits to startups and small businesses. Why? Because of the staggering amount of potential fraud the program has experienced.
Creators raising venture capital: Unsettling or genius?
When Slow Ventures announced that it would set aside $20 million to invest in individual creators, GP Sam Lessin responded to onlookers’ confusion with a memorable quip: “it’s def not indentured servitude.” Though Lessin’s remarks weren’t very reassuring, these sorts of venture deals — investments in people, as opposed to companies — have started to seem a little less bizarre. Companies like Spotter and Jellysmack underwrite YouTubers’ back catalog in exchange for upfront cash, while Creative Juice will fund a creator in exchange for a cut of revenue over a set term. Mythical, the entertainment studio owned by YouTube stars Rhett and Link, launched a $5 million venture capital fund for creators in 2021.
It’s the perfect time to take venture debt — but not all lenders want to be lending
Venture debt — a high-risk loan given to growing but not-yet-profitable companies backed by VCs — had a record 2022 in Europe. European tech companies raised over €30.5bn in venture debt — almost double the amount raised a year before, according to GP Bullhound. This year, as investors continue to hold back and valuations take a beating, startup founders are just as keen to take on venture debt — but lenders are becoming more cautious and selective. They, like VCs, don’t want to give money to startups that are running out of runway. Damian Polok, one of the founding members of the German branch of Silicon Valley Bank (SVB), says that we can observe a “more nuanced” approach towards venture debt than last year. “With the decrease in valuations, equity became significantly more expensive, which increased the attractiveness of growth debt — despite the increase of reference interest rates,” he says.
Indian startups were not spared in the global venture slowdown of Q3
As we noted last week, venture capital investment hit some big bumps in the last quarter. Still, the declines we’re seeing in terms of deal volume and value in India this year is stark in comparison, especially for a country that’s as populous, online and replete with technical talent as this one. Venture investment totals could clock in at less than $1 billion per quarter if this trend doesn’t reverse in the next quarter or two. Continuing our deep dive into the venture capital market (web3, Canada, charts) in the third quarter, we’re looking at what’s happening in India today. We’ll start with high-level numbers, then look at sectors, and also hear from Manish Singhal, a partner at deep tech–focused pi Ventures, an Indian VC firm with more than $100 million under management.
EIF Working Paper 2023/93, EIF Venture Capital Survey 2023 : Market sentiment, scale-up financing and human capital
The EIF VC Survey and the EIF Private Equity Mid-Market Survey (the largest combined regular survey exercises among General Partners on a pan-European level) provide an opportunity to retrieve unique market insights. This publication is based on the results of the 2023 VC Survey, conducted by the EIF with the support of Invest Europe. The paper focuses on the market sentiment as well as on issues related to scale-up financing and EU strategic autonomy. The study looks at the current situation, developments in the recent past and expectations for the future. It highlights substantial challenges, but also opportunities as perceived by survey participants. The main results are summarised and compared over time. The publication provides a valuable picture of the developments in the VC market in 2023 as well as an outlook for the near future.
The EIF Working Papers are designed to make available to a wider readership selected topics and studies in relation to EIF´s business. The Working Papers are edited by EIF's Research & Market Analysis and are typically authored or co-authored by EIF staff or are written in cooperation with EIF.
NFTs aren’t dead — they’re just resting
Headlines predicting the death of Bitcoin are nothing new. Over the past decade, we’ve seen every permutation of why “Bitcoin is dead” imaginable, yet the current crypto winter has brought very few of these dire proclamations. It seems a little different this time. Maybe it’s hard to pen such a eulogy with Bitcoin hovering around $28,000, and a spot Bitcoin ETF on the horizon. Doesn’t seem like Ethereum’s dead either. But the blockchain industry and its commentators still need a corpse to poke at, and that’s what they’ve found with the putrid cadaver that is the nonfungible token (NFT) market.
European Venture Funding Slows Further At Seed And Early Stage
Funding to European startups reached $16.4 billion in Q3 2023 — up by 28% quarter over quarter and flat year over year. While the continent’s funding is up compared to the past three quarters, that increase is concentrated in late-stage funding, based on an analysis of Crunchbase data. For seed and early-stage companies in Europe, however, both amounts and funding counts were at the lowest ebb since we began charting the downturn. The largest region for funding in the third quarter in Europe was the U.K., followed by Sweden, France and Germany.
California passes law mandating VC firms to release investments’ diversity information
Last night, California Governor Gavin Newsom signed into law Senate Bill 54, which will require venture capital firms in the state to annually report the diversity of the founders they are backing. This is the United States’ first piece of legislation that aims to increase diversity within the venture capital landscape. The law will go into effect on March 1, 2025.
Once the law goes into effect, any venture capital firm operating in the state (that includes VC firms headquartered in California, have operations in the state, have invested in companies that operate in or are based in the state, or have received investments from California residents) must report, for example, the race of the people they back, as well as their disability status and whether they’re a member of the LGBTQ+ community. It notes that disclosing information is voluntary and founding teams won’t be penalized for not answering. The bill also requires firms to collect and release their diversity data to the public.
European VCs’ market sentiment is at record low
It’s been a tough year so far in the venture capital world — and funds are taking the hit of a hard reality check. New data from industry body Invest Europe seen by Sifted shows that European VC funds raised €7bn in the first half of 2023 — roughly half of the €13bn raised in the same period last year. VC investments into startups also halved compared to 2022 to reach €6bn.
Amid the slowdown, investors have rarely been more pessimistic, according to new research by the European Investment Fund (EIF) published today. The survey of almost 500 funds found that market sentiment is at a record low. Key challenges include a blocked exit market and difficulties in raising funds — made even harder, according to VCs, by the lack of domestic LPs.
Europe lacks ‘developed’ VC ecosystems — with the exception of London
Just one European city makes it into the top 10 most ‘developed’ tech ecosystems in the world, according to a new ranking by data platform PitchBook. London came in seventh in the ranking — based on a ‘development score’ calculated using the value and number of deals, exits and VC funds between Q3 2017 and Q2 2023 — behind San Francisco, New York, Beijing, Shanghai, Los Angeles and Boston. San Francisco tops the list by some way, with more than double the deal value and quadruple the exit value of the next biggest tech ecosystem, New York.
Stablecoins: Roman Coins or Spanish Doubloons for the Modern Era
It is easy to see digital assets as something completely new. However, they represent a return to a longer-term historical trend of money being far more international than it is today. Stablecoins and digital assets are a means of unshackling money from inherently national payment systems and placing it on the open internet. To illustrate the point, we can look back to the 1950s when a hoard of Roman denarius coins, buried by a soldier in 43 A.D., was discovered in Kent, England. What was surprising was that it contained coins from the Roman Republic. This meant that the Roman soldier was being paid in silver coins that were potentially up to 250 years old. The modern equivalent is to pay a U.S. Marine today with Spanish doubloons.
Asia Startup Funding May Be Leveling Off After Quarters Of Decline
Funding to startups in Asia in the third quarter of 2023 saw only a slight drop year to year, a sign that the continent’s funding market may be finding its equilibrium. Asia funding seemed to mirror global trends, with year to year being down, but with the third quarter actually representing an 8% increase from the previous quarter, per Crunchbase data. The small growth from last quarter was mainly led by late-stage and growth funding being up even as seed and early stage struggled. Startups in the region raised a total of $22.3 billion compared to $24.4 billion in the same quarter last year. In Q2 of this year, funding hit $20.6 billion.
The Blockchain-Based Solution Poised to Improve Our Financial Lives
While advances in blockchain technology and tokenization often grab the headlines, there is a more mundane concept that nevertheless may end up being the single most important piece of future financial industry (and commercial) infrastructure – the digital wallet. A cryptographically protected, blockchain-based digital wallet is a piece of software that points to an address on the internet where tokenized assets can be stored. There is no identifying information on these wallets other than a long string of letters and numbers. The wallet itself contains a digital key that is required to unlock and access the holdings in the user’s wallet, and such keys are only shared when a wallet owner authorizes a transaction.
VC funding has taken a nosedive. Crowdfunding rounds? Not so much
To get her dream of opening a direct-to-consumer plant business off the ground, Eliza Blank bypassed pre-seed venture capital, instead bootstrapping and launching a modest $12,000 Kickstarter campaign. Her startup, The Sill, targets customers who are busy, nature-starved city dwellers. It has since grown into a well-known plant brand with outposts in four US cities. In 2019, the company raised a $6.5 million Series A at a post-money valuation of $27.5 million, according to PitchBook data. But three years later, the rosy outlook for raising venture dollars had faded. "Raising institutional venture as a consumer brand right now is difficult," Blank said.
How private equity firms are disrupting the Fortune 500 CEO pipeline
It’s funny where you can end up when you follow a new bit of data down a trail. For me recently, it was learning that a vast majority of the new CEOs in the S&P 500 last year—82%—were company insiders, a typical rate in recent years. But it wasn’t always so. Before 2000, the rate was much lower. CEOs were much more mobile. So what happened?
One factor turns out to be the rise of private equity, as I explain in a new article. The U.S. has 22,956 PE-owned portfolio companies, and each one needs a CEO. The PE firm installs a new CEO at the time of the buyout in 70% of the cases. That new CEO is usually from outside the portfolio company and in many cases was a CEO at a publicly traded company, lured away by the riches available when a portfolio company is offloaded successfully three to seven years later. Rather than bid against PE firms for outsider CEOs, companies are increasingly promoting first-time CEOs from within.