VNTR Capital News Oct 24, 2022 - News, Events, VC Reads
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VNTR CAPITAL COMMUNITY NEWS
Weekly Highlights
We will be hosting our largest event yet in Lisbon, VNTR Breakfast Lisbon, on Nov 2, during Web Summit as a side event to Wow Summit. We expect as many as 100 investors who will be traveling to Portugal from 30+ countries.
We are excited to announce that VNTR Capital has entered a strategic partnership with BitDegree to support their tremendous growth as they empower Web3 companies to generate a wider adoption of Web3 through a learn-and-earn model and immersive learning at Learnoverse.
We held our 2nd VNTR Breakfast in Los Angeles (Glendale), a side event to Glendale Tech Week, and in partnership with SmartGateVC. Thank you, Ashot Arzumanyan, Partner at SmartGateVC, for hosting.
The 3rd VNTR Breakfast in Tbilisi was hosted yesterday as a side event to DeGameFi, the first international Web 3 conference in the Caucasian Region. Thank you, Mika Didebulidze, Founder and CEO at Arena Games, and George Paliani, Co-founder and CEO at CoinsPaid Media, for hosting.
The 1st VNTR Breakfast in Istanbul will take place on Nov 3 during Istanbul Tech Week to launch our chapter in Turkey, co-hosted with our partners Finberg.
After hosting eight (8) events across India in New Delhi, Mumbai, and Bengaluru, we are scaling the format to connect Indian investors at VNTR Breakfast New Delhi on Nov 23.
Thank you to our partners for their valuable collaboration and support:
Cudos provides highly scalable decentralized cloud computing capacity, powering metaverses and the web3 economy.
Kikimora Labs is a venture studio, and tech hub focused on incubating next-generation technological projects in web3, education, and other areas.
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.
Upcoming VNTR Capital events:
Oct 27 VNTR Community Roundtable (community members only)
Nov 2 VNTR Breakfast / Lisbon (during Web Summit and Wow Summit)
Nov 3 VNTR Breakfast / Istanbul (during Istanbul Tech Week)
Nov 10 VNTR Breakfast / London (during Token2049 London)
Nov 11 VNTR Breakfast / Tel-Aviv
Nov 16 VNTR Breakfast / Malta (during AIBC Europe)
Nov 18 VNTR Breakfast / Helsinki (during SLUSH)
Nov 23 VNTR Breakfast / New Delhi
Nov 24 VNTR Breakfast / Berlin (during Next Block Expo)
Dec 2 VNTR Breakfast / Miami (during Art Basel)
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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 1-4 Web Summit, Lisbon, Portugal
Nov 1-3 Wow Summit, Lisbon, Portugal
Nov 1-3 LA Blockchain Summit, LA, USA
Nov 3-6 Smart Vision Investment Summit, Alexandria Cairo, Egypt
Nov 9-10 Token2049, London, UK
Nov 10-11 Pacific Bitcoin, LA, US
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
Dec 1-3 Art Basel Miami, US
Dec 6-7 NOAH Zurich 2022, Switzerland
Jan 16-20 World Economic Forum, Davos, Switzerland
Jan 16-19 AIBC Africa, Nairobi, Kenya
March 13-16 AIBC EURASIA, Dubai, UAE
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
Will PE still flourish as China turns inward?
With the end of China's 20th Communist Party Congress in Beijing, there are signs that a more insular country is emerging—it's a worrying development for private equity, an asset class that thrives on international cooperation.Chinese premier Xi Jinping used the event to confirm his unprecedented third term. He has used his power to expand state control of the economy and crack down heavily on parts of the country's giant tech sector. He has also, it appears, begun to turn his country inward, emphasizing economic self-reliance and asserting China's national interests on the global stage. At the same time, the influence and power of China's private sector has declined. According to reports, significantly fewer executives from private groups were invited to this month's congress compared to previous years. These are unstable times for China. The unraveling of the country's real estate sector has triggered a financial crisis years in the making. Meanwhile, a zealous commitment to its zero-COVID policy, enforced by regional lockdowns and travel bans, has been ruinous for the country's fortunes. This month, the International Monetary Fund downgraded China's growth forecast for next year to 4.4%. There is no indication that China will loosen the policy.
JPMorgan launches fundraising platform to lure startups
JPMorgan is launching a platform that aims to connect startup founders with venture capital investors to simplify the fundraising process, the bank told Reuters.
The new platform, Capital Connect, focuses on serving the financing needs of startups from their early stages, marking the ambition of the biggest U.S. bank by assets to further expand into the private market and build a founder-friendly brand in Silicon Valley.
AI: Startup Vs Incumbent Value
In each technology wave the value, revenue, market cap, profits and great people captured by startups versus incumbents differs. In some waves it all goes to startups, while in others it goes to incumbents or is split between them. Unexpectedly, the prior wave of value from AI roughly all went to incumbents over startups, despite a lot of startup activity. This post explores that dynamic and posits the current unsupervised learning wave of AI will contain strong startup success, in addition to incumbent value.
‘My biggest mistake was taking the company public’: Brunch with Babylon’s Ali Parsa
This is not a story about one specific company but rather a whole cohort of companies putting the cart before the horse in their listing strategy and suffering terrible performance from their US listings as a result.
The first question should be - are we ready to be a public company, then where should we list, and finally, how - traditional #IPO, #SPAC, direct listing?
Does Europe have a university spinout problem? Key takeaways from the Sifted Summit
There’s a common opinion that Europe’s spinout funnel — and the process of commercialising research — is broken. But is that really the case?
According to a survey of 143 spinouts — across Europe, the UK and the US — by Air Street Capital, most founders are dissatisfied with the spinout process. And a large part of that is to do with the equity stake that universities take in the companies being spun out. On average they take 12.8% upon founding — and that figure’s dramatically skewed by the average of 19.8% in the UK, against 7.3% in mainland Europe.
Recently Public Real Estate Startups Shed Over $42B In Value
American homebuyers have largely done well in the past couple years, with average house prices up sharply. Sadly, the same does not hold true for those who put capital into newly public real estate startups. There, the reverse applies, with shares of many housing-focused companies hitting new lows this month after an already rocky year. Overall, venture-backed U.S. real estate-focused companies that went public in the past two years are down an average of 85% from their offering price, according to a Crunchbase analysis. None are above their offering prices. Some of the worst performers are down 90% or more. This includes i-buying platforms Opendoor and Offerpad, as well as Doma, a homeowners insurance upstart. For a broader sense of how venture-backed real estate companies have performed on public markets, we assembled a chart of seven below that debuted in the past couple years. Altogether, it’s a pretty staggering decline. A total of more than $42 billion in post-debut market capitalization has been wiped out as of early this week.
Q&A: An 'exit to community' offers startups a different path
A growing movement of founders and academics are advocating for a new way to exit. The idea is to give more control to those who have helped build or benefit from the startup: an "exit to community."Unlike an IPO or acquisition where one or a few external investors buy a startup, an exit to community transfers ownership, decision-making and profits to a larger group of people that includes employees and users. Media Enterprise Design Lab, which is a think tank at the University of Colorado, Boulder known as MEDLab, and Zebras Unite, a founder cooperative, have set up the Exit to Community project to explore ways startups can transition from being investor-owned businesses to community-owned. PitchBook spoke with Nathan Schneider, who leads MEDLab and is also an assistant professor of media studies at the university, about this alternative exit route.
Nodes are going to dethrone tech giants — from Apple to Google
While highly regarded even at the time of its writing, Marc Andreessen’s 2011 landmark essay, “Why Software Is Eating the World,” has proven even more prophetic than it seemed at the time. At the dawn of a decade when software would prove invaluable to nearly every aspect of modern life, Andreessen argued that every company was now ostensibly a software company, whether the company liked it or not. Tailoring his argument to many of the companies that were market leaders at the time, his ideas eventually also applied to companies that either hadn’t fully defined their markets or didn’t even yet exist but would go on to generate billions in market share: Uber, Lyft, TikTok/ByteDance, Robinhood and Coinbase, among several others. If you were going to be a unicorn in the 21st century, software was probably going to be a key part of earning that horn.
Gaming industry is winning the battle of VC funding
The pandemic waves have transformed the growth curve of the online gaming sector in India and the emerging growth spectrum is shaping up serious business and investment opportunities. According to a report published by All India Gaming Federation (AIGF), the gaming sector in India has attracted investments worth more than $1.6 billion in the first nine months of 2021. What’s quite interesting to note here is that the flurry of investment has surpassed the total investment the industry attracted in the last five years. As per the experts, the investment is expected to go up in the next two years driven by growing gaming consumption, digital transaction, new-age technology integration, genre multiplicity, monetisation of casual games and demographic dividend. India has emerged as the second largest base of online gamers in the world after China in 2020 with the number of gamers increasing to almost 400 million from approximately 250 million in FY18. India is also counted among the fast-growing online gaming markets in the world. The market which was growing at a steady pace in the pre-covid times on the back of high-speed internet penetration, availability of sophisticated gaming devices and technology infrastructure development has entered its next phase of accelerated growth.
Nike’s Venture into Web3 Isn’t About Tech – It’s About Culture
Nike is making waves in Web3 and the metaverse. In November 2021, the athleisure icon unveiled a virtual experience in the online gaming platform Roblox. Since then the space – dubbed Nikeland – has attracted 6.7 million global visitors and over 21.6 million total visits. It’s not quite Vans’ 82 million visits, but Nike CEO John Donahue deemed the campaign successful enough to extend “the positive momentum and energy'' as part of the company’s digital strategy.
In December 2021, The Swoosh took a deep dive into Web3, acquiring non-fungible token (NFT) studio RTFKT. On the back of its new purchase, Nike launched a series of NFT drops in the following months, starting with its Crypto Kicks – a collection of 20,000 sneaker NFTs, including one designed by artist Takashi Murakami that sold for an eye-watering $134,000. The company has since also toyed around with exclusive drops for NFT holders and other phygital (physical plus digital) items.
Meet The New Unicorns Minted In September 2022
Twelve companies joined The Crunchbase Unicorn Board in September 2022, adding $19.6 billion in value to the board. These companies have raised $3.8 billion total in funding with 62% of that amount raised in September 2022. Six companies are U.S. headquartered. Two hail from India and one each from China, Thailand, Italy and Switzerland. The majority of these companies were founded since 2018, while companies more than a decade old include Molbio Diagnostics and Wealthfront. India-based Molbio Diagnostics, a molecular diagnostics company that builds portable devices to detect TB, HIV and Malaria as well as real-time PCR tests amongst other diseases. The company raised $85 million led by Temasek Holdings which valued the company at $1.6 billion. New York-based Redesign Health invests in and incubates healthcare startups. It raised $65 million led by General Catalyst which valued the company at $1.7 billion. India-based online medicine ordering company 1mg raised a $40 million funding led by Tata Digital which had acquired a majority stake in the company in 2021. The company is valued at $1.2 billion.
The world has reset.
On the public side, $1.6T of market capitalization has been lost in the global Euroscape cloud Index with the average forward revenue multiples plunging from 17x a year ago to 6x today. On the private side, cloud funding in Europe, Israel and the US is down 42% in Q3. From data analytics to security and collaboration, no sector has been immune.
The Web3 Pulse Check
The crypto landscape is constantly changing. The leapfrog team looked at all of the big narratives and trends in crypto, and prepared a comprehensive report.
This report isn't an in-depth analysis, but rather a pulse check on what the data is saying about adoption (as of September 2022). According to DappRadar, the total number of weekly active users in crypto has fallen only 3.5% in the last 12 months. The total number of weekly transactions haven’t fallen too infact it has increased 8% lower. But total weekly volumes are down 87% since last year.
Bill Gates’s energy venture fund is expanding into climate adaptation and later-stage investments
Bill Gates’s climate-oriented venture capital fund is expanding its mission, adding adaptation to its investment categories and establishing a later-stage fund to help clean-tech startups begin building plants and scaling up their technologies. The announcement came at the end of the firm’s Breakthrough Energy Summit in Seattle on October 19. To date, Breakthrough has been focused on “five grand challenges,” backing companies that promise to drive down climate pollution in electricity, transportation, manufacturing, buildings, and agriculture. All these efforts are considered forms of climate mitigation. Climate adaptation refers to developing ways of bolstering protections against the dangers of climate change, rather than preventing it.
In an interview, Eric Toone, technical lead for Breakthrough Energy Ventures’ investment committee, said it’s increasingly clear that adaptation will need to play a major role as global emissions continue to rise and the planet continues to warm.
Spain overtakes El Salvador to become third largest crypto ATM hub
The European country of Spain is officially home to the third-largest network of Bitcoin and cryptocurrency ATMs after the United States and Canada. Spain currently hosts 215 crypto ATMs, pushing El Salvador — wi 212 crypto ATMs — down to the fourth position after surpassing the country by 3 crypto ATMs. Data from CoinATMRadar confirms that Spain represents 0.6% of the global crypto ATM installations.Moreover, the revelation places Spain as the highest contributor to crypto ATMs in Europe, which represents 14.65% of total installations in the continent, followed by Switzerland (144 ATMs), Poland (142 ATMs) and Romania (135 ATMs).In 2022 alone, Spain installed 43 crypto ATMs and has previously shared its intent to install a total of over 100 ATMs by the end of the year — taking up the total to nearly 300 crypto ATMs once completed.
Funding To VC-Backed India Startups Falls To Lowest Levels Since Early 2020
While seemingly everywhere is seeing a significant pullback in venture capital funding, some countries are seeing a much more precipitous dropoff. India—which like many regions had a banner year in 2021—is one of those areas seeing the most pronounced decline. Funding in India dropped to its lowest point since the first quarter of 2020. VC-backed companies took in $2.9 billion in the third quarter of this year, a massive 66% drop from the previous quarter and a mind-blowing 81% drop from the same quarter last year.Deal flow did not see nearly as major a dropoff, but numbers were still down. Just more than 420 deals were announced in Q3, a 12% drop from the second quarter and a 32% decrease from the same period last year. “The funding environment globally has weakened significantly, and India is no different,” said GV Ravishankar, managing director at Sequoia Capital India. “We have seen several hedge funds and global investors without local/regional presence recede from the market to focus on core markets,” said Ravishankar, adding the dramatic drop should also be seen in the context of a very exuberant market in 2021.
Due Diligence 101: 3 Things Founders & Investors Need To Focus On
Startups and entrepreneurs often rely on venture capital (VC) firms or individual angel investors to raise capital. The firm’s general partners (GP) have a fiduciary responsibility to the limited partners (LP) or investors to ensure that the companies in which the fund invests meet financial, legal, and regulatory requirements. VCs typically conduct due diligence (DD) to ensure the accuracy of past performance and compliance data. The procedure is divided into three stages, each of which allows investors to finalise their internal approval and complete the investment. Typically, the due diligence process begins once the term sheet is issued. A checklist is shared with the founders, which guides them through the process and the documents needed to begin the DD.
This document list is based on the scope of work of the due diligence. A thorough due diligence process requires certain documents. These include registration certificates, contracts, agreements, copies of filings, resolutions, statutory registers, intellectual property documents, human resource documents, tax-related documents and books of accounts.
As Overloaded Families Turn To Famtech, Funding Follows
The image of how a successful American family with children lives has been engrained over decades by relentless marketing and Hollywood glamorization. The go-to image usually revolves around a lovely home. But of course, there are also lavish-yet-balanced family meals, and a lifestyle complete with vacations, birthday parties, extended family visits, soccer teams, music lessons … the list goes on, and on, and on. While the so-called American Dream has its allure, maintaining it all tends to be exhausting. And although tech startups have long churned out productivity tools for the workforce, families don’t have a lot of dedicated offerings tailored to their needs. Increasingly, startup entrepreneurs and investors are addressing this gap as part of a burgeoning sector that goes by the catchphrase famtech. Think digital tools to manage household responsibilities, track what the kids are doing, find care and even free up a little personal time. Oftentimes, founders are building the kinds of tools and apps they wished they had. “I feel that an impossible thing is being asked from the modern family these days,” said Yoky Matsuoka, founder and CEO of Yohana, a Panasonic-backed startup offering a service to help families outsource or streamline more of their routine tasks and projects.
Private equity fundraising challenges set up a tough 2023
As fundraising challenges persist in the private equity market, managers seeking new capital are expected to see an even tougher year in 2023. These additional challenges could confront private equity managers across almost all fund sizes and strategies, said Clay Deniger, the chief executive of Capstone Partners, a private equity placement agent owned by Mizuho. As a result, firms could take longer to reach the finish line when raising funds. Data in PitchBook's Q3 2022 US PE Breakdown shows fundraising already down from last year's strong pace, with midsized PE funds and emerging managers seeing the biggest declines. Through the first three quarters of the year, PE managers closed 143 vehicles with fund sizes between $100 million and $5 billion, raising a total of $119 billion, according to PitchBook data. That compares to $197.4 billion across 268 such vehicles during the same period last year. Emerging managers have also experienced slower fundraising. There are 42 first-time funds that have closed $8.5 billion in capital through the first three quarters, a pace unlikely to surpass last year's tally of $18.4 billion. One constraint facing LPs is the so-called denominator effect, triggered by the decline in public asset valuations this year. Some LPs had to cut back on investing in private fund managers or free up their capital through secondary sales of fund stakes because their holdings of private assets exceeded the allocations allowed under their mandates.
VC investments in India soften across all verticals, except fintech: KPMG
Venture capital investments in India have been ‘quiet’ both in terms of deal count and value in the September ending quarter, says a KPMG report. For the June-September quarter this year, the total deal value of VC investments stood at $2.7 billion. This is significantly lower than what it was in the same period last year at $15.9 billion. However, deal values peaked in Q3 of 2021 and have been falling since then. But the Q3 deal value in 2022 fell sharply as compared sequentially too – from Q2’s $7.4 billion. Yet, there is a silver lining. “VC investment in India has softened this quarter across most industry verticals. Fintech investment however continued to buck this trend garnering significant investor attention as evidenced in the number of big deals,” said Nitish Poddar, partner and nation leader of private equity at KPMG India.
Ecosystem Growth, Not Prices, Tells the Real Crypto Story
Amid the current crypto winter, I have called and chatted with participants in the digital assets industry and heard the same narratives scores of times. More investors are interested in crypto than ever before. Institutional interest in crypto continues to increase. The tools and products to include digital assets into portfolios continue to proliferate. Pending regulations will help create the kind of clarity that helps even more people become comfortable investing in crypto.
Yet the price of tokens like bitcoin and ether remain subdued – if there is all this momentum behind digital assets, it’s not showing up in the kind of price increases that signal investor enthusiasm.
Part of the reason for the stubbornly lower prices is an economic one – crypto did not show itself to be a hedge against inflation or equity volatility early in the market downturn, so investors haven’t seen digital assets as a haven while inflation remains high and interest rates climb.