VNTR Capital News Oct 29, 2023 – News, Events, VC Reads
Venture Capital, Web3, and Private Equity – Oct 29 News, Events, and VC Reads
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Past Week
VNTR Speed Networking — We hosted VNTR LITE and VNTR PRO members at our monthly speed networking event on Oct 23. Our members had 10+ one-on-one meetings each, where they connected and activated new relationships. Join November Speed Networking, which will take place on Nov 29.
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Barcelona — We hosted our Oct VNTR Barcelona Roundtable on Oct 25, a side event to the European Blockchain Convention.
Cascais — We hosted a private VNTR PRO Investors Dinner on Oct 26, where we learned about all the members' current investment focus and needs.
This Week
London — Join us at the VNTR FinTech Investors Dinner on Oct 31 in London to learn about FinTech trends and current FinTech deals.
Hong Kong — Join us on Nov 3 at our 2nd VNTR Investors Roundtable this year, which will mark the launch of the Hong Kong chapter as a side event to Hong Kong FinTech Week.
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VNTR Capital Events:
Nov 12 VNTR Investors Roundtable Melbourne (Australian Crypto Convention side event, VNTR PRO members get free passes, 50% off with VNTR50)
Nov 14 VNTR Investors Roundtable Lisbon (Portugal Tech Week side event)
Nov 16 VNTR Investors Roundtable Singapore (Singapore FinTech Festival side event, Complimentary Investor passes to VNTR Members)
Dec 1 VNTR Investors Roundtable Helsinki (SLUSH side event)
Dec 5 VNTR Investors Roundtable Berlin (Next Block Expo side event)
Dec 7 VNTR Investors Roundtable Bangalore (India Blockchain Week side event)
Dec 10 VNTR Investors Roundtable Miami (Art Basel Miami side event)
Jan 17 Venture Capital Investors Roundtable Davos (World Economic Forum 2024 side event)
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Nov 12 Girls Into VC 2023 Summit, Cambridge, Massachusetts, USA
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Nov 13 Europas, Lisbon, Portugal
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VC Reads
View curated VC news and articles on the VNTR Platform
What does it take to become a unicorn founder? Insights from 200 startup journeys
Is there a proven road to become a unicorn founder? What does it take to scale a startup, and is it different by market?
One of the most interesting pieces of research in the field recently came out by Endeavor, which charted the journeys of unicorn founders in the U.S., China and Emerging Markets, leveraging their rich global dataset.
The Week’s 10 Biggest Funding Rounds: Anthropic Rules With $500M Round; Aiolos Bio Nabs Large Raise
After a slow week last week — where the top raise was only $57 million — this week saw a nice pickup thanks again to AI. Four companies raised nine-figure rounds and there were several other big rounds just under that. Of course, Anthropic’s round late in the week was the top raise, but biotech took three of the top five spots.
The Big Reset in Seed to Series A Graduation Rates is Real and Permanent
A Fundamental Shift in the Series A Venture Landscape
For the past ten years, the near-term goal for most seed-stage companies has been to raise a Series A round of investment. Good venture capital firms saw 50-75% of their seed investments graduate to Series A rounds during this time. The ability to get successful seed-stage companies financed at the Series A stage was taken as a given by most seed-stage firms and their limited partners. In many ways, graduation rates became a key part of the marketing story around seed-stage firm performance.
Thiel’s Unicorn Success Is Awkward for Colleges
The billionaire investor’s fellowship has helped build 11 startups valued at $1 billion or more along with a host of other innovative companies — all by enticing smart kids to forgo higher education.
Meet The New AI Unicorns Of 2023
One in five of the new billion-dollar startups to join The Crunchbase Unicorn Board this year were artificial intelligence companies, an analysis of the board shows.
The 15 AI companies that joined as of Q3 2023 collectively added $21 billion in value to the board and were dominated by generative AI companies in text, translation, video, coding and human computer interaction.
These 15 companies are a small proportion of the 200 private companies tagged with AI on the unicorn board, as funding to this sector has grown over the past decade.
Scaling your B2B growth engine
On average, it took top B2B startups ~2 years from founding to hit $1m ARR, and roughly 1.5 years after closing their first customer. There are exceptions, like Ramp, Linear, Census, and Zip, that got there more quickly (some within months), and also companies like Loom and Vanta that took 2+ years.
What’s weighing down Europe’s IPO market rebound?
Europe's struggling IPO market teased a comeback this week with the news that Swedish battery maker Northvolt is aiming to go public in Stockholm at a valuation of up to $20 billion. But a slew of recently canceled listings, along with the dismal performance by London's biggest listing this year, casts doubt on any hope for a rebound in IPOs. Northvolt's planned deal makes it the most highly valued company to go public in Europe this year. But just a day after that IPO was announced, the market was jolted by news that shares of newly public CAB Payments plunged 72% after it slashed its revenue forecast.
Raising without a deck is more common than you think
If you want to raise venture capital funding, you should be able to tell a compelling story to get anywhere. What’s more, according to conventional wisdom, your story should be supported by a pitch-perfect deck, too. How many slides a deck needs and what order they should be in is up for debate, but the deck itself is nonnegotiable. That said, there are, in fact, people out there raising lots of capital without employing a deck at all. I was really intrigued to speak to two of them and learn how they did it. Before Michal Cieplinski became the CEO and founder of fintech startup Capstack, he successfully founded several companies and invested in others. Today, he has refined his storytelling chops to the extent that he doesn’t use a deck at all.
VCTs are proving resilient in the downturn, data shows
VCs may be facing their toughest fundraising environment in years, but one kind of fund is bucking the trend. Venture capital trusts (VCTs) — which invest retail investor money into startups — in the UK have continued to attract capital, as savers look to invest cash in fast-growing companies and reap the tax benefits. This month, a number of the UK’s biggest VCTs have also launched new fundraises. The largest of Octopus Investments four VCTs — Titan — launched a new £200m fundraise last week, inviting retail investors with £3k-200k to spare to take a bet on its fund. Molten Ventures’ VCT, which often invests alongside its main fund, launched a new £40m fundraise at the beginning of the month for investors with the same amount of cash.
There could be a simple reason why seed deals are so expensive today
Why are seed deals still so expensive? The global venture capital market has contracted steadily over the past year, but seed valuations have not, avoiding the massive cuts to round size and median valuations that later startup investment stages have suffered. And according to Accel’s Philippe Botteri, it appears there’s a simple answer as to why seed deals are holding up so well: rapid growth. The seed market is a bit weird right now. On one hand, PitchBook reports that at a total of $3.2 billion in the third quarter, pre-seed and seed deals in the U.S. have “fallen to pre-pandemic levels.
Startup Radar: VCs on immigrant-founded startups you need to know
Immigrant entrepreneurs are a driving force behind many of the world's largest VC ecosystems, creating some of the most well-known names in tech. According to research by the National Foundation for American Policy, over half of US unicorns were founded by immigrants and nearly two-thirds were founded or co-founded by immigrants or their children. Examples of these include Stripe, SpaceX and Instacart. "Immigrant entrepreneurs often have to go through tremendous hardship when they uproot their lives, get a one-way ticket to a foreign country, and start from scratch," said Semyon Dukach, founding partner of One Way Ventures. "From that tremendous hardship, often comes a tremendous capacity to carry a sustainable company all the way to success."
Regulatory Clarity Won’t Bring an End to Crypto Risk
Like a ship emerging through the fog, the outlines of regulatory clarity are becoming visible in many different parts of the world, even though the United States isn’t one of them. From Japan to Dubai to the EU, the rules and regulatory models for cryptocurrencies, digitized real world assets and stablecoins are taking shape. The future is one where it will be possible to legally issue all kinds of digital assets, and that legal and regulatory structure will reduce risks and unleash a torrent of investment in the space. So pack your sunscreen, the blockchain summer is coming.
French early-stage startups get a €500m funding boost in 2024 budget
An extra €500m of funding per year is expected to be injected in French startups thanks to new budget laws, which provide tax incentives for those who wish to invest their savings in early-stage companies.
It is a welcome boost for the country’s startup ecosystem, investors and founders say, although hopes were high for even higher tax breaks that would have unlocked funding in the billions.
Distressed debt investors prepare for 2024 opportunities
Distressed debt funds have slipped in performance in recent years, with slim pickings for attractive distressed assets. But GPs expect to increase capital deployment in 2024 and beyond with expectations for more troubled companies and distressed debt. Higher for longer interest rates are expected to create more stressed and distressed situations among over-leveraged borrowers with maturing debt, which should result in more deals, improve fund returns and propel capital-raising efforts again.
Take-privates dominate top PE-backed enterprise software deals
Massive take-privates have been propping up private equity activity in enterprise software. While global PE deal value in the business-centered software arena is down from its 2022 peak of $138.8 billion, investors are remaining active with $58.3 billion in total value in 2023, spearheaded largely by a number of large-scale take-privates, according to PitchBook data. In the largest enterprise software PE deal of 2023, Silver Lake and the Canada Pension Plan Investment Board bought customer experience management company Qualtrics off of the Nasdaq for $12.5 billion.
VCs Have A Bad Relationship With Trucks
Among country singers, crooning about trucks has long been a reliable path to getting a hit. The list of famed songs praising old pickups is probably rivaled in length only by odes to whiskey and broken hearts. If only startup investors could do the same. But sadly, when it comes to trucks, venture capitalists are basically the opposite of country singers. Almost anytime they start dabbling with pickups and long-haul tractor-trailers, the result seems to be anything but a hit. The list of failures at the intersection of trucks, trucking and startups is not a short one. Nor is it a cheap one. Failed companies raised billions before breaking down.
SaaS follow-on rounds see a slowdown, but it won’t last forever
Global venture funding has been rather gloomy as of late, with data from Crunchbase showing that investments fell in Q3 despite a late-stage rebound led by large AI deals. And the story’s no different for SaaS startups. In May, net new SaaS sales came down from a spike in Q1 while churn worsened, spurred by reduced business-to-business budgets and higher borrowing costs. At the same time, extension rounds — an important indicator of a sector’s overall health — declined. PitchBook data compiled for TechCrunch shows that U.S. VC follow-on activity in SaaS dropped from a high of $9.7 billion across 270 deals in March to a low of $1.5 billion across 131 deals in October.
European cleantech shows resilience in face of VC downturn
Half of the largest European venture capital deals in Q3 involved cleantech startups as the sector has seen less severe declines than others in VC dealmaking. A total of €9.1 billion (around $9.6 billion) was invested across 748 deals in the first nine months of this year, according to PitchBook's Q3 2023 European Venture Report. This represents falls of 42.8% for deal value and 38% for count compared to 2022.
African VCs and startups are eyeing the Middle East for new capital, but there’s a catch
African startup funding has seen a significant decline of more than 50% over the past three quarters compared to the previous year, as reported by The Big Deal. To date, startups on the continent have secured funding in the range of $2.5 billion to $3.4 billion, based on data from The Big Deal and Briter Bridges. With one quarter remaining, it appears unlikely that this figure will reach the levels seen in 2021 and 2022, when venture capital peaked at $5 to $6 billion, encompassing equity and debt deals. It’s essential to note that this decline isn’t exclusive to Africa. Venture capital worldwide has retraced to pre-COVID levels. However, Africa’s diminishing numbers are particularly concerning given its reliance on external funding, especially compared to other emerging tech ecosystems such as India and Latin America.
Andreessen Horowitz May Be Optimistic About Tech, But It’s Still Slowing Its Deal Pace
Andreessen Horowitz is known for its bets on then-startups such as Facebook, Instagram and Airbnb. Firm founder Marc Andreessen is also known for his opinion pieces, from “Software Is Eating The World” to the new and much-discussed “The Techno-Optimist Manifesto” published last week. The 5,000-word “manifesto” basically says technology is the cure for — not the cause of — the world’s ills and comes complete with an enemy list and even a “meaning of life” entry. While it’s been much debated here, here and here — as well as several other places — we’ll forgo the back-and-forth and instead look to see how “optimistic” the firm really is right now in the market. At least judging by its 2023 reported investment activity, it seems a16z, as the firm is also known, is a lot less bullish than in recent past years.
Want to expand into the US as a European startup? Read this first
From 2015-2019, a third of European companies who expanded to the US did so even before they even raised a Series A, according to Index research.
European startups usually cite potential customers as the impetus for a move stateside, but funding also plays a major role. There is simply more money available in the US – to compare, in 2020, venture capital funding reached almost $24bn in Europe and $73.6bn in the US. To access that capital, some sort of US presence is often a requirement.
But when is the right time to consider expanding across the Atlantic? And what kind of presence does your startup need? How soon is too soon? How late is too late?
Crypto reshapes the American dream for younger generations
A new Coinbase report on the state of crypto has revealed the disillusionment of younger generations (Gen Z and Millennials) with the traditional American dream and the financial system. It shows young Americans are more open than older generations to unconventional paths to financial independence, such as crypto, than older generations. According to the report, young people find the American dream less achievable, partly due to high housing costs, inflation and an outdated financial system. Instead of following conventional paths, they are actively building new models of work, ownership and finance that are more flexible and don’t rely on legacy intermediaries.
Investors Have Stopped Feeding The Supply Chain
For a number of years, one of startup investors’ favorite activities involved writing checks to companies in the supply chain management sector. From 2018 till the end of 2022, investors across the globe poured more than $50 billion in seed through growth financing into supply chain-related companies, per Crunchbase data. Several startups raised billions, including cold chain logistics company Lineage Logistics, freight-forwarding platform provider Flexport, and Hong Kong-based Lalamove. As with all venture bets, it will take time to see what runaway success stories might emerge from this tremendous capital expenditure. Already, however, it’s clear some big wagers haven’t worked out.
From Buildings To Ocean Water, Startups Are Finding More Places To Stow Carbon
There is too much carbon in the atmosphere, and we have to find somewhere else to put it. Preferably, somewhere stable and contained. Maybe deep underground. Potentially in some concrete. Or perhaps sucked into the vastness of the ocean. Looking at funded startups in the carbon removal space, such ideas aren’t abstractions. Rather, they describe several business models around carbon removal that have collectively pulled in hundreds of millions of dollars from investors this year alone. Funding records show that financings around carbon removal themes have accelerated in recent quarters, in tandem with climate data pointing to increasingly dire impacts should atmospheric carbon levels continue to rise. To some extent, it’s a recognition that, given the suboptimal adoption pace of clean energy sources, there’s an urgent need for other options.
20 UK VC firms commit to plan to direct pension funds cash to startups
Twenty British venture capital firms have committed to working with UK pension funds to pump more investment into UK startups. The British Private Equity and Venture Capital Association (BVCA) is bringing together pension funds and VC firms in a “Venture Capital Investment Compact” — one of the main elements of the UK government’s Mansion House reforms to help startups benefit from untapped capital in pension funds. The list of VC firms joining the compact include the likes of Albion, Amadeus Capital, Balderton, Cambridge Innovation Capital, IQ Capital, Lakestar, Molten and Octopus, among others. Together they support more than 1,800 companies and have more than £25bn of assets under management.
Strategic Partnerships: Best Practices And Pitfalls To Avoid
Strategic partnerships are formidable tools in an entrepreneur’s arsenal, capable of accelerating growth, adding credibility to your offerings, and opening doors to new horizons. However, when mishandled, they can spell the slow decline of your business. As a start, let’s explore the fundamental types of strategic partnerships and their inherent pitfalls. Product partner: Product partnerships involve a collaboration in which two companies merge their technologies or resources to create an advanced product beneficial to both parties. This type of partnership can yield innovative solutions that neither could achieve independently. A potential pitfall here is intertwining your intellectual property with your partner’s, making it challenging to disentangle in case of an acquisition.
African VCs and startups are eyeing the Middle East for new capital, but there's a catch
African startup funding has seen a significant decline of more than 50% over the past three quarters compared to the previous year, as reported by The Big Deal. To date, startups on the continent have secured funding in the range of $2.5 billion to $3.4 billion, based on data from The Big Deal and Briter Bridges. With one quarter remaining, it appears unlikely that this figure will reach the levels seen in 2021 and 2022, when venture capital peaked at $5 to $6 billion, encompassing equity and debt deals.
The U.S. Risks Its Position as a Stablecoin Leader
Stablecoins are the backbone of the crypto economy. Transactions involving USD-backed stablecoins reached nearly $6.87 trillion in 2022, surpassing the volumes of Mastercard and PayPal. Despite the crypto winter, stablecoin activity has remained resilient, reflecting approximately 40% of all value transacted on blockchain networks. In other words, stablecoins have emerged as an innovation with product-market fit.
Inside Sequoia Capital’s Growing AI Portfolio
A year ago, about 16% of Sequoia Capital’s new investments were in artificial intelligence startups. So far in 2023, that number has jumped to nearly 60%. “AI has brought new life to the investing ecosystem in the last year,” said Stephanie Zhan, a partner at the firm who invests in seed and early-stage companies. Crunchbase News spoke with Zhan about Sequoia’s AI investments, which the firm says now span 70-plus portfolio companies.
Venture Capital investment into the UK remains steady but deal volumes fall
VC investment into UK businesses has continued to remain stable in the third quarter of 2023. However, investor caution still remains over the sustained cost of living crisis and the high interest rate environment impacting the UK economy.
A total of $5.2 billion was invested into UK businesses during July - September 2023, with 469 deals completed during that period. Whilst investment was down $0.4 billion on the previous quarter, the number of deals completed fell by 34% from 713 in the second quarter for the year.