VNTR Capital News Oct 2nd, 2022 - News, Events, VC Reads
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VNTR CAPITAL COMMUNITY NEWS
Week’s Highlight – We had a busy week in Singapore, where we hosted our largest networking breakfast for a select group of investors from Singapore, Hong Kong, South Korea, Japan, Indonesia, UAE, Israel, Australia, Lithuania, USA, Vietnam, India, Chech Republic, Taiwan, Philippines, Latvia, Estonia, UK, France, and Sweden. A video summary of the event is available here.
Thank you to our partners for their vital support in producing our event in Singapore:
BitDegree is the leading Web3 Learning Hub, helping 20 million learners annually start their journey in crypto and discover awesome Web3 projects.
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.
Market Making Pro is a B2B SaaS one-stop solution for market-making in the cryptocurrency market, working with 50+ DEXs and CEXs and 450+ clients since 2017.
Aargo Trade is a global investment management firm built on a solid foundation of scientific research and technology.
Today’s Event – We are hosting a private sailing experience in Lisbon for local investors and entrepreneurs who will spend 4 hours together exploring the majestic Lisbon/Cascais coast.
Current Syndicated Deal - Series B FinTech company that is launching neobanks in emerging markets, already successfully operating in Azerbaijan, and launching in Vietnam, Nigeria, Pakistan, and India by the end of 2023. Deadlines: indicate interest by Oct 21; transfer funds by Oct 24.
Join VNTR Syndicate to learn more.
Join us at upcoming VNTR Capital events:
Oct 12 VNTR Capital Breakfast / Dubai (during Gitex)
Oct 20 VNTR Capital Breakfast / Los Angeles (during Glendale Tech Week)
Oct 21 VNTR Capital Breakfast / Vienna (during Wolves Summit)
Oct 23 VNTR Capital Breakfast / Tbilisi, Georgia (during DeGameFi)
Oct 25 VNTR Capital Breakfast / Las Vegas (during Money2020)
Nov 2 VNTR Capital Breakfast / Lisbon (during Web Summit)
Nov 3 VNTR Capital Breakfast / Lisbon (during Wow Summit)
Nov 3 VNTR Capital Breakfast / Istanbul (during Istanbul Tech Week)
Nov 10 VNTR Capital Breakfast / London (during Token2049 London)
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UPCOMING VC EVENTS
Oct 5-6 CryptoExo, Dubai, UAE
Oct 5-6 Sifted Summit, London, UK
Oct 10-14 GITEX Global, Dubai, UAE
Oct 10-13 Future Blockchain Summit, Dubai, UAE
Oct 13-15 VC Weekend, Dubai, UAE
Oct 16-20 Glendale Tech Week, LA, USA
Oct 17-18 World Blockchain Summit, Dubai, UAE
Oct 18-20 TechCrunch Disrupt, San Francisco, USA
Oct 19-20 Future Innovation Summit, Dubai, UAE
Oct 21-22 Wolves Summit, Vienna, Austria
Oct 22-23 DEGAMEFI, Tbilisi, Georgia
Oct 23-26 Money2020, Las Vegas, USA
Nov 1-4 Web Summit, Lisbon, Portugal
Nov 1-3 Wow Summit, Lisbon, Portugal
Nov 9-10 Token2049, London, UK
Nov 10-11 Pacific Bitcoin, LA, US
Nov 14-18 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 24 VNTR Capital Breakfast Next Block Expo, Berlin, Germany
Dec 1-3 Art Basel Miami, US
Dec 6-7 NOAH Zurich 2022, Switzerland
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VC READS
Why Is the Dollar Crushing Global Currencies if Inflation Is so Bad?
While the declining domestic buying power of a dollar dominates headlines in the United States, American inflation is having a surprising impact around the globe: Nearly every major currency has fallen dramatically against the dollar over the past six months. That seems like a challenge to the relentless focus on monetary supply that is widespread among cryptocurrency adherents.
China’s yuan has lost 12% against the dollar since April, and traditionally stronger currencies including the euro and yen have seen similar drops. Controversial financial decisions by new U.K. Prime Minister Liz Truss have driven the British pound down even more sharply in recent days, for a cumulative 18% drop since April. These moves may be particularly surprising for those whose financial thinking has been shaped by discussions in cryptocurrency circles. You might argue the tail has wagged the dog on crypto’s understanding of inflation: Bitcoin’s fixed supply has been aggressively marketed as a long-term inflation hedge, leading to an emphasis on so-called monetary inflation. Monetary inflation occurs when more monetary units compete for the same amount of real-world goods, driving prices up. Or, as a coronavirus pandemic-era meme elegantly simplified it, “money printer go brrrrr.”
Saudi Arabia to invest $37 billion in gaming
Saudi Arabia's government-funded gaming conglomerate The Savvy Gaming Group will invest $37.8 billion in gaming as part of a controversial effort to expand the kingdom's role in the sector. Why it matters: Savvy is primed to buy up a lot of gaming companies and start many of its own. Savvy has earmarked more than $13 billion "for the acquisition and development of a leading game publisher to become a strategic development partner," according to the kingdom's press agency.
Porsche goes public in landmark IPO
Porsche has made its public debut in one of Europe's largest IPOs to date, defying one of the weakest listing markets in years. The luxury carmaker, which is majority owned by Volkswagen, listed in Frankfurt at the top of its range. The share price of €82.50 gave the company a reported market cap of around €78 billion (about $76 billion). Porsche's listing is a bright spot for European IPOs, which have plummeted this year after a frenzied 2021. Only 231 companies have listed in 2022, according to PitchBook data, compared to 873 during last year's surge; both IPO count and aggregate value are on pace for potential decade lows.
Google Ventures shelves its algorithm
Google Ventures has mothballed an algorithm that for years had served as a gatekeeper for new investments, Axios has learned from multiple sources.
Why it matters: This is a strategic sea change for one of venture capital's most data-driven firms and a Big Tech acknowledgment that human judgment shouldn't always be automated away.
SoftBank Plans To Cut 30% Of Vision Fund Staff
After facing one of the biggest quarterly losses in history, SoftBank is planning on laying off another 30% of employees, according to Bloomberg News. The Vision Fund, SoftBank’s venture arm, reported a devastating $21.6 billion loss in August. That, coupled with plummeting valuations on SoftBank’s portfolio companies like DoorDash and Uber and the Japanese Yen depreciating in value, has set the company back more than $23 billion. The company plans on laying off roughly 150 of 500 employees from the fund, which is based in London. Earlier in September, reports said the company planned on cutting 20% of its Vision Fund staff. SoftBank has sold shares of its portfolio companies to cushion the blow of these losses, a dramatic pivot from 2020 and 2021 when the company pushed portfolio companies to debut on the public market. CEO Masayoshi Son offered a rare mea culpa in August, stating, “When we were turning out big profits, I became somewhat delirious, and looking back at myself now, I am quite embarrassed and remorseful.”
BlackRock’s newest ETF invests in 35 blockchain-related companies
BlackRock, the world’s largest asset manager, has just launched a new exchange-traded fund (ETF) providing European customers with exposure to the blockchain industry, while reports indicate a Metaverse-focused ETF may be on the way. The new blockchain ETF launched on Sept. 27 is called the iShares Blockchain Technology UCITS ETF (BLKC). BlackRock said 75% of its holdings consist of blockchain companies such as miners and exchanges, while the other 25% are companies that support the blockchain ecosystem. The fund includes 35 global companies out of a total of 50 holdings, which also includes fiat cash and derivatives, but does not directly invest in cryptocurrencies. BLKC marks the latest of a series of moves into the digital assets space for BlackRock, with the most recent being the launch of a private spot Bitcoin trust on Aug. 11. In a Sept. 29 report from Finextra, product strategist for thematic and sector ETFs at BlackRock, Omar Moufti, said the ETF will “allow our clients the opportunity to engage with global companies leading the development of the emerging blockchain ecosystem,"
India’s startup market may be behind China’s, but it has ‘tremendous potential,’ says Facebook co-founder
India’s startup market is worth betting on, though it’s still “a few years” behind China’s, Facebook co-founder Eduardo Saverin said. During a panel discussion at the Forbes Global CEO Conference in Singapore this week, Saverin said his investment company B Capital is deploying “a lot of dollars” into India and is thinking about the long-term success of new companies there. “I think India is a huge market with just tremendous potential,” Saverin said, in response to a question on why India’s startup ecosystem has not generated better returns.
“And I think as the market continues to mature, and as you get into a better macroeconomic environment, it is a market to bet on, combined with Southeast Asia.” Much of the growth in India will come from enterprise tech companies, Saverin said, adding that B Capital has put money into a electronic health records company and contract management companies. Enterprise tech companies are those that create software that serve businesses.
New Pillsbury Report Finds Climatetech Remains a Priority for VC Investors Worldwide
Despite a variety of macroeconomic challenges in 2022, venture capital investments in climate tech continues to outpace the market according to recent analysis by Pillsbury. As reported in Climatetech: Venture Dealmaking & Cross-Border Investment Trends, the sector is on pace for a strong year that may only be surpassed by the unprecedented deal activity of 2021. "Qualified opportunities tend to bring capital onto different continents," noted Pillsbury partner and report contributor Stan Lewandowski, who focuses his practice on advising startups across a variety of international markets. "Prominent investors have claimed that the next wave of unicorns will be companies developing green hydrogen, climate-smart agriculture, green steel, and green cement and that borders will not exist for such investments."
Cathie Wood's Ark courts retail investors with new VC fund
Cathie Wood's Ark Investment rose to prominence over the last several years by making bets on high-growth tech stocks. Now, the firm wants to help open venture capital investing to individuals. Ark Investment is launching a new venture fund with a minimum initial investment of $500. The fund will be made available exclusively on Titan, a fintech startup backed by General Catalyst and Andreessen Horowitz. The Ark Venture Fund plans to construct a portfolio that is 70% early- and late-stage private companies and 30% public technology stocks. The firm will also invest selectively in other venture capital funds. The fund's initial private investments include Epic Games, Flexport and Chipper Cash, according to a tweet by Clayton Gardner, Titan's co-founder and CEO. Ark did not reveal how the fund intends to source VC investments. The firm did not respond to a request for comment. Venture capital is one of the most high-risk asset classes. The difference in returns between the top and bottom performing funds has historically been larger for VC than for all other private market asset classes, according to PitchBook data. Therefore, investors' return expectations will depend on Ark venture fund's ability to invest in strong startups.
The 'Brussels Effect' wields real influence over US crypto regulation
The right to privacy is enshrined in many legal traditions around the world. In the United States, it’s protected by the Fourth Amendment; in the European Union, it falls under Article 8 of the European Convention for Human Rights. While definitions differ between jurisdictions, most of us have a right to a reasonable expectation of privacy for our correspondence, in our homes and about our persons. In the 1970s, businesses, families and individuals started generating data like never before, and the degree to which it fell under existing privacy mandates was increasingly unclear. This proliferation of data was first acknowledged as a problem in the late 70s and picked up pace in the decade that followed. In response, the EU introduced its Data Protection Directive in 1995, guaranteeing certain fundamental rights around the processing of personal data. The crucial thing to understand in this context is that an EU directive leaves space for member states to determine how it will be incorporated into national laws. It is a recommendation, not a regulation that would legally require members to enforce laws from a set date.
Startup Notes From The United Nations General Assembly And Clinton Global Initiative
During last week’s United Nations General Assembly in New York City, I attended one of the many events taking place, the Clinton Global Initiative conference.I went with an interest in learning what organizations today are doing to face global challenges and found that early-stage entrepreneurs are leading that change.Early-stage startups are playing an increasingly significant role in solving some of the world’s greatest challenges. In the past, startups doing good, and doing well, may have been relegated to the area of social impact. The onset, however, of a global pandemic, and the catastrophic impact of climate change has called for solutions that often governments alone may not be able to ideate, much less execute against.Where a gap exists, some early-stage entrepreneurs have heeded the call in finding practical solutions to the world’s biggest problems.
Minority-Owned Managers in PE and Venture Capital Face Barriers in Raising Their First Funds. Researchers Explore Why.
During fundraising, past performance metrics have a greater impact on Black- and Latino-owned private capital funds than on white-owned funds. In fact, minority-owned venture capital and private equity buyout funds are more likely to be punished for past performance when fundraising for a second fund, according to a paper titled “Racial Diversity in Private Capital Fundraising” by Johan Cassel, an assistant professor of finance at Vanderbilt University, Josh Lerner, a professor at Harvard Business School, and Emmanuel Yimfor, an assistant professor of finance at the University of Michigan. This dynamic is indicative of larger investor biases toward minority-owned funds. The asset management industry has little diversity. According to one of Lerner’s previous papers, in 2021 only about 1.4 percent of the total share of assets under management were managed by firms owned by minorities in the U.S., even though they represented 40 percent of the population last year.
Where’s Funding Going In Former Soviet States? Not Russia.
When the Soviet Union splintered into separate nations in the early 1990s, it contained exactly zero hubs for venture-backed tech startups. Three decades later, of course, the picture is quite different. Metro areas in multiple former Soviet countries now have a rich concentration of tech founders. Capital has followed. But as one might expect, geopolitics have created some havoc in the fundraising dynamics. In particular, Russia, an up-and-coming market for U.S. and European VCs roughly a decade ago, is now persona non grata on the term sheet. This begs the question: Are other tech hubs in the region picking up the slack? To get a general idea, we took a look at how former Soviet nations rank on the startup funding front using Crunchbase data. Below, we break down the funding by region, including the Baltic States, Eastern Europe, Central Asia, the Caucasus and Russia.We’ll start with the Baltic nations of Estonia, Latvia and Lithuania. These are known as cold places climatewise but hot ones when it comes to startup funding. Over the past three years, the three countries have pulled in at least $3.65 billion in known startup and growth-stage financing. This has gone to a small stable of unicorns alongside a number of earlier-stage upstarts.
Web3 Weekly: Crypto Holding Even As Equities Markets Tumble
This week we took a deeper look into M&A deal making—or lack thereof—this year in crypto. While the year got off to a fast start, with more than a dozen deals announced for VC-backed companies, the pace has slowed as the crypto winter has gotten colder. Just this month, Bolt dropped plans to buy crypto and payment infrastructure company Wyre for $1.5 billion as the industry pilots through dropping valuations. Weeks earlier, digital asset investment firm Galaxy Digital called off its proposed $1.2 billion acquisition of Palo Alto, California-based BitGo.
Despite the pullback on dealmaking, other numbers this week may show some positive sign for the industry. Crypto prices historically have been linked to the public markets (here’s an example), often mirroring to some degree the ups and downs. That has been for a couple of reasons—as we’ve written about before—including the influx of large institutional traders from banks to hedge funds into the crypto sector and drops in the market make risk assets like crypto less attractive to investors.
Despite its many troubles, the insurtech market is ‘far from dead,’ investors say
When insurtech company Metromile went public via a special purpose acquisition company (SPAC) in February last year, it was valued at over $1 billion. A year and five months later, Lemonade acquired the company for less than $145 million. As the markets turned early this year, insurtech left most generalist investors’ playbooks almost as fast as Metromile and its peers’ plummeting valuations. Yet, the sector is very much alive, and the “correction” of these companies’ valuations presents an opportunity for those who have cash left on their balance sheets, investors told TechCrunch. “Just like how not every insurtech was a unicorn last year, not all of them are worth zero today,” said Florian Graillot, founding partner at Astoria.vc.The insurtech market has been through a rough time this past year, so we reached out to eight active investors in the space to get a read on what’s been cooking as the markets aggressively recalibrated what an insurtech startup is worth.
India is where climate tech meets global venture capital
One of the world’s biggest greenhouse gas emitters is trying to clean up. Global venture capitalists looking to put their money to work should keep an eye on it. Drive through the streets of New Delhi and its surrounds and the Indian capital is abuzz with activity. Rusty metal signs that tout “Electric Charging” stand out, along with stations that power electric two-and-three wheelers. Startups building technology to drive greening and sustainability are hustling for funding. Corporate activity is chugging along, while capital expenditure has risen sharply in recent months and rail freight volumes have reached record highs. India’s biggest companies — including the likes of Wipro Ltd., UltraTech Cement Ltd. and Reliance Industries — are increasingly talking to their shareholders about sustainability. Private capital is looking to back climate change-related technology, too: Of the almost $27 billion of such investments globally in the first half of this year, close to $2 billion went to India’s firms.
EQT's Billtrust acquisition is latest in a hot year for financial software take-private deals
Swedish private equity firm EQT's deal to acquire Billtrust, a payments software provider, is the latest in a string of take-private transactions in the financial software sector, where falling valuations have created opportunities for private buyers. Including the Billtrust deal, there have been eight take-private buyouts involving financial software companies worth a total of $26.92 billion so far this year—the highest annual deal value since 2007, when PE firms inked two take-privates totaling $29 billion, according to PitchBook data. This year's total deal count is well ahead of last year and breaks the record set in 2019. Buyout firms this year have been on a take-private dealmaking tear as they seek to take advantage of the decline in valuations of publicly traded companies, according to PitchBook's Q2 2022 US PE Breakdown. Many public companies are trading at a discount of 50% or more from their 52-week highs. The largest take-private deal in the financial software industry so far this year is Thoma Bravo's $10.4 billion buyout of Anaplan, a San Francisco-based company that provides business planning software to companies such as Coca-Cola and Shell.
Cloudflare unveils $1.25 bn fund to help startups, partners 26 VC firms
Digital infrastructure services provider Cloudflare on Tuesday announced a $1.25 billion ‘Workers Launchpad Funding’ programme to help startups grow their businesses.
The company partnered 26 leading venture capital firms to help startups building applications on Cloudflare Workers, a highly-scalable serverless computing platform that allows developers to build or augment apps without configuring or maintaining infrastructure.
Real Estate 3.0 – The Ownership Revolution
Real estate has always been more than just the largest asset class in the world. It is the embodiment of home and work, family and business – the opportunity of generational wealth, writ large. The American dream. One that has become increasingly out of reach to most Americans. But, obscured by news of 14-year-high rate hikes, outsized mortgages, rising rents, and company layoffs, there is something important and largely positive happening at the edges of the real estate industry: Paths to ownership of real estate are expanding. What “ownership” even means is also expanding.
Down rounds help VC-backed founders shift growth expectations
Down rounds often signal risks of a struggling business to future investors. But contrary to expectations, venture-backed companies that have taken on a down round are likely to continue on the path to growth—including raising new rounds and restructuring following a buyout. Only 13% of the US companies that raised a down round from 2008 to 2014 were unable to raise a new round or exit immediately after, according to a recent PitchBook analyst note.Companies that raise a down round are more likely to be acquired by a private equity firm. Nearly 1 in 5 of the companies analyzed took the buyout path. Within the broader venture ecosystem, 11.5% of company exits since 2016 have occurred through a buyout. Kyle Stanford, a senior analyst at PitchBook, said the difference is significant because it highlights the change in expectations needed for companies that have raised a down round. "The unicorn IPO is probably not on the table for most companies after a down round, but buyout firms come in and buy companies that are strong underlying businesses that just need to be restructured," said Stanford.
FTX Wins Bid to Buy Crypto Lender Voyager Digital's Assets Out of Bankruptcy
Exchange giant FTX won the bidding war to buy the assets of bankrupt Voyager Digital, Voyager said in a press release late Monday Eastern time. FTX was bidding against Wave Financial, a digital-asset investment firm. Voyager Token (VGX) rose after the announcement, gaining 3.76% as of 04:17 UTC, trading around 76 U.S. cents. Crypto lender Voyager Digital filed for bankruptcy in July. Industry observers had been increasing their scrutiny of Voyager’s business practices, particularly how the Canadian-listed firm said in marketing materials that investors' deposits were protected by Federal Deposit Insurance Corporation (FDIC) insurance.
While FDIC insurance would indeed protect bank-held cash deposits up to $250,000, it would not cover cash converted to stablecoins. According to writer Frances Coppola, Voyager’s loan book accounted for nearly half of its total assets, and nearly 60% of that loan book was composed of loans to Three Arrows, which filed for Chapter 15 bankruptcy, also in July.
Startups stare at 2-year funding freeze, though investors sit on $9-billion dry powder
India-dedicated private equity and venture capital (PE/VC) firms are sitting on billions of dollars of dry powder but a full-blown funding revival in the world’s third-largest startup ecosystem is unlikely in the next 12-18 months as investors tread cautiously in an increasingly challenging macro environment. PE/VC firms, focused on India, have raised almost $9 billion in 12 months between September 2021 and August 2022 compared to $5 billion in the year-ago period, data collated by Venture Intelligence showed. However, while these investors made more bets in the 2021-22 period, the cheque sizes seem to have shrunk. During 2021-22, PE/VC firms made 1,470 bets worth $58 billion compared to 1,154 bets of $56.5 billion in the year-ago period. Ashish Kumar, Managing Partner at Nandan Nilekani’s Fundamentum Partnership, said that as VCs do not have any specific time frame to deploy the funds that they have raised, they might wait for the macros to turn positive before aggressively investing in companies.