VNTR Capital Newsletter June 16, 2024 – News, Events, VC Reads
Venture Capital, Web3, and Private Equity – News, Events, and VC Reads
Hello friends,
Happy Sunday!
VNTR Capital Newsletter is delivered to 90k+ investors weekly to share the latest news, events, and articles from the global VC and startup ecosystem.
Scroll down for VNTR Capital Community News, Upcoming Events, and VC News/Reads.
VNTR CAPITAL COMMUNITY NEWS
Spotlight
VNTR Podcast: The latest episode of the VNTR Podcast is now live on YouTube, Spotify, and Apple. In this episode, we speak with Dave McClure, Founder and Managing Partner at Practical Venture Capital and 500 Startups. Dave shares his journey as an investor, from his early days at PayPal to his roles as Managing Partner at 500 Startups and Practical Venture Capital. He discusses Practical Venture Capital's unique focus as a VC secondary firm providing liquidity to LPs and GPs, offering valuable insights into the evolving landscape of venture capital.
You catch up on our previous episodes with Tim Draper and Lou Kerner. Contact Elise if you're interested in joining as a guest on the VNTR Podcast.VNTR Summit: Join us at the VNTR Summit, which will gather the global VC community in Lisbon from November 11 to 14 during the Web Summit. The summit will feature keynotes, panel discussions, and roundtables, offering opportunities to share insights, learn, network, and collaborate with investors worldwide. Apply to join. Companies interested in connecting with investors can apply for sponsorship.
VNTR Island Summer Trip: We are finalizing the agenda for our summer trip with VNTR members to one of the European islands from July 30 to August 2. Spots are limited, with priority given to VNTR Club members. To secure your spot, please reach out to Elise. Stay tuned for more details and registration information next Sunday.
Coming 2 weeks:
Online: June 17 VNTR Chapter Directors Roundtable (VNTR Chapter leaders monthly online gathering)
Online: VNTR Expert Session with Club Member Alexander Filatov, CEO of EverX, "Web3 / Blockchain / Crypto / Key Narrative for 2024"
Toronto: June 18 VNTR Investors Roundtable Toronto during Collision. Thank you, Highline Beta, for hosting.
Online: June 19 VNTR Speed Networking hosted on Airmeet. (connect via one-on-one sessions with community members)
Mexico City: June 26 VNTR Investors Roundtable Mexico City.
Koh Samui: June 26 VNTR Investors Padel Experience in Koh Samui.
New York: June 26 VNTR Investors Cocktail during Bloomberg Invest Summit. Thank you to our partners: Filedgr, N8 Capital.
Cluj-Napoca: June 27 VNTR Investors Roundtable during Techsylvania.
Thank you to our Partners:
Perfect is a Personal Lifestyle app that helps you Book your flights and hotels and manage your lifestyle. Enjoy personalized assistance with tasks, errands, and reservations, freeing time for what truly matters. Join Perfect using "VNTR" code to get special discounts and VNTR experiences.
Synexis is Blockchain-powered shares distribution, intellectual property protection, and transparency reports automation for startups and investors. Contact Paul to join their beta program.
Paypolitan stands at the cutting edge of payment technology, operating as an innovative application that effortlessly merges conventional fiat currency and contemporary cryptocurrency transactions. As a fintech pioneer, Paypolitan is a first mover in Open Banking with over 2,000 connected banks in over 40 countries. Contact Nils to explore partnership or integration.
Upcoming VNTR Events:
July 25 VNTR Investors Roundtable Kuala Lumpur (Tech in Asia Conference)
Aug 8 VNTR Investors Roundtable Auckland (New Zealand Chapter gathering)
Aug 13 VNTR Investors Roundtable Toronto (Blockchain Futurist Conference)
More events available on the VNTR Platform
Reach out to Lukas to sponsor VNTR events or join VNTR Corporate Membership.
Follow us on Social media: Instagram, LinkedIn, Facebook, Flickr, and X.
UPCOMING VC EVENTS
June 17-21 Cannes Lions, Cannes, France
June 17-20 Collision Conf, Toronto, Canada
June 24-26 Fund Forum, Monaco
June 25-26 Bloomberg Invest Summit, New York, USA
June 26-27 Techsylvania, Cluj, Romania
June 26-27 FinTech Summit Africa, Johannesburg, South Africa
June 26-28 Mobile World Congress, Shanghai, China
June 28-30 Investment Ecosystem Conference Vol.3, Tbilisi, Georgia
July 25-27 Bitcoin2024, Nashville, USA
Aug 21-23 VCILAT, Santa Cruz De La Sierra, Bolivia
Aug 22-24 Coinfest, Bali, Indonesia
Aug 28-29 WebX, Tokyo, Japan
Sep 11-12 TechBBQ, Copenhagen, Denmark
Sep 18-19 Token2049, Singapore
Sep 25-27 South Summit, Seoul, Korea
Sep 29 - Oct 1 Bitz & Pretzels, Munich, Germany
Oct 28-29 SWITCH, Singapore
Oct 28-Nov 1 Hong Kong FinTech Week, Hong Kong
If you would like to submit VC-related events, please respond to this email or Telegram @byuric
Check out VNTR Capital upcoming events
VC Reads and News
View curated VC news and articles on the VNTR Platform
Meet the 10 most active investors in generative AI
AI valuations are far outpacing other verticals, a sign of a continued willingness to invest—even if it comes at a premium. Cohere, a large language model developer, has reportedly been in talks to raise $450 million at a $5 billion valuation. In April, AI search engine Perplexity raised $62.7 million at a $1.04 billion valuation. And in February, AI cloud computing startup Lambda raised a $320 million Series C at a $1.5 billion valuation.
How to Find a Unicorn
Firms live and die on the deals they find. It is perfectly possible to raise a fund from LPs, spend four years sourcing opportunities, meeting with founders, diligencing diligently, and writing checks without ever encountering a true unicorn. Without meeting the kind of reality-bending founder capable of building a generational business.
A shrewd manager may be able to salvage such a vintage. You could land some base hits, secure some savvy secondary sales, and minimize losses. All of these can stanch the bleeding, but they are not the basis for eyebrow-raising DPI. Nor are they the basis for the establishment of a new franchise.
Microsoft, Nvidia Lead In Investing In AI Startups, But Others Close Behind
Just last week it was reported chip giant Nvidia, Salesforce Ventures and Cisco all participated in a $450 million investment for Toronto-based AI startup Cohere. That same day, Cisco and its investment arm — Cisco Investments — made news when it launched a $1 billion AI investment fund. Those noteworthy machinations by some of the biggest names in tech are just the latest examples of these corporate giants’ desires to at best be leaders in the generative AI sector — and at worst not fall behind.
The Week’s 10 Biggest Funding Rounds: Massive Rounds By Cruise And AlphaSense Lead Way
After a few slow weeks, things picked up slightly concerning big funding deals. Most surprisingly is the fact the week was led by an autonomous driving startup — an industry left for dead by some. AI, biotech, space tech and cybersecurity also saw good-sized raises. Perhaps things are heating up as we head into summer.
Early AI Funding May Be Showing Some Cracks
While funding to AI-related startups remains strong, with nearly $30 billion raised so far this year alone, there are indicators that some of the earliest-stage investors are getting some AI fatigue.
Deal-making volume seems to be slowing in the second quarter — with just a couple of weeks left — compared to other recent quarters, when investors’ appetite showed little to no limits for the all-encompassing technology.
According to Crunchbase data, the number of funding deals is on pace to reach only about 900 this quarter — a seemingly significant drop from the 1,052 last quarter and a decline of nearly 30% from the same quarter last year.
How VCs Become Assholes
The partners at NFX are all founders. One of the main reasons NFX exists is to be the kind of investors we wished we had when we ran our own companies.
Each of us had experiences with amazing investors…and some real asshole investors. Our biggest fear is waking up one day and realizing that somehow, we became the thing we hated the most. You know the type: late for meetings, always looking at their phone instead of listening, ghosting founders, stressing founders out for no reason, giving unthoughtful, obvious advice.
That’s an investor that adds negative value (other than their investment). Sometimes, it’s so bad that they add negative value even considering their investment.
SaaS founders — if and when you IPO, how much of the company will you own?
1. The average ownership across the entire founding team at IPO was 22%.
2. The "first founder" (usually the CEO) had significantly more equity in companies with 2 co-founders (often about 2:1 ratio).
Number of active VCs in Europe falls more than 50%
The number of active investors in Europe’s venture capital ecosystem has shrunk by over half as the industry struggles to rebound. PitchBook data shows that in the past year just 906 European VC investors have made two or more deals globally—less than half of the 1,955 investors recorded in 2023. Since VC dealmaking started to decline in 2022, many firms have eschewed new investments in favor of supporting existing portfolio companies. While the pace of dealmaking is expected to rebound this year, the data suggests that some investors are still on hold.
Edtech Funding Has Not Hit Bottom
Education is not a hot area for venture investors lately. So far in 2024, startups in the space have pulled in just over $1 billion in total funding, per Crunchbase data. Consequently, investment in edtech is on track to hit its lowest total in years. For a sense of how steeply funding has fallen, we charted out total annual investment and deal counts since 2019 below. As you can see, the education space is not showing signs of a rebound.
Startup Playbook
We spend a lot of time advising startups. Though one-on-one advice will always be crucial, we thought it might help us scale Y Combinator if we could distill the most generalizable parts of this advice into a sort of playbook we could give YC and YC Fellowship companies.
Then we thought we should just give it to everyone.
This is meant for people new to the world of startups. Most of this will not be new to people who have read a lot of what YC partners have written—the goal is to get it into one place.
GRR Vs. NRR: Choosing The Right Metric For Your Business Strategy
In today’s competitive business environment, mastering revenue metrics is pivotal for sustainable growth. Two key metrics are GRR, or gross revenue retention, and NRR, or net revenue retention. I will not dive into how to calculate them as it is widely available information, the benchmarks are also available and periodically change. Instead I will focus on when they should be used and under what conditions one may be more important than the other. Each provides unique insights into a company’s revenue health and helps shape strategic decisions. Knowing when to focus on GRR vs. NRR can profoundly influence your business strategy and performance.
LP access to fund information hangs in the balance
For the foreseeable future, the information imbalance between fund managers and their various limited partners may be in the hands of market players, not regulators. Last week, a federal appeals court in New Orleans rejected the Securities and Exchange Commission’s recent amendments to the Investment Advisers Act of 1940, marking a major setback in the commission’s campaign to level the playing field for investors.
DePINs are a proven path to crypto mass adoption
Decentralized physical infrastructure networks, or DePINs, remain one of the hottest narratives in the Web3 space this cycle. While the technology has been around for several years, it has recently gained renewed excitement amid the return of bullish sentiment to the crypto market. DePINs allow regular people to contribute their physical infrastructure resources — such as hard drive space or bandwidth — to help power a larger decentralized network.
How many new VC funds does Europe need?
Several investors pointed out to me this week that it’s not all that hard to start raising a VC fund. Almost anyone could do it; there aren’t any qualifications you need. The key skill is being able to convince people to give you money. Deploying and managing a VC fund is another story. But that comes later down the line. There are what feels like a record number of first-time VCs out raising at the moment. I heard several guesstimates that there might be 100 at it right now. Europe’s startup ecosystem is growing, and as it does, the number of VC funds based here is also increasing.
Exits multiply for continuation funds
Continuation funds have roughly doubled their quarterly exit activity, enduring as a viable liquidity solution for PE firms. The rigid exit environment has prompted GPs to launch continuation funds to provide more flexible timing for portfolio company exits, offer liquidity to existing investors, and grant secondary access to new investors. Exits increased from 13 in Q1 2023 to 27, according to PitchBook’s Q1 2024 Global Private Market Fundraising Report.
Should VCs pay higher tax on carried interest?
This week the UK’s main political parties are releasing their manifestos, outlining their key proposals before the country goes to the polls on July 4. Yesterday, the incumbent Conservative party laid out its policy platform, which we’ve summarised here. Tomorrow, the UK’s Labour party will release its manifesto — and the nation’s VCs will be looking for details on one proposed policy change in particular: Labour’s pledge to reform the taxation of “carried interest” (known as “carry”).
Eye On AI: Legal Tech Funding Getting AI Upgrade
Late last week it was reporte artificial intelligence startup Harvey was looking at raising $600 million at a $2 billion valuation. Of course, news of a nine-figure fundraise at a billion-dollar-plus valuation is nothing new in AI — just look at some of the news over the past couple of days.
However, it’s what Harvey does and what such a round could do to its industry funding that caught our attention. Harvey’s platform helps with research and analysis of legal documents, and is one of a growing number of generative AI startups in legal tech looking to take some repetitive, time-consuming and mundane tasks off lawyers’ plates.
Why High-Risk, High-Reward Venture Capital Is Likely to Reshape Behavioral Health
Once sidelined as a digital-only contender, venture capital is becoming a more mature player in the behavioral health arena. And the numbers are starting to tell the tale. In the first quarter of the year, venture capital firms invested $350 million in the behavioral health sector, according to M&A advisory firm Mertz Taggart. Similar quarterly figures from Rock Health back up this notion as well. This could be a particularly interesting dynamic because several private equity firms have their capital tied up in practices they purchased at sky-high valuations, meaning they are still maneuvering the best exit options.
Why being the last company to launch in a category can pay off
When Jordan Nathan launched his DTC nontoxic cookware company, Caraway, in 2019, he knew he was not the only founder trying to sell a new brand of pots and pans to millennials scrolling through Instagram. But he found that launching after his peers ended up being a blessing in disguise in all areas but one. When Caraway launched, it joined companies like Our Place, Great Jones and Made In Cookware in an increasingly crowded category of online cookware startups. But being a little late to the party allowed Caraway to see what other brands’ products and target audiences were, Nathan said on a recent episode of TechCrunch’s Found podcast. This allowed Caraway to change its approach and try to fill the gaps these brands were leaving open.
EV Charging Is Still A Hot Niche For Startup Funding
With more electric vehicles on the road than ever, we also need more places to charge them all. Startups and their investors are lining up to fill that demand. Since last year, companies working on charging stations and associated technologies have raised billions in seed- through growth-stage financing. There’s nothing mysterious about the driving force behind the funding, observed Loren McDonald, CEO of research firm EVAdoption. We’re still in the early stages of a massive shift from refueling with gas to recharging with electricity. And since electricity is a lot more ubiquitous than giant tanks of gasoline, there’s far more potential territory to cover.
International investors, secondaries and a focus on DEI - what founders and VCs should know about term sheets in 2024
The last few years have brought trying times for much of Europe’s tech ecosystem and in a moment of economic turmoil, it can be difficult to know what is normal when it comes to fundraising terms — especially for founders who lack previous company-building experience. To give clarity to how term sheets have changed — or not, a new report from HSBC Innovation Banking has tracked the trends from the past year.