VNTR Capital Newsletter June 2, 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 Community: In May, we hosted a record 17 offline events worldwide and launched new chapters in Auckland, New Zealand, and Austin, Texas. Additionally, we organized 10 online VNTR Club and Community events to educate and connect investors.
VNTR Podcast: The new episode of the VNTR Podcast is live on YouTube, Spotify, and Apple. Join us as we explore Tim Draper's venture capital journey and delve into his unique mindset. Tim Draper is a prominent Silicon Valley venture capitalist and the founder of Draper Associates, DFJ, and the Draper Venture Network, a global consortium of venture capital funds. His firms have invested in major companies such as Baidu, Focus Media, YeePay, KongZhong, Skype, Hotmail, Tesla, SolarCity, Coinbase, Ledger, Robinhood, Athenahealth, Box, TwitchTV, SpaceX, Cruise Automation, Carta, Planet, PTC, and many others. Stay tuned for our upcoming episode featuring Dave McClure, Founder of Practical Venture Capital and 500 Startups. Contact Elise if you're interested in joining as a guest on the VNTR Podcast.
VNTR Corporate Membership: Introducing our latest offering, the VNTR Club Membership service tailored specifically for Corporate VCs, providing unparalleled access to the expansive VNTR global community. Corporate VCs keen on exploring this opportunity are encouraged to connect with Sara. Here's a glimpse of the benefits awaiting CVCs as part of this exclusive membership:
Access to a diverse pool of startups sourced from over 3000 VNTR Community members.
Opportunity to extend corporate accelerators/incubation services to carefully vetted startups endorsed by existing investors.
Global networking platform facilitating knowledge exchange and potential co-investment opportunities among CVCs.
Collaboration opportunities to co-invest in promising early-stage startups.
Facilitated connections with qualified startups for M&A and corporate development initiatives.
Formation of a Corporate sub-community of co-investors.
VNTR Summit: We opened registration for the VNTR Summit, which will gather our global 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. You can reserve your spot via VNTR. Companies interested in connecting with investors can apply for sponsorship or contact Lukas.
VNTR Club Events: VNTR Club Members host workshops, fireside chats, and masterclasses to share knowledge and expertise with VNTR Community Members. The recordings of Expert Sessions can be found in the Academy on the VNTR Platform. Upcoming online VNTR Club events:
June 06: VNTR Expert Session with Andrey Kostyuk, Co-Founder and CEO of AAlchemy Ventures, "How Mentoring Startup Founders Impacts Venture Performance".
June 10: VNTR Speed Networking Event. Thank you to Airmeet for hosting.
June 11: VNTR Club Members Roundtable Online will offer an opportunity to network online.
June 13: VNTR Expert Session with Bryan Talebi, Founder and CEO at CEO Ahura.AI, "The intersection of the future of AI, future of work and future of education"
Coming 2 weeks:
Vienna: June 3 VNTR Investors Roundtable, during the Vienna UP. (Vienna chapter launch)
Amsterdam: June 4 VNTR Investors Cocktail during Money 20/20 Europe.
New York: June 5 VNTR Investors Roundtable during New York Tech Week. Thank you, E-PR and Polsinelli, for sponsoring.
Zug: June 5 Venture Capital Investors Brunch during Swiss Web3 Fest. Thank you to our partners: Inacta, Crypto Valley, and Crypto Oasis.
Madrid: June 7 VNTR Investors Roundtable during South Summit Madrid hosted by Yuri Rabinovich (20% Discount using VNTRCAP20)
Koh Pangan: June 7 VNTR Investors Luncheon (chapter event)
Barcelona: June 11 VNTR Investors Luncheon (chapter event)
London: June 12 VNTR Investors Roundtable London during London Tech Week. Thank you, Legal Tech Talk, for partnering with us for this event.
Dubai: June 12 VNTR Investors Roundtable Dubai (chapter event)
Tbilisi: June 16 VNTR Investors Roundtable Tbilisi during DeGameFi. Thank you to our partners: Terminal.
Thank you to our Partners:
E-PR is a New York-based digital PR Agency revolutionizing the industry with its innovative approach tailored for SMBs. E-PR Online offers effective, transparent, and affordable PR solutions by combining smart media strategies with a vast catalog of 17,000+ outlets across 137 countries and leveraging AI for streamlined media selection. Contact Irina Proskurina to get started and use a VNTR to get a discount.
Polsinelli is an Am Law 100 firm with more than 1,000 attorneys in over 20 offices nationwide. Recognized by legal research firm BTI Consulting as one of the top firms for excellent client service and client relationships, Polsinelli attorneys provide value through practical legal counsel infused with business insight and focus on health care, real estate, finance, technology, private equity, and corporate transactions.
Crypto Oasis is a MENA-focused blockchain ecosystem uniting investors, collectors, startups, projects, corporates, governments, associations, researchers, and service providers. With a foundation built on robust physical and regulatory infrastructure, ample capital, and exceptional talent, Crypto Oasis aims to be the world's leading blockchain ecosystem in size and innovation.
Upcoming VNTR Events:
June 26 VNTR Investors Roundtable Mexico City (Chapter gathering)
June 27 VNTR Investors Roundtable Clug Romania (Techsylvania)
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 Twitter.
UPCOMING VC EVENTS
June 3-9 NY Tech Week, New York, USA
June 3-9 ViennaUp, Vienna, Austria
June 4-6 Hamptons Tech Week, USA
June 5-6 Blockchain Expo, Santa Clara, USA
June 5-7 South Summit, Madrid, Spain (20% Discount using VNTRCAP20)
June 5-11 Swiss WEB3FEST, Zurich/Zug, Switzerland (20% Discount using VNTRWEEK for all week pass)
June 10-14 London Tech Week, London, UK
June 13-14 LegalTech Talk, London, UK
June 15-16 DeGameFi, Tbilisi, Georgia (15% Discount using PARTNER15V
June 17-21 Cannes Lions, Cannes, France
June 17-20 Collision Conf, Toronto, Canada
June 24-26 Fund Forum, Monaco
June 26-27 Techsylvania, Cluj, Romania
June 26-27 FinTech Summit Africa, Johannesburg, South Africa
June 26-28 Mobile World Congress, Shanghai, China
July 25-27 Bitcoin2024, Nashville, USA
Aug 21-23 VCILAT, Santa Cruz De La Sierra, Bolivia
Aug 22-24 Coinfest, Bali, Indonesia
Sep 11-12 TechBBQ, Copenhagen, Denmark
Sep 18-19 Token2049, Singapore
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
The Week’s 10 Biggest Funding Rounds: xAI Laps Field In Another Slow Week
Last week’s slowdown continued, as big rounds were hard to come by this week. One big AI round likely helped boost dollar figures — and interest — but aside from that large funding, rounds dried up. It was a holiday week, so that could be a reason — or maybe VCs’ checkbooks are cooling off after a strong start to the year when it came to nine-figure rounds.
Eye On AI: xAI’s Backers Have A Lot Of Other Bets Besides Musk’s LLM
Looks like we are back to weekly billion-dollar raises at multibillion-dollar valuations, at least when it comes to generative AI startups. Last week, Scale AI raised $1 billion in a round led by Accel that values the data labeling and evaluation startup at a stunning $13.8 billion. And this week, of course, Elon Musk’s generative AI startup, xAI, officially announced its $6 billion round that values the company at $24 billion. The xAI round — which included investment from Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Co., Prince Alwaleed Bin Talal and Kingdom Holding Co., among others — makes Musk’s startup the second-most-valuable generative AI company in the world behind only competitor OpenAI.
Ukrainian Venture Capital Association kickstarts $300M Fund of Funds
According to the head of the UVCA Supervisory Board, Andriy Kolodyuk, it was first designed in 2016, but it took years to harness difficulties and reach a point of readiness.
The Fund of Funds allows investors to deploy capital into local funds through an intermediary, receiving commercial benefits (FoF is not a donor-like program or charity). The initial Ukrainian FoF will kickstart a continuous program to strengthen the PE, VC, and tech ecosystem in Ukraine.
The expected initial FoF size is $300 million.
Sequoia Bets Big on Musk-World
Sequoia Capital wrote another check to Elon Musk this week, taking a small part of a $6 billion funding round that valued his artificial intelligence startup, xAI, at $24 billion.
It wasn’t the first time Sequoia has doubled down on the Musk universe. Let’s step back for a second.
Generative AI seed funding drops 76% as investors take wait-and-see approach
Even with AI, what goes up must eventually come down. For two consecutive quarters, generative AI dealmaking at the earliest stages has declined, dropping 76% from its peak in Q3 2023 as wary investors sit back and reassess following the initial flurry of capital into the space. VC deal value for pre-seed and seed-stage deals fell in Q1 2024 to $122.9 million, a far cry from Q3’s peak of $517.7 million. Deal count has also declined with only 34 deals recorded in Q1. In all, the latest quarter marks the lowest deal value and count since ChatGPT’s launch kicked off the generative AI frenzy in November 2022.
1% of VC backed startups will make it past $100M ARR
But does that make the other 99% a failure?
Let’s dig in to the numbers…
Stephen Millard analyzed 117K startups founded between 2005 and 2022
→ Of those 117K startups founded
→ 31% (37K) were VC backed
→ 12% (13K) raised $3M+
Of those 13K startups, 1.8% (243) either made it past $100M ARR and/or achieved a $1B+ exit
→ 0.5% (71) had a $1B+ exit without reaching $100M ARR
→ 1.2% (168) made it past $100M ARR
→ 109 of the 168 did it <10 years
DePIN networks can disrupt Big Tech and free the internet
Today, control of the internet is heavily concentrated in the hands of a few companies that enjoy massive scale advantages and regulatory protection. These companies operate the internet’s most critical infrastructure, from providing services like telecommunications to offering digital commodities like compute power. Their dominance has lowered competition in their respective industries, which has inevitably led to rising prices and fewer choices — ultimately hurting end users. A new set of platforms, termed decentralized physical infrastructure Networks (DePIN), return control of the internet’s infrastructure to the people it’s supposed to most benefit: users.
Is open banking living up to expectations?
Awareness and adoption of open banking — a technology which allows you to share your financial data with companies of your choice — has grown in the UK. The first six months of 2023 saw double the volume of payments seen in the same period the previous year. By January 2024, one in seven digitally active consumers in the UK had used open banking. However, while the scope of open banking is on the up, the UK’s progress in the sector has moved slower compared with other global open banking adopters – Brazil, for example, reached 5m connected accounts five times faster than the UK.
An Auditing Startup Produced 2024’s Biggest VC-Backed M&A Exit
Who Could Be Next? Big M&A deals don’t always involve the buzziest industries or companies. For a case in point, look at last week: Software investor Hg announced it would pay over $3 billion to acquire auditing platform provider AuditBoard. Amid a slow period for big M&A transactions, the deal ranks as the largest purchase of a U.S. private, venture-backed company in 2024, per Crunchbase data. If AuditBoard is a name you’ve never heard of, you’re not alone. While the Cerritos, California-based company has an enviable track record — profitable, with over $200 million in annual revenue — it wasn’t a heavy venture fundraiser. In a decade of operations, it pulled in $43.6 million total, raising its last Battery Ventures-led round back in 2018.
China’s $47B semiconductor fund puts chip sovereignty front and center
China has closed a third state-backed investment fund to bolster its semiconductor industry and reduce reliance on other nations, both for using and manufacturing wafers — prioritizing what is called chip sovereignty.
China’s National Integrated Circuit Industry Investment Fund, also known simply as “the Big Fund,” had two previous vintages: Big Fund I (2014 to 2019) and Big Fund II (2019 to 2024). The latter was significantly larger than the former, but Big Fund III is larger than both at 344 billion yuan, or about $47.5 billion, public filings revealed.
Alaska’s sovereign wealth fund wants more PE exposure
The Alaska Permanent Fund, which manages the state’s nearly $80 billion sovereign wealth fund, acted on Wednesday to increase its allocation to private equity, after having pared back its exposure last year. The decision to increase its PE target by 3 percentage points comes amid portfolio underperformance and an overallocation to the asset class. In the fiscal year leading up to March 2024, the total fund underperformed its benchmark by 1.15 percentage points, weighed down by a weak year in the private markets, according to documents prepared ahead of the board of trustees meeting.
How billions in outflows from Grayscale could impact Ethereum ETF launch
In a surprise for markets, the U.S. Securities and Exchange Commission (SEC) approved eight spot Ethereum ETFs on May 23, leading to a wave of positive sentiment. But perhaps even more surprisingly, the Ether price barely reacted to the news. Before the SEC announcement on May 23, the price of Ether was $3,742.31. It rose to $3,959.28 on May 27 before falling to $3859.39 on May 28. A consistent bull run has yet to emerge.
Saas Startup Funding Falls
Software as a service — long a favored sector among startup investors — has seen cooling interest in recent quarters even as overall U.S. venture funding has rebounded a bit. So far this year, SaaS and enterprise software companies have raised $4.7 billion in seed- through growth-stage financing, per Crunchbase data. That puts 2024 on track to come in far below last year’s $17.4 billion annual tally — which was itself the lowest total in years.
Why European spacetech hasn’t quite taken off - yet
This week, a group of students including German VC Point Nine’s Pawel Chudzinski gathered in Oslo for an executive course on how the space sector is developing, put on by the International Space University. Point Nine hasn’t made any space investments yet, but Chudzinski tells me the firm is “looking more and more closely” at the sector: it’s “evolving very dynamically,” he says. “With increased scale, the costs are going down,” making it “viable for startups to play a significant role.”
The AI safety movement is on the ropes
The dream of prioritizing AI safety is quickly fading. Over the past month, leading model developers have seen safety experts scatter, competition heat up and public trust shatter through unforced errors. This week, OpenAI installed a new safety team, one that includes CEO Sam Altman, after the old team jumped ship. Jan Leike, who previously led the ChatGPT maker’s “superalignment” team with Ilya Sutskever, just landed at rival Anthropic. Leike said on X earlier this month that he’d reached a “breaking point” with OpenAI’s leadership, which he said prioritized “shiny products” over safety. The internal dispute dates back to Altman’s brief ouster late last year and has damaged OpenAI’s image as an AI safety evangelist.
A venture capital firm looks back on changing norms, from board seats to backing rival startups
Last month, one of the Bay Area’s better-known early-stage venture capital firms, Uncork Capital, marked its 20th anniversary with a party in a renovated church in San Francisco’s SoMa neighborhood, where 420 guests showed up to help the firm celebrate, trade tips and share war stories. There’s no question the venture scene has changed meaningfully since Uncork got its start. When firm founder Jeff Clavier launched the firm, he was mostly using his savings to write six-figure checks to founders. Now Clavier and his contemporaries, including Josh Kopelman of First Round Capital and Aydin Senkut of Felicis, collectively oversee billions of dollars in assets. Zooming out, the whole industry has gotten a whole lot bigger. In 2004, venture firms plugged roughly $20 billion into startups. In 2021, that amount reached a comparatively jaw-dropping $350 billion.
Fusion Funding Has Fizzled
Funding to startups focused on fusion energy has declined sharply in recent quarters after hitting a high two-and-a-half years ago. So far this year, just $58 million has gone to companies innovating around the future of fusion as a potential power source, per Crunchbase data. By contrast, more than $2.4 billion went to the space in the fourth quarter of 2021, the peak period for funding. For a sense of how fusion-focused startup funding has fluctuated, we used Crunchbase data to chart out investment to the space over the past 14 quarters.
The Future of AI Is Decentralized
Younger readers may not remember, but cloud computing was once the future. The advent of unlimited computing and storage resources represented one of the few tech ‘revolutions’ worthy of the name. But the age of AI has made the centralized cloud model not only obsolete but also an active danger for those building on it — and for every user, too. If that sounds a little hyperbolic, consider the recently uncovered vulnerability affecting Hugging Face, a major AI-as-a-Service platform.
Virtual Care Drives Rise In Addiction Treatment Startup Funding
When Hollywood takes on addiction recovery, the script typically conjures up dingy rooms where the down-on-their-luck gather to share their struggles and fears. The prevailing venture-funded model, in contrast, offers little cinematic eye candy. Rather, the focus is mostly on startups where people in treatment message and video chat with care providers and use apps to track prescriptions. Visual appeal aside, there’s plentiful funding to bolster this smartphone-driven vision. Addiction-focused virtual care startups have pulled in hundreds of millions for business models largely based on building offerings scalable enough to meet the massive demand for treatment.
Pulling teeth: Why dental sector exits have been tough for PE
Healthcare-focused private equity managers are struggling to exit their dental investments, and problems over pay and retention are only making matters worse. A recent PitchBook analyst note showed that companies across several healthcare segments have seen extended holding periods. However, the trend is more acute in the dental sector. As of Q1 2024, 37 PE-backed dental platforms in the US and Canada have been in managers’ portfolios for more than five years—17 of these for more than seven years.
How to protect intellectual property in Web3
Intellectual property (IP) rights pertain to creative products of the mind. In the rapidly evolving digital age, Web3 IP protection has become a paramount concern for creators and innovators. With the proliferation of digital content and technologies, ensuring the integrity and ownership of creative works has become increasingly challenging. Web3’s decentralized nature fundamentally alters the traditional frameworks for safeguarding IP. Web3 operates on the principles of peer-to-peer (P2P) networks and trustless interactions, diverging from the centralized and intermediary-driven structure of the current internet, known as Web2.
VC firm Antler’s CEO says Asia presents ‘biggest opportunity’ in the world for growth
Asia’s startup ecosystem hasn’t been doing well in the past couple years, as everything from geopolitics to higher interest rates affected investors’ willingness to write checks. Many venture firms have exited China, which used to be the continent’s biggest venture market. Though there hasn’t been a huge decline in the number of fundraising rounds, the rounds have shrunk — investors are no longer spending as much as they used to. Still, some investors are bullish on the continent’s potential, setting up global strategies as they seek fund-returning investments.
End of funding winter? All eyes on June 4 as PE, VC deals start getting cooked again
During a recent visit to Bengaluru, I had a chance to speak to some key venture capitalists about the outlook for deals in the coming months. Quite a few of them were of the view that the funding winter was finally tapering off. Deals were being cooked and it wouldn’t be surprising, they said, to see even larger deal sizes being put through. However, they were waiting a tad bit longer, and all eyes were on June 4, the day the results of the General Elections would be declared.
Everyone at Consensus 2024 Is Talking About Biden’s Crypto Flip Flop. Is He for Real?
The biggest news this year at Consensus seems to be the political sea change happening in the Democratic party over crypto. While President Biden’s administration essentially carried over the same reluctant-to-the-point-of-being-nearly-hostile approach to crypto as its predecessor, ever since the bottoming out of the industry in 2022 (the year from crypto hell) it has been actively hostile. The easiest way to sum up Biden’s “whole of government” attempt to wrangle in the crypto industry is with the catchphrase Operation Choke Point 2.0, coined by VC Nic Carter to describe the apparent debanking of many crypto firms.
How Nvidia, TSMC, Broadcom and Qualcomm will lead a trillion-dollar silicon boom
We believe the artificial intelligence wave will bring profound changes, not only to the technology industry but to society as a whole. These changes will perhaps be as significant to the world as the agricultural and industrial revolutions, both of which had drastic economic consequences.
Although the exact progression and timing of these changes are unpredictable, one thing is clear: The AI wave will not be possible without advancements in – and a stable supply of – hardware and software generally, and silicon specifically. The complexity of semiconductor design and manufacturing combined with rapid innovation and the vulnerability of the supply chain creates unique and challenging dynamics that in our view are reshaping leadership in the semiconductor industry.