Hello! Just a quick reminder that we are pulling the plug on this thing for a couple of weeks beginning Monday, but we'll be back and recharged that first week of January. (We do this every year, but newer readers sometimes wonder if we've fallen down an elevator shaft.)
Before we ride off, we leave you with the last StrictlyVC Download episode of 2022, with investor Bradley Tusk, who shared a number of predictions for the year ahead. Tusk is a professional conversationalist and it's always illuminating, talking with him; we hope you enjoy it.
Enormous thanks to week's StrictlyVC Download sponsor: Vauban from Carta. Vauban, acquired from Carta to introduce "fast, low-cost" SPVs in the U.S and bring international funds and SPVs to the Carta platform, is currently accepting SPV migrations from Assure if you were caught in that mess. Learn about this "VC super app" here.
We're also leaving this link here in case you want to sign up to a live-stream of our January 12 event in San Francisco. We'll also see closer to the event if we can get any of you off the waitlist.
More soon, and happiest holidays! ❄️❄️❄️
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Uneasiness is growing around the dominance that Changpeng Zhao’s Binance holds in the cryptocurrency market. The worries surfaced again today as the accounting firm Mazars Group halted work for Binance and other crypto firms. Bloomberg has more here.
Michael Burry — played by Christian Bale in "The Big Short"movie — said in a related tweet that examinations of digital asset holdings in firms like Binance and FTX are “essentially meaningless,” because auditors are learning on the job. More here.
Stocks dropped today as fears grow over a recession taking place as the Federal Reserve continues raising rates.
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Affinity, the relationship intelligence platform for dealmakers, recently launched a report analyzing investment trends that point toward future unicorn status. While the impact of an economic downturn can’t easily be predicted, deal activity trends can help us better understand current conditions and future outlooks. In this U.S. vs. European Unicorn report, Affinity takes a comparative look at global investment data to understand how the landscape for investors and hopeful unicorns has evolved against economic challenges and the role relationship intelligence plays in these transactions. Read the report.
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Deal Terms, Fatality Rates, and the Drawbacks of Credit Lines: a View From Today's Most Active Global VC Firm |
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Yesterday, we had the chance to catch up with Fabrice Grinda, a French, New York-based serial entrepreneur who co-founded the free classifieds site OLX -- now owned by Prosus -- and who has in recent years been building up his venture firm, FJ Labs. He often likens the outfit to an angel investor "at scale," saying that like a lot of angel investors, "We don't lead, we don't price, we don't take board seats. We decide after two one-hour meetings over the course of a week whether we invest or not."
The outfit, which Grinda cofounded with fellow entrepreneur Jose Marin, has certainly been busy. Though its debut fund was relatively small -- it raised $50 million from a single limited partner in 2016 -- Grinda says that FJLabs is now backed by a wide array of investors and has invested in 900 companies around the world by writing them checks of between $250,000 and $500,000 for a stake of typically 1% to 3% in each.
In fact, the data provider Pitchbook recently ranked FJLabs the most active venture outfit globally, just ahead of the international outfit SOSV.
Yesterday, Grinda suggested that the firm could become even more active in 2023, now that the market has cooled and founders are more interested in FJLab's biggest promise to them -- that it will get them follow-on funding come hell or high water through its worldwide connections. Excerpts from our wide-ranging chat with Grinda follow, edited lightly for length.
You're making so many bets in exchange for a very small stake. Meanwhile you've bet on companies like Flexport that have raised a lot of money. You're not getting washed out of these deals as they raise round after round from other investors?
It's true that you sometimes go from 2% to 1% to 0.5%. But as long as a company exits at 100 times that value, say we put in $250,000 and it becomes $20 million, that's totally fine. It doesn't bother me if we get diluted on the way up.
When making as many bets as FJLabs does, conflicts of interest seem inevitable. What's your policy on funding companies that might compete with one another?
We avoid investing in competitors. Sometimes we bet on the right or the wrong horse and it's okay. We made our bet. The only case where it does happen is if we invest in two companies that are not competitive that are doing different things, but one of them pivots into the market of the other. But otherwise we have a very Chinese Wall policy. We don't share any data from one company to the others, not even abstracted.
We will invest in the same idea in different geographies, but we will clear it by the founder first because, to your point, there are many companies that attract the same markets. In fact, we may not take a call when a company is in the pre-seed or seed-stage or even A stage if there are seven companies doing the same thing. We're like, 'You know what? We're not comfortable making the bet now, because if we make a bet now, it's our horse in the race forever.'
You mentioned not having or wanting board seats. Given what we've seen at FTX and other startups that don't appear to have enough experienced VCs involved, why is this your policy?
First of all, I think most people are good-intentioned and trustworthy so I don't focus on protecting the downside. The downside is that a company goes to zero and the upside is that it goes to 100 or 1000 and will pay for the losses. Are there cases where there has been fraud in lining the numbers? Yes, but would I have identified it if I sat on the board? I think the answer is no, because VCs do rely on numbers given to them by the founder and what if someone's giving you numbers that are wrong? It's not as though the board members of these companies would identify it.
More here.
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Aztec Network, a five-year-old London startup that says it is creating an encrypted version of Ethereum, raised a $100 million Series B round. Andreessen Horowitz was the deal lead. The company has raised a total of $119.1 million. TechCrunch has more here.
Gladly, a seven-year-old San Francisco startup that has built a customer service platform spanning voice, email, SMS, chat, and social messaging, raised a $55 million round from Riverwood Capital, Greylock, GGV, NEA, and Glynn Partners. The company has raised a total of $168 million. More here.
Sun King, a 15-year-old London startup that provides off-grid solar energy products for customers in Africa and Asia, raised a $70 million Series D extension round led by LeapFrog Investments. The company has raised a total of $567 million. TechCrunch has more here.
Svante, a 15-year-old Canadian startup that develops filters to capture industrial carbon emissions for storage or reuse, raised a $318 million Series E round led by previous investor Chevron; Temasek, OGCI Climate Investments, Delek US, Hesta AG. New investors included 3M Ventures, Full Circle Capital, GE Vernova, Japan Energy Fund, Liberty Media, M&G Catalyst, Samsung Engineering, TechEnergy Ventures, and United Airlines Ventures also re-upped. The company has raised a total of $474 million. Reuters has more here.
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Big-But-Not-Crazy-Big Fundings |
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Eion, a startup based in Princeton, N.J., that helps farms capture carbon with green rock dust, raised a $12 million Series A round co-led by AgFunder and Ridgeline, with Carbon Removal Partners, Mercator Partners, Orion, Overture, SLVC, Trailhead Capital, and Sibelco also contributing. TechCrunch has more here.
Element Energy, a three-year-old Menlo Park, Ca. startup that has developed a platform to manage large-scale battery systems, raised a $28 million Series B round. The round was led by Cohort Ventures, with participation from LG Technology Ventures, Edison International, Prelude Ventures, and Radar Partners. The company has raised a total of $35.9 million. More here.
Howl, a New York startup that is developing collaborative tools to foster collaboration between social media influencers and brands, raised a $27 million Series A round led by Highland Capital Partners, with Act One Ventures and Talis Capital also chipping in. The Information has more here.
K1x, a Chicago startup founded this year that automates the production of K-1 federal tax forms and tax returns for tax-exempt organizations, raised a $15 million round. Edison Partners was the deal lead. More here.
Virgio, an Indian fast-fashion startup founded this year that has been likened to an up-and-coming Shein, raised a $37 million Series A round. Prosus Ventures, Alpha Wave, and Accel co-led the deal. TechCrunch has more here.
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Artifact, a San Francisco startup that provides professional interviewing and audio biography services for families and corporate clients, raised a $5 million seed round led by GV, with additional participation from Offline Ventures, Goodwater Capital, and Atento Capital. TechCrunch has more here.
Everimpact, a seven-year-old Paris startup that helps companies track their carbon emissions in real-time, raised a $1.8 million seed round. Motion Ventures was the deal lead; Climate-Kic, EIT Urban Mobility, ADB Ventures, Wilhelmsen, Transport Capital, IMC Ventures, MOL PLUS, Blue Star Group, and Rainmaking Impact also participated. The company has raised a total of $2.2 million. TFN has more here.
Kuona, a nine-year-old Mexican startup that helps consumer packaged goods companies and retailer optimize their promotions, raised a $6 million seed round led by Cometa and including Seaya Cathay Latam and FEMSA Venture. The company has raised a total of $6.7 million. TechCrunch has more here.
Plugo, a Singapore startup founded this year that offers e-commerce support services for direct-to-consumer brands, raised a $9 million Series A round led by Altos Ventures, with additional investment from BonAngels Ventures Partners, Access Ventures, Mahanusa Capital, Prodigy Investment, and Pearl Abyss Capital. TechCrunch has more here.
Pocketnest, a four-year-old Detroit startup that has created a financial wellness app , raised a $2.6 million led by Reseda Group. The company has raised a total of $4.6 million. More here.
SaaSWorks, a three-year-old startup based in Cambridge, Ma., that claims it can help clients elevate their revenue data to audit quality, raised a $6 million seed round led by Vestigo Ventures, with Conversion Venture Capital also anteing up. The company has raised a total of $11 million. More here.
Spaceport, a Los Angeles startup that aims to give web3 creators and brands the ability to monetize their intellectual property faster and more easily, raised a $3.6 million pre-seed financing co-led by Arca, Decasonic, and CRIT Ventures, with Cozomo De Medici, Diaspora Ventures, Infinity Ventures Crypto, FBG Capital, Nextview Ventures, Republic Asia, and Valhalla Ventures also joining the round. VentureBeat has more here.
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Wischoff Ventures, a pre-seed and seed-stage venture outfit that largely focuses on B2B software, has closed its second fund with $20 million in capital commitments, a sizable jump from its $5 million debut fund. Founded by solo general partner Nichole Wischoff, who spent the last five years working at companies like Blend and Built Technologies, the firm's backers are even more notable, including Peter Thiel, Lee Fixel, Yahoo co-founder Jerry Chen, Bain Capital, Byers Capital, Cendana Capital, Crossover, Insight Partners and others. It's not clear if this fund is entirely closed; Wischoff said in March that she was targeting $50 million. TechCrunch has more here.
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John Carmack, the consulting CTO for Meta's virtual-reality effort, left abruptly today, reports Business Insider. It says that Carmack, who has been openly critical of Meta's advancements in AR and VR, core to its metaverse ambitions, posted to the company's internal Workplace forum about his decision to leave. More here.
Florida finally catches a break, as Ohio man who posed in tub full of cash is scheduled to plead guilty in bitcoin theft case.
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Self-driving trucking company TuSimple Holdings plans to cut potentially at least half of its workforce next week as it scales back efforts to build and test autonomous truck-driving systems, says the WSJ. The move, adds the outlet, could impact roughly 700 people. More here.
Goldman Sachs is planning to lay off several thousand employees, according to the WSJ, another consequence of this year’s deal-making slump. Goldman also expects to slash, and in some cases eliminate, the annual bonuses of underperforming employees, the outlet adds. More here.
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TikTok's secret sauce.
Elon Musk’s team has reached out for potential fresh investment in Twitter for at the same price as the original $44 billion deal, Semafor reported earlier today. One of those contacted was Ross Gerber, president and CEO at Gerber Kawasaki Wealth & Investment Management, whose firm had previously put up less than $1 million to back Musk’s takeover of Twitter. Gerber, who also is an investor in Tesla, tells the WSJ he isn’t concerned about how Twitter is doing so far. But along with other shareholders, he has expressed frustration recently that Musk’s involvement in Twitter might be to the detriment of the auto maker, says the outlet.
A top official for the European Union warned Twitter owner Elon Musk about “red lines” that exist and potential “sanctions” to come "soon" following the platform’s suspension yesterday of multiple journalists who cover him and Twitter. The Hill has more here.
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Hearing aids that are ready to wear, no doctor required.
An American Girl luxury home that is nearly six feet wide, has a hot tub, a security system and costs $1,000. (Sorry, parents.)
Draft Top Lift beer can opener. Now we'll drink to that! 🍻
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