Venture Trends Newsletter, Issue #16
I read daily and this newsletter gathers together this week’s most interesting content I saw related to the venture capital and startup ecosystem. I hope you find it useful as well as being a time saver. Feel free to email me at keith@teare.com. The unsubscribe button is at the bottom of this message (inside the shaded box).
This week’s issue includes content from Beezer Clarkson, Fred Wilson, Alan Patricof, Paul Graham, Duncan Davidson, Axios, TechCrunch, The Harvard Business Review, CrunchBase News, The Economist, and many more. Topics are the ones that dominated the week.
- Robotics & Automation on the rise – Duncan Davidson
- Robots Overrated – Harvard Business Review
- New Normal VC Funding – Alan Patricof
- An investor Pitch versus a Customer Pitch – Paul Graham
- Not all Gross Margin is the Same – Fred Wilson
- Josh Constine joins Signalfire – TechCrunch
- This is Like a Slow Motion Plane Crash – Beezer Clarkson.
I email the newsletter each weekend. There is little or no commentary included, it is the things I found compelling or interesting. You can find more about what I do at archimedes.studio and ubi network
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Bullpen’s Davidson thinks robotics and automation will be in demand
In response to the supply chain problems they experienced during the crisis, companies are likely going to shift their production out of China, and that’s going to spur demand for industrial automation products, Davidson said.In response, governments around the world are likely to push their companies to shift production out of China and back to their home countries, Davidson, a general partner with venture firm Bullpen Capital, told Business Insider in a recent interview.
Are Robots Overrated?
Robotics experts like UC Berkeley’s Ken Goldberg believe that this trend is likely to accelerate further and an article in the The Robot Report , a widely-read online magazine, predicts that a post-pandemic future will entail an even greater reliance on such automation technologies due to cost savings and productivity gains.In spite of recent technological leaps, the current generation of robots perform routine tasks in controlled environments.
Alan Patricof: How to adapt to the new normal of virtual VC funding
Since we are virtually always “open to buy,” to quote a retailer’s expression, we are now faced with the challenge of being presented opportunities to invest in startups, early-stage companies, and even first-time CEOs, and having to make an investment decision without meeting the entrepreneurs face-to-face.He writes that given the timeline of the coronavirus pandemic, VC firms will have to invest in startups, early-stage companies, and new CEOs without meeting teams face-to-face.
Which companies are most immune to the pandemic?
The Economist: Graphic detail
Using data from more than 6,000 publicly traded firms across 56 countries, the authors found that, as is to be expected, companies in countries with greater exposure to the pandemic, as measured by confirmed cases of covid-19, suffered more than those in less-affected countries (see chart).All else being equal, the share prices of companies with more cash, larger profits and less debt were more resilient against the pandemic.
Andreessen Horowitz raises $515 million for second crypto fund – Axios
Venture capital firm Andreessen Horowitz has raised $515 million for its second fund dedicated to cryptocurrency and blockchain technologies. Strategy: Like its $300 million predecessor, the fund will primarily back crypto-related startups, but also will buy and hold some crypto assets.
Why venture capital can’t bail out startups during the coronavirus crisis
As more and more venture capital-backed startups acknowledge having received Paycheck Protection Program (PPP) loans, many have wondered why their VCs didn’t bail them out.There also may be some technical issues, in terms of there not being enough fund capital reserved to bail out existing portfolio companies.
But when the investors do happen to be typical customers, you can give them the customer pitch as well. If they leave the meeting wanting to buy the product, they’ll believe everyone will. In fact if anything they tend to overweight such evidence.
— Paul Graham (@paulg) April 28, 2020
Another way to understand the difference: an investor pitch is a customer pitch where the product is your stock.
— Paul Graham (@paulg) April 29, 2020
Seed investors take long view on promising enterprise startups
Companies might be thinking twice about where they spend money, but some are still helping drive the net-new, post-COVID-19 investments happening from seed to late stage across many sectors.That means, if a seed-stage investor believes in the founders and their vision and the company can ride out today’s economic upset, there’s still money in the till — at least for now.
Not All Gross Margin Is The Same
So Macy’s operated at a 40.1% gross margin over the last twelve months, more than double what Adyen operated at. In some cases, a software business is in the middle of the revenue flow, takes the revenue, and then passes on a lot of it, and is left with what looks like a low margin, but is in fact a high margin.
What Early-Stage Investors Really Care About
While entrepreneurs believe their technology and their revolutionary products are the most important topic, early-stage investors want to mitigate their innately high risks in exchange for high returns.As an entrepreneur, you need to understand that early-stage investors take the biggest risk by investing in your company first, before you prove you can deliver on your promises.
How the Pandemic Is Pushing Blockchain Forward
The Covid-19 pandemic has revealed the weaknesses in our supply chains and our ability to deploy resources where they are most needed to address the pandemic, and exposed difficulties in capturing and sharing the data needed to make rapid decisions in managing it.The virus has revealed the weaknesses in our supply chains, our inability to deploy resources where they are most needed to address the pandemic, and difficulties in capturing and sharing the data needed to make rapid decisions in managing it.
Josh Constine leaves TechCrunch for VC fund SignalFire
After 8.5 years at TechCrunch and 10 in tech journalism, I’m leaving today to join the venture team at VC fund SignalFire .I was drawn to SignalFire because it’s built like the startups I love writing about: to solve a need.
India Venture Capitalist inflows tumble to just $2.2 bn in Mar quarter
Though VC investments may be challenging in the short term, it is expected to remain robust over the longer term,” Nitish Poddar of KPMG India said in the report.Though initially, India was not as affected by the COVID-19 pandemic as China in the reporting quarter, concerns grew later because India receives a significant amount of venture capital (VC) from international firms and corporates.
OMERS Ventures announces a new $750M fund for investing in North America, Europe
The new $750 million is a hybrid, acting as both the firm’s Europe-focused capital pool and the source of funds from which it can invest in North American startups.Happily for Steel and his firm, some OMERS portfolio companies are well capitalized, with the venture capitalist telling TechCrunch during a call that “that the companies [his firm has] invested in a have really benefited from the exceptional amount of liquidity that’s been available in the market over the last two years,” with some of their startups winding up “sitting on quite a lot of cash because arguably they raised too much in 2019 and 2018.”
‘This Is Like Watching A Slow-Motion Plane Crash’: Venture Capitalists Wonder Which Portfolio Companies Will Make It
Frozen private capital has led U.S. civil and military agencies to step up or accelerate funding to space companies during the coronavirus crisis, CNBC reported. Don’t expect an IPO anytime soon, said Beezer Clarkson, Sapphire Ventures managing director, in an interview with The Information .
A Viral Market Update VII: Mayhem with Multiples
In this post, I will, as in the prior weeks, update the prior weeks’ market action (for two weeks, from April 4 to April 17) in different asset classes, and within equities, across regions, sectors and stock classifications. The numerator for any pricing multiple is a market value of equity, firm or operating assets, and the denominator is a scaling variable: revenues, earnings, cash flows or book value.