Investing in the Time of Cholera

By Keith Teare • Issue #310

In Love in the Time of Cholera, the author tells a story of a world of plague, civil war, and mass murder, yet love still dominates the protagonist’s story. This week the continued collapse of the public market begs the question, are we still in love with investing in startups?


  • Is the Party Over?
    • Wall Street Journal
    • Revolut founders’ new fund
    • Helping your slower companies
    • Newcomer on good times in the great revaluation
    • Andreessen, Gil, Romero & George on The Good Time Show
    • Tiger Cubs & Hedge Funds
    • Thriving amidst SaaS revaluations
  • The Twitter Game
  • Crypto Futures
    • Robinhood’s crypto wallet plans
    • Block’s Bitcoin Wallet plans
  • Relevant News
    • SEC plans crypto enforcement
    • Russia will legalize Bitcoin and Crypto
    • Africa is best for DeFi and Web3
  • Essays of the Week
    • Twitter plans to block “crisis disinformation”
    • Clegg and the Metaverse
    • China’s economy
    • The end of car dealers?
  • Startup of the Week – Ethereum
  • Tweet of the Week


Gabriel García Márquez Love in the Time of Cholera is set in Columbia towards the end of the 19th Century, through 1924. It is about love that endures and survives amidst plagues, civil wars and massacres of plantation workers. The protagonist, Florentino Ariza suffers from lovesickness and it gives him pain, just like cholera. I found this nice precise statement about the book’s key message:

The best message this book teaches us is that love is not to be disappointed with. Life is full of chances. One should not be disappointed when he runs into obstacles in his life even though he spends half of it suffering from sorrows. The most beautiful thing is to wait for the right time. One should try his level best to be patient as one day or another they will bear the fruit of their patience.

For those involved in startup investing this book could easily be a metaphor for the past months. We love finding love, defined as a new startup that has a vision for the future. But love is hard when the very fabric of the startup world is clearly suffering from transformation and violent challenges.

The decline in the public market for tech stocks has continued unabated this week. There is no clear sign it will not continue next week, or for that matter, next year. Investors everywhere are discussing it. Below is a lengthy video starring @pmarca (Marc Andreessen), David George, Dan Romero, and Elad Gil focused on the fallout from the public markets correction.

But the pain of this correction is a false signal to the future. Its primary impact on venture investors is focused on those who invest close to an IPO or exit, seeking a rapid return on a short-term investment. For most of Silicon Valley, focused on earlier stage investing at the seed, Series A, or Series B round, the future looks bright. Because of this, love continues to blossom between investors and founders.

And investors are more in love than ever because downturns in valuation mean that less money can buy more equity than before. And founders can be happy because the best of them will find more talent available, cast aside by the victims of the last wave.

To continue the book metaphor. It is the best of times, it is the worst of times. But mainly it is the best of times. Even in the public markets.

Take Tesla. it’s stock is one of the hardest hit on the New York markets. It is worth $687 billion today. A year ago its stock was $100 less than it is today. This chart looks bad:

But zoom out and it looks great

Down 45% in 2022 but up 920% in the past 5 years (200% a year almost).

So really, let’s get over the idea that we are in an economic apocalypse. Or that growth has suddenly become less valuable.

If the charts above were extended backwards to where private investors got in then the dramatic growth of value is even more pronounced.

23x gain in 5 years for B Round investors. And 105x if you waited until the 52-week high to sell. Even after the recent 45% fall the gain since the series B round is 56.45x.

Since the markets started falling my fintech company SignalRank has tracked B Rounds that are on track to produce unicorns. We are a technology company that uses ai to identify investor partners according to their ability to invest early in future winners. We supply follow-on capital from the B Round for companies that qualify under our CompanyRank algorithm. Through that, we capture top-performing companies and value creation that only the best early-stage investors can hope for. So we look at B rounds as our entry and the beginning of value creation. Since January our ai model has found 34 B rounds that had $253m of follow-on capital available to the A round and Seed investors. 62% of them included a top 5 later-stage investor. We estimate the future value of the $253m to be between 6x and 30x, in 5 years. So between $1.5 and $7.5 billion.

As I said, this is the best of times. This week’s video, in order to double down on this point, is my current SignalRank investment deck.

By way of warning, it includes forward-looking statements. and cannot be relied upon for investment advice. Also, it is not a solicitation. I am not seeking your interest in investing. Also its a solo walk through so don’t expect the high energy that goes with public performance 🙂

It is simply so you can see why this moment is laden with potential, and that the fear, driven by public markets, is not something that should dominate what we all do.


Is the Party Over?

For Tech Startups, the Party Is Over

A dizzying turn in technology-startup investing is undoing the fortunes of founders and investors riding a 13-year bull run.

Highflying startups have been grounded, swiftly, by the new climate: layoffs, skeptical investors, an exodus of funds and the prospect of a valuation haircut.


Many big money managers have fled startups. Venture capitalists are steering clear of high valuations and demanding that companies spend less and improve their margins — an about-face after years of profitability taking a backseat to growth. The pressure, combined with uncertainty over where the next investor check will come from, has prompted startups that seemed to be soaring just months ago to fire staff members, cut marketing spending, cancel projects and do whatever they can to make their money last.

“This is clearly not a speed bump,” said Mike Volpi, a venture capitalist with Index Ventures. “This is a proper correction. The end of a cycle.” The Wall Street Journal • Share

Revolut CEO Nik Storonsky To Launch AI-Led Venture Capital Fund — Forbes

The billionaire co-founder of one of Europe’s most valuable startups plans to launch his own venture fundpowered by artificial intelligence, to compete with “legacy” venture capital investors. Nik Storonsky will himself invest, with other investors, around $200 million into the Quantum Light Capital fund.

Storonsky will tap his experience raising $1.8 billion to build fintech Revolut, which was valued at $33 billion in July 2021, and his earlier career working as a Lehman Brothers and Credit Suisse quant trader to use machine learning to identify promising Series B and C startups. Russian-born Storonsky, who now is a British citizen, claims that the relationship-driven and clubby world of venture capital was outdated and waiting to be disrupted.

“Based on my experience as an entrepreneur for the last eight years I found VCs’ product pretty frustrating,” says Storonsky, whose stake in Revolut is worth $7.1 billion. “In the bad times no one wants to invest, in the good times they all want to invest — so the lessons were that VCs are pretty unstable and there is some element of crowd mentality.”

Storonsky has hired a team of six data scientists and engineers over the last year to mine LinkedIn, corporate filings and other databases to identify fast-growing startups. “I personally believe in having a model without having human judgment,” he says. “Different people have different opinions, and this how you end up with this crowd mentality.”orbes • Share

Power Law And The Long Tail — AVC

If you look at the distribution of outcomes in a venture fund, you will see that it is a classic power law curve, with the best investment in each fund towering over the rest, followed by a few other strong investments, followed by a few other decent ones, and then a long tail of investments […] • Share

The Good Time Show w/ Elad Gil, David George, Dan Romero, Marc Andreessen, and Steven Sinofsky

Good Times in The Great Revaluation — by Eric Newcomer

Exclusive slides from Laurence Tosi + a16z’s view on the downturn

You know the market has taken a tumble when venture capitalists feel the need to remind the less numerate among us how percentages work. You need to grow by 100% to make up for a 50% loss.

Andreessen Horowitz’s growth investor David George did just that on the latest episode of The Good Time Show. “The crazy thing is — I mean, this is simple math so bear with me: When you’re down 80%, even if you go up another 50% — you’re still 70% off your overall high.”

With the NASDAQ Composite down 16% over the past month and down 28% over the past six months, venture capitalists have started giving their portfolio companies tips on how to navigate the stock market downturn.

It’s an important moment for thought leadership.

Thankfully, investors aren’t just dishing out basic arithmetic.

  • On March 9, Logan Bartlett at Redpoint Ventures posted his own “State of the Current Market.”
  • On May 13, David Sacks’ venture capital firm, Craft Ventures, published the advice that it’s giving to founders.
  • George’s appearance on The Good Time Show Monday, along with Andreessen Horowitz partners Marc AndreessenSteven Sinofsky, and show co-host Sriram Krishnan, served as an informal public update on the firm’s thinking about the market downturn. (On May 13, George and a colleague also posted “A Framework for Navigating Down Markets.”)
  • Also on Monday, Lightspeed Venture Partners tried to put a happy face to the worried markets with “The upside of a downturn.”
  • For this piece, I also reached out to Laurence Tosi — who runs the investment firm WestCap Group to get his take on what the markets mean for startups. As the former CFO at Blackstone and Airbnb, Tosi is an authority. Tosi agreed to send me some of the internal WestCap research that he’d shared privately with his portfolio companies’ founders. He’s calling this reset the “Great Revaluation.”

a16z’s View on the Downturn….. • Share

Analysis | Tiger Cubs and the Danger of Hedge Funds Buying Too Many Unicorns

Last year, when the tech sector was all the rage, hedge funds raced to private markets, writing million-dollar checks in minutes, to get exposure to the next generation of unicorns before anyone else. As the Nasdaq selloff pummels their portfolios, it’s worth asking what their investments are worth now and if they have any second thoughts.

The most prominent crossover investor — industry jargon for hedge funds that also do venture capital — is Chase Coleman’s Tiger Global Management LLC. The firm’s public stock positions fell from $46 billion at the end of 2021 to just over $26 billion as of March.

Though it began as a hedge fund, Tiger Global has supersized thanks to its private-equity business. As of October, Tiger Global managed about $95 billion — with its venture capital arm accounting for around two-thirds of the total. Its main hedge fund, a long-only fund and another that also makes some private wagers, managed about $35 billion. That side of the business lost about $16 billion in the first four months of the year.

The Washington Post • Share

SaaS valuations cratered in early 2022. But these startups thrived.

Despite a volatile tech stock market so far this year that has included delayed IPOs, lowered valuations and declining investor sentiment, a few enterprise tech categories managed to keep getting funding. Data platforms, supply chain management tech, workplace software and cybersecurity startups all dominated the funding cycle over the past quarter.

When it comes to enterprise SaaS, the number of mega-deals — VC funding rounds over $100 million — spiked last year, according to data from Pitchbook. Partially driven by the onset of a pandemic that accelerated the need for everything from contact centers to supply chains to move into the cloud, the number of large VC deals tripled between 2020 and 2021. That growth has extended into this year, where the number of mega-deals has already outpaced all of 2020.

Over that quarter some of the largest deals were in logistics, like Project44’s $420 million funding or recruiting software Remote’s $300 million round. Still, a plethora of startups in those industries as well as data and cybersecurity managed to snag mega-deals.

Here are the major categories, as well as the key startups in each field, that investors continued to pour money into in 2022. • Share

The Twitter Game

Elon’s exit strategy

Good morning! It’s beginning to look a lot like Elon Musk doesn’t actually want to buy Twitter. There are a whole bunch of ways this deal could shake out, and you can bet Musk will tweet his way through it. I’m Owen Thomas, and my copy of “GuRu” by RuPaul is the only thing vaguely keeping me together these days.

Elon’s unconventional acquisition playbook

Elon Musk is too busy owning Twitter to actually buy it. The performative grift of his offer is becoming more evident every day.

Musk is incensed about bots, a peeve some attribute to the tendency of crypto spammers to attach themselves to his tweets. This isn’t as big an issue for the vast majority of Twitter’s users, who don’t have 93.6 million followers and hence aren’t as attractive a target. But when you’re a raging narcissist, your problems are what matter.

  • Twitter says less than 5% of its active accounts are bots or spammers. At a tech conference in Miami Monday, Musk estimated, without providing any evidence, that the number was more like 20%, or even as high as 90%.
  • Twitter CEO Parag Agrawal gamely tried to explain that the company is aware of the bot problem, devotes a reasonable amount of resources to combating an ever-changing army of spammers and can’t reveal all of its methods and data lest the people it’s trying to fight gain insight into its defenses.
  • Musk’s response: a poop emoji, which is a fairly good indicator that this is not a serious adult having a serious conversation.

Overnight, Musk also tweeted that Agrawal had “publicly refused to show proof of <5%,” and added that the “deal cannot move forward until he does.” • Share

Crypto Futures

Robinhood Plans Ethereum Wallet With DeFi, NFT Trading — And No User Gas Fees

Robinhood is joining the ranks of MetaMask and Coinbase by launching a user-controlled crypto wallet that it plans to roll out by the end of the year. • Share

Block’s new bitcoin wallet aims to solve a huge problem

Block just detailed plans for its self-custody bitcoin hardware wallet, aiming to bring together the often contradictory goals of convenience and crypto security. Block’s goal is to monetize the wallet through a subscription service.

The plan, laid out at Block’s investor day, aims to make it easier for mainstream individuals to self-custody their own bitcoin — thus enabling total control of it — while offering additional protections that are often not available for self-custody hardware or software wallets. Many other wallets don’t have easy backup systems for consumers to access their funds. • Share

Jack Dorsey’s Block Wants To Create Economic Empowerment With Bitcoin

Among Block’s initiatives to further the Bitcoin ecosystem shared in its 2022 Investor Day is the development of an open-source bitcoin mining ASIC chip. • Share

Relevant News

Breaking: SEC Announces Huge Crypto Enforcement Plan

SEC chair Gary Gensler said efforts are on to get a majority of the crypto initial coin offerings registered, in coordination with the crypto exchanges. He was speaking at the Congressional budget request questioning for FTC and SEC on Wednesday. Gensler said a majority of the coin offerings come under the SEC’s securities law. The

The post Breaking: SEC Announces Huge Crypto Enforcement Planappeared first on CoinGape. • Share

Russia Legalizing Bitcoin And Crypto Is A Matter of Time, Says Minister of Industry And Trade

Denis Manturov, Russian minister of industry and trade, explains that legalizing bitcoin and other cryptocurrencies as payment will happen given time. • Share

Why Africa has the most lucrative opportunity for fintech, DeFi, and Web3

Barbara Iyayi of Unicorn Growth Capital is looking to back fintech startups who can build Africa’s Web3 infrastructure • Share

Essays of the Week

Twitter goes after ‘crisis misinformation.’ It’s going to get messy.

Twitter will begin taking action against misinformation in crisis situations, the company said Thursday. The new policy will be immediately applied to misinformation surrounding the war in Ukraine.

Given the way misinformation and disinformation have been weaponized in that war, it’s an important update. But it’s also a challenging one for Twitter to pull off, and not just because Twitter’s would-be new owner believes the company should let all legal speech stand. It also puts Twitter in a position of defining what’s true — or not true — in often chaotic situations and, perhaps even more challenging, deciding what constitutes a crisis to begin with.

“During periods of crisis like international armed conflict, public health emergencies and large-scale natural disasters, we find misinformation can undermine public trust and cause further harm to already vulnerable communities,” Yoel Roth, Twitter’s head of Safety and Integrity, said on a call with reporters. Roth said the company eventually plans to deploy this policy in “any situation in which there’s a widespread threat to life, physical safety, health or basic subsistence,” but that the company was starting off in Ukraine because of “the unique role that disinformation has played in this conflict.”

To figure out what’s true and not, Roth said, Twitter is relying on public information from multiple “credible sources,” including humanitarian groups, news organizations, conflict-monitoring services and open-source intelligence investigators. Once Twitter determines that a given post is misinformation, it’ll stop amplifying and recommending it, and will add warning notices that users have to click through in order to view the tweet. • Share

Nick Clegg’s Stab at Hyping Up the Metaverse

When Nick Clegg was promoted to be President of Global Affairs at Meta Platforms earlier this year, it was clear that one of his big responsibilities was handling heat from governments, freeing up Mark Zuckerberg to talk up the metaverse to anyone who will listen. But it seems you can’t be a higher-up at Meta without cheerleading the metaverse, and today is Clegg’s turn.

Publishing on his preferred platform of a Medium blog, Clegg reiterates many of the talking points we’ve heard from Zuckerberg and CTO Andrew Bosworth over the past few months, albeit with an interesting twist. From the very first paragraph, Clegg tries to address the skepticism that Meta’s rebranding and pivot have been met with. And he does so by acknowledging that he himself wasn’t sure what to make of all this metaverse talk at first (something we can believe given that he called the Quest 2 a “wretched” device during an interview late last year). • Share

Visualizing China’s $18 Trillion Economy in One Chart

China is the world’s second largest economy after the U.S., and it is expected to eventually climb into the number one position in the coming decades.

While China’s economy has had a much rockier start this year due to zero-tolerance COVID-19 lockdowns and supply chain issues, our visualization covers a full year of data for 2021⁠ — a year in which most economies recovered after the initial chaos of the pandemic.

In 2021, China’s Gross Domestic Product (GDP) reached ¥114 trillion ($18 trillion in USD), according to the National Bureau of Statistics. The country’s economy outperformed government targets of 6% growth, with the overall economy growing by 8.1%.

Let’s take a look at what powers China’s modern economy. • Share

The Incredible Shrinking Car Dealership

FEW PEOPLE LOVE car dealerships. They’re stressful and sprawling, and it’s hard to shake the feeling that someone is getting a raw deal. But as the auto industry increasingly goes electric and moves online, companies like Honda are rethinking every aspect of the purchase process — including the spaces in which it happens.

Honda announced today that it’s rolling out a new dealership design, one that takes up less square footage and is modular and flexible; what was once showroom space, for example, can be transformed into offices for employees. It’ll also have electric vehicle chargers, as the company aims to sell half a million EVs in the US by 2030. “Our dealers are looking at ways to modernize and digitalize their business,” Mamadou Diallo, the vice president of auto sales at American Honda, told reporters last week. Recent experiences, he says, have taught the automaker that selling cars “will not require as much space.” And they’re not the only ones looking to shed square footage.

Like so many recent transformations, the shift is in part a reflection of the pandemic. Automakers have struggled through a shortage of semiconductor chips, a serious issue for vehicles that need hundreds and sometimes a thousand or more of them to work. The supply chain bottleneck means new car dealers have fewer vehicles on hand to show off to customers. Meanwhile, inspired by a new breed of electrified direct sales companies, like Tesla and Rivian, big automakers started experimenting with letting customers reserve and even buy their cars online. Ford made its first sales for its electrified sports car, the Mustang Mach-E, on the internet and took online reservationsfor its electric pickup truck. Volvo said last year that its electric vehicles — which the automaker says will account for 100 percent of sales by 2030 — will be sold exclusively online. • Share

Startup of the Week

Tweet of the Week

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