🗒️ VC funding to Black web3 founders popped last year, bucking trends
Techcrunch: Much hope remains after the crypto winter almost froze the sector: the Luna crash, the bankruptcy of Celsius and the arrest of FTX founder Sam Bankman-Fried for alleged fraud. Then there was the venture pullback amid an economic downturn.
In 2021, web3 startups globally raised a record $29.2 billion. By 2022, that number dipped to $21.5 billion — though that’s still much more than the total $4.8 billion and $4.2 billion such companies picked up in 2020 and 2019, respectively.
Black people who invested in crypto were hit disproportionately hard during the winter, though many Black founders and investors who spoke to TechCrunch remain optimistic about the sector’s potential for the community and society overall. If anything, last year’s economic correction was necessary, they told TechCrunch.
🗒️ Global energy storage investment jumped 55% in 2022 as funds shifted from private equity to public markets
Utility Dive: Investor interest in energy storage is growing — and probably hasn’t yet peaked, according to Mercom Capital Group.
While overall corporate funding for energy storage increased to record levels in 2022, venture capital invested in energy storage declined by a little over one-third after hitting a record $8.8 billion in 2021. The inverse trends appear to be the result of a few large deals, such as a $10.7 billion IPO by battery manufacturer LG Energy, shifting funds from venture capital and private equity to public markets, according to Prabhu.
“Beyond that, the second, third and fourth quarters were steady,” Prabhu said. “These big deals are making a huge difference.”
Investors remain keenly interested in energy storage, even as funds move around. A record 28 acquisitions were completed in 2022 — a 400% increase over last year, according to Prabhu. The IRA and other new incentives for energy storage have likely piqued interest in energy storage startups on the market, Prabhu said, and investors no longer seem to view storage as a liability when it’s paired with wind or solar development. However, one barrier remains in place: cost.
🗒️ Fallen Unicorns: Startup Billionaires Nearly $100 Billion Poorer Than A Year Ago
Forbes: These 44 founders have lost half their wealth and are nearly $100 billion poorer than a year ago. Twelve are no longer billionaires.
Last January, credit card startup Brex raised $300 million from a string of A-list investors, nearly doubling the company’s valuation to $12.3 billion and making its Brazilian cofounders– 26-year-old Pedro Franceschi and 27-year-old Henrique Dubugras–the world’s youngest self-made billionaires.
“I think it's easy for people to think that we're already successful,” Dubugras told Forbes at the time. “We are, and we aren’t. We're obviously happy about what we’ve achieved, but there's so much more to come.”
It’s certainly far too early to write-off the long-term success story that could be Brex. But a year later, Forbes estimates the company’s value has fallen to $6.4 billion–nearly 50% less than 12 months ago. Francheshi and Dubugras, meanwhile, are no longer billionaires–worth an estimated $900 million apiece, down from $1.5 billion.
🗒️ Why VC valuations look too high to limited partners
Pitchbook: Jeff Nasser has been spending a lot of time lately explaining to his institutional investment clients why tech stocks crashed by as much as 80% since 2021 highs, while VC portfolio losses are only averaging in the single digits.
The answer is straightforward when addressing the discrepancy over the short-term: Stocks are repriced continuously, but startups are valued only when a new funding round occurs.
But over time, public and private market valuations should start converging.
Under fair-value accounting standards, venture firms, just like other private market asset classes, are required by the American Institute of CPAs to review underlying investments each quarter to ascertain whether the value of portfolio companies has increased or decreased in the current economic environment.
The valuations that VC firms have been providing their LPs show that private market prices are still far from catching up to the steep drops of their public equity counterparts.
