Top 4 Curated Venture Capital Weekly Update for 05Jul2023💰
🗒️ A startup 'mass extinction event' has begun. You can't see it clearly yet, but it's going to be bad.
Business Insider: Venture capitalists love to talk about how failure is essential to innovation. They will have a LOT to discuss soon.
The startup failure rate is beginning to increase, from artificially low levels in 2021, and there could be a wave of capitulation in the next year where an unusually large number of startups shut down.
"The Mass Extinction Event for startups is underway," according to a recent tweet from Tom Loverro, a general partner at IVP, which has backed companies including CrowdStrike, Datadog, Discord, Klarna, Slack, Snap and Twitter. "It is a news footnote most of the time. Don't be fooled. The market has changed. Funding announcements get lots of headlines. Bankruptcy filings…less so." The Wall Street Journal turned his insight into a great story here.
As Loverro notes, startups die quietly and slowly. They also shut down a lot. While VCs tweetstorm the latest M&A or IPO exit, there are many more young businesses in their portfolios that wither in the background.
🗒️ How Equity in Philanthropy is Powering Capital Funds
Michigan Chronicle: It’s become the buzz word heard everywhere — ‘equity.’ Now, how do you access or apply it to the world of philanthropy, which is designed to ‘promote the welfare of others’ through a generous financial donation for a good cause.
It’s the reason foundations and nonprofits exist but the dialogue of Diversity, Equity and Inclusion has put a focus on how those generous funds are dispersed, to what communities, and is it an equitable approach to the people being served and those that need it the most.
The philanthropy research group, Candid, launched a research group of funders and grantees which aims to standardize the collection of data to help others strategically donate to minority- led organizations.
“Harnessing such data could help advance racial equity,” said Candid’s CEO, Ann Mei Chang, according to philanthropy.com
🗒️ Stalled Venture Capital Funds Scramble to Find Cash for Impatient LPs
Chief Investment Officer: Venture capital has struggled to get back on its feet after a tough 2022. While fund-raising recovered 37% in this year’s first quarter versus 4Q2022, exits still lagged, by EY’s reckoning. So cash distributions to VC limited partner investors has have been curtailed.
As a result, some VC funds have taken to raising cash via selling stakes in their portfolio companies on secondary markets, according to PitchBook research.
Thus far, the research firm indicated in a report, this has seen only limited success, as buyers are only interested in taking a piece of the fund’s best assets, thus limiting the cash generated to ship to impatient limited partners. And the stakes that go to secondary investors are often sold at a discount to their value and could lead to marking down portfolios.
For newer VC funds, the ratio of distribution to paid-in capital, which measures how much money a fund returns to LPs compared to what they invested, has flagged. For instance, for funds that launched in 2016 and 2017, just 40% has been returned. The average prior to 2016 is 80%.
🗒️ Crypto VC Investment Drops 70% In One Year: Report
Dcrypt: Venture capital investments in cryptocurrency companies have plummeted over 70% over the past 365 days, according to information published by RootData, a crypto data provider. During the month of June 2022, the digital asset space received $1.81 billion in 149 rounds, whereas this year, only 83 projects registered $520 million—the lowest funded month to date.
Top 3 book summaries this week 📚
High Profit Prospecting by Mark Hunter
Prospecting is the most critical element of any sales funnel. Without prospects, even the world's best closer will have nothing to work with. This summary busts the myths and shares terrific advice for powering up your prospecting.
Generations at Work by Claire Raines
Traditionalists, Baby Boomers, Gen Xers, and Millennials each have unique work ethics, management per-spectives, idiosyncratic styles, and different ways of viewing their role in the world. Assembling an effective team built with this mosaic of individuals can be challenging and rewarding. Here's how...
Build an A Team by Whitney Johnson
It's simple: your business will never grow without a team working together. How far and fast that growth will occur is based entirely on the quality of your team. So don't settle for mediocre employees. Aim higher - aim to build an A team. Watch this summary learn how.