Top 4 Curated Venture Capital Weekly Update for 17May2023
🗒️ Women-founded firms get a trickle of venture funding
Business Daily: Only seven percent of the venture capital deals struck in 2022 went to women-owned companies, indicating the disparity in backing in the sector.
Venture Capital in Africa Report by African Private Equity and Venture Capital Association (AVCA) also shows the proportion was lower than 13 percent of deals that went to female-led companies or companies with a female CEO, suggesting that more women are leading than founding early-stage companies in Africa.
It ties to the underrepresentation of women in senior leadership roles leading to the slow trickle of venture capital to solely female-founded start-ups.
"Although the industry made modest strides towards diversifying gender representation in the recipients of venture capital, the funding gap between male and female founders in Africa remains significant," the report states.
🗒️ Why Investors Should Prioritize Hardware Over Software Companies
Built In: In the world of venture capital, emerging software companies hold the limelight. Lower capital requirements, higher margins, and rapid growth potential have made them the sweetheart of the VC world. Digitizing the world through software, though, has proven to be a challenge for VCs when it’s time to deliver actual returns to investors from sales of the equity they hold in these companies.
Software companies often have low barriers to entry for competitors, putting even the best investments at risk over time as the playing field becomes crowded. Either the investment doesn’t exit because the company has been replaced by one or more competitors and its business disrupted or the company doesn’t exit in a timely manner or at a price that matches a VC’s paper valuations along the way that set investor expectations.
Compounding the competition that software companies inevitably face is competition among VCs for the best software company deals. Too many VCs are chasing too few deals, which means the stock price gets bid up, resulting in irrational valuations that are hard to realize for investors.
🗒️ Venture capital valuations plateauing in Europe, fall could be on its way
Alt Assets: Venture capital valuations in Europe have plateaud so far in 2023 amid lower growth rates, workforce reductions and tougher funding conditions, new data from PitchBook reveals.
The research firm’s Q1 2023 European VC Valuations report said 2021’s post-Covid boom for VC activity, which spilled over into early 2022, had seen valuations balloon, particularly at later financing stages.
But tightening global markets, high inflation and interest rates have seen those rising values capped amid a shift away from growth and towards profitability, PitchBook said – meaning valuations could begin falling later this year.
It said, “VC dealmaking activity decelerated in Q1 2023, as investors have been more selective in their approach to deploying capital.
🗒️ Binance is banking big on M&A and VC deals
Tech Crunch: The world’s largest crypto exchange by volume, Binance, is making big bets on M&A this year, paying particular attention to geographical gaps and customer base. And to help the exchange get there is the company’s chief business officer, Yibo Ling.
He joined Binance nearly seven months ago, after stints at Bird and Uber. Ling’s role at the company focuses on VC investments, strategic M&A and business development. And there’s a lot to look at there; Binance Labs, the exchange’s VC arm, has a portfolio valued at about $9 billion right now, Ling shared. “That’s well in excess of 10x return.”
I sat down with Ling at Consensus 2023 to learn more about Binance’s focus for investments, layer-1 blockchains, geographical and product growth for the business, among a ton of other things.