🗒️ A Look Back at Our Letters to our LPs and Capital Exuberance
Medium: When we started Aleph, I decided to take on the responsibility of writing the annual letter to our Limited Partners, our investors. I was inspired by Warren Buffett and Jeff Bezos, but also intimidated by these unique thinkers. Honestly, it is hard to write something unique and insightful year in and year out.
After reading Josh Wolfe’s post on Lux’s annual letters and his tweeting out sections, I went back to look at our last four years of letters. My conclusion is that uniqueness, newness of thought or blinding insights were overrated. There was one consistent theme we went back to year after year. In fact, it was the only topic repeated in the letter, which typically spans 10–12 pages.
🗒️ With new partnership, RareBreed Ventures is innovating in the VC world again
Technically: RareBreed Ventures is trying a new way to fundraise through a new partnership with two venture capital firms to diversify the investment pool to let smaller more diverse groups invest in large funds.
RareBreed’s founder McKeever Conwell II paired up with two of his colleagues in the Kauffman Fellows program for venture capital leadership development — Caroline Lewis, managing partner of Rogue Women’s Fund; and Gale Wilkinson, founder of VITALIZE Venture Capital — to create a single larger entity known as a special purpose vehicle (SPV) and democratize access to the venture capital world. The SPV will allow lower minimum investments to the tune of $40K over four years; by comparison, typically, an investor would need to commit in the six figures. The three funds hope the lower financial barrier to entry will bring in a more diverse pool of investors.
🗒️ Why The Term Venture Capital Is A Misnomer Right Now
Forbes: The big story within the private equity and venture capital markets has been declining valuations. However, new data shows that valuations for private tech companies remain quite high on a relative basis. Data from CB Insights shows that tech valuations have skyrocketed over the last two years.
When the second quarter of 2022 arrived, median valuations had declined across most investment stages. Despite those declines, valuations for Series E funding and beyond in the tech sector remained 35% higher than they were in 2020. For Series C and D rounds, valuations are more than 100% higher.
In a recent interview, Jim McVeigh CEO of Cyndx, a fintech firm with data on over 21 million private companies from around the world, outlined the latest trends he's been observing in the private equity market. For example, he said venture capitalists are doing less investing in earlier stage, pre-revenue companies now, favoring established companies with revenues in the $5 million to $10 million range.
🗒️ GameFi and NFTs Set to be First to Recover From Downturn as Venture Funds Flow In
Cryptonews: Venture capital funding for NFT and gaming companies within crypto rose by 66% in August, from USD 507 million in July to USD 842 million. This increase comes during a month when total VC funding within the cryptocurrency sector declined overall, suggesting that it may be NFT and GameFi cryptocurrencies that lead the way out of the ongoing bear market.
The funding data, collected by the Block, reveals a fourth consecutive month of overall decline, with August's total of USD 1.85 billion some way off the USD 4.8 billion recorded in January. Still, the amount raised by NFT and GameFi firms provides some hope for a gradual turnaround in the cryptocurrency market's fortunes, with the sector also representing the highest absolute amount raised in August, in addition to biggest rise in percentage terms.
