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2016 Predictions for VCs and Startups

It’s the time of the year to blog about predictions for the new year.1. The end of the unicorn…

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It’s the time of the year to blog about predictions for the new year.

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1. The end of the unicorn era

The new year will mark the end of the unicorn era investment strategyPrivate Investors will stop believing in ever increasing valuations until an IPO in the far future. Private equity and late stage VCs will become more careful investing in those 130+ companies valued above $1B. While fueling the late stage high valuation rounds will come to a slow down the high fundings in early stages will too. Unsurprisingly corporations, who invested in those companies in recent years, will stop doing so. They are slow in learning but they will do eventually.

2. Corporate investments will change

Following the education of corporations as investors in late stage companies, the corporate investment activities will change. Corporations will still be active in startup companies but they will rethink how they do it. Some corporate VCs have lowered their number of deals already. The end of corporate accelerators and incubators have been discussed lengthy in other publications. Instead of equity investments corporations will do what they can do best: partner with young, agile companies. Finding beneficial cooperation models by reselling and/or bundling their own product portfolio with those of startups will get more into focus in 2016. Fintech is a good example already where startups are looking for partnering with traditional banks to increase their customer access. Transferwise, Funding Circle and Gini are just the tip of the iceberg but this strategy will lead the development for 2016. Same is true for mobility sector and insure-tech.

3. Internet giants take over the commodity

Banks in Germany listed Internet giants like Apple and Google most likely as their competition in digital payment and banking services for 2016 rather than fintech startups. The success of Apple Pay is proving this thread. However the ownership of eyeballs and distribution platforms is having an impact in several industries as we see in publishing where facebook is taking over the distribution of news content. In entertaining they also lead with the success of Amazon Video versus Netflix and Apple Music versus Spotify. Even in logistics Amazon is challenging Fedex as well as Uber. Everything what can be commoditized will be commoditized which leads to the dominance of horizontally built Internet companies over vertical focused startups. Another reason why unicorns will see the end of their era coming.

4. Technology will overtake common expectations

In 2015 we have seen a lot of engineering development which is making us doubtful about our common expectations in technology. Those are small hints but in 2016 those hints will be more obvious and disturbing at least. Intel is admitting that it might not keep up with Moore’s Law. Private companies will take more and more business and scientific research off from governments. NASA is giving its business to Project X and in health research we see private companies leading the work against cancer and Alzheimer. We see the implementation of autonomous driving by a remote software update in a car. Law makers need to keep up with those developments to think about the usage of this new technologies. Robotics and Artificial Intelligence will further more challenge the philosophical and ethical use of technology. What used to be topics of novels and science magazines in the past will become a daily discussion for the coming years. 2016 will mark the year when all this became mainstream. New ventures will need to think about a society, which needs to be prepared and govern how to use the products of this new generation.

5. Law makers will need to handle the mess

The good and evil in technology will be discussed most prominently on the topics of encryption. If governments and ruling tech companies can not agree on the use of encryption it will be interesting to see how they will discuss AI, robotics and mobility in the future. It has become obvious, that like guns, new technologies will be used by bad guys as well. Preventing the abuse of technology and control access to capacities of technologies will be a challenge for future generations. The fundamental discussions and rules will happen starting with the new year. It looks like encryption is the first example for these discussions and it has become a mess already. I am a believer of privacy and availability of encryption with no backdoors. This is not easy to achieve but a necessity in a free world. But it is just one of the ethical discussions we need to have based on the technology cycle we are in. Dependencies of investments on the results of those discussions will become part of any due diligence in the future for investors.

It won’t be easier to invest in startups based on those conclusions. There are still risks from new influencers. Technology has become more reliable and a lot cheaper. The value of investments is becoming more difficult to be calculated because of more variables being in the game. Investors will need more knowledge outside their core field of expertise as of today.

Source: https://thomasgr.tumblr.com/post/136202282920

Private Equity

Alternative Investments: Accelerate’s Alt ETFs Now On RBC Dominion Securities A+ Platform

Accelerate Financial Technologies Inc announced this week that its alternative ETFs have been added to the RBC Dominion Securities A+ platform. RBC Dominion Securities describes the A+ as the next level of wealth management.

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Alternative Investments: Accelerate’s Alt ETFs Now On RBC Dominion Securities A+ Platform

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The A+ is for you if “you require serious investment management for your serious money.”

Accelerate Financial Technologies Inc announced this week that its alternative ETFs have been added to the RBC Dominion Securities A+ platform.

RBC Dominion Securities describes the A+ as the next level of wealth management.

For select clients with serious money, the platform provides greater convenience, customization, RBC’s Unified Managed Account technology, access to elite money managers worldwide, and tax efficiency.

Accelerate’s Alt ETFs on RBC A+

The range of alternative ETFs from Accelerate allows investors to diversify beyond stocks and bonds by including alternative asset classes in their portfolios.

The firm is known as a pioneer in institutional caliber alternative ETFs including hedge fund and private equity ETFs. It claims it is “disrupting the asset management industry by offering performance-oriented alternative investment strategies previously reserved for wealthy investors at a fee significantly lower than competitors.”

“We are pleased to be chosen by RBC Dominion Securities, a global leader in wealth management, as one of the select group of high-quality investment managers on the exclusive A+ platform for RBC Dominion Securities advisors and their clients,” said Accelerate CEO Julian Klymochko. “In an era of rock-bottom interest rates and record-high stock market volatility, we are pleased to provide investors with diversification, alternative yield, and alpha generation solutions through alternative investment strategies including absolute return, arbitrage, enhanced equity, and private equity replication.”

Selected ETFs

The alternative ETFs on the RBC Dominion Securities A+ platform include:

  • Accelerate Absolute Return Hedge Fund (TSX: HDGE) – a diversified, liquid, and performance-oriented long-short equity hedge fund
  • Accelerate Arbitrage Fund (TSX: ARB) – provides exposure to SPAC arbitrage and merger arbitrage investment strategies
  • Accelerate Enhanced Canadian Benchmark Alternative Fund (TSX: ATSX) – combines exposure to the S&P/TSX 60 plus a long-short Canadian equity overlay
  • Accelerate Private Equity Alpha Fund (TSX: ALFA) – designed to provide investors with private equity-like investment returns

Related Story:  Liquid Alt ETF Provider Accelerate Offers Ready-Made Alternative Investment Strategy                                                

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Source: https://dailyalts.com/accelerates-alt-etfs-now-on-rbc-dominion-securities-a-platform/

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Private Equity

Venture Capital: AgTech Startup Benson Hill Lands $150M

Benson Hill, an agtech startup based in St. Louis, announced Thursday its close of a $150 million Series D round led by Wheatsheaf and GV (formerly Google Ventures). It uses biotechnology and data science to enhance the nutritional qualities and sustainability of crops.

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Venture Capital: AgTech Startup Benson Hill Lands $150M

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Benson Hill uses biotechnology and data science to enhance the nutritional qualities and sustainability of crops.

Benson Hill, an agtech startup based in St. Louis, announced Thursday its close of a $150 million Series D round led by Wheatsheaf and GV (formerly Google Ventures).

The company said other strategic and ESG focused investors also participated. These included Argonautic Ventures, Caisse de dépôt et placement du Québec (CDPQ), Emart, GS Group, Louis Dreyfus Company, iSelect Fund, Fall Line Capital, Mercury Fund, Prelude Ventures, Prolog Ventures, S2G Ventures, and additional strategic and family office investors.  (FOOD navigator-USA.com)

Benson Hill technology

Benson Hill uses biotechnology, data science, and AI to enhance the nutritional qualities, flavor, and sustainability of crops and vegetables.

The firm’s “Cloud Biology” is the fusion of data, machine learning, and AI techniques with biology. Its “CropOS” is a proprietary platform that facilitates the accessibility and actionability of Cloud Biology.

The CropOs platform uses plant phenotyping, predictive breeding, and environmental modeling algorithms to better control the plant breeding process and realize these advantages:

  • Produces plants that are highly productive, highly nutritious, and better tasting
  • Better texture
  • Reduce the number of processing steps
  • Reduce the need for additives
  • Grow plants that “do more with less,” thus boosting sustainability

The company’s work so far has been concentrated around soybeans.

Its new, ultra-high-protein (UHP) soy products spiked the interest of investors. They come from a highly productive non-GMO soybean that is rich in oleic oil content.

Use of funds

Benson Hill plans the commercial launch of the first Ultra-High Protein soybean varieties in 2021, among other product launches.

It also plans to expand its team by adding top talent and continue the development of Cloud Biology and CropOS.

“As a society, we’re at a crossroads made more evident as the pandemic has revealed strengths and vulnerabilities in our food system,” said Matt Crisp, Benson Hill CEO. “Food choices that create enjoyment, make us stronger, and help preserve our environment need to be accessible to everyone, and the power of plant diversity and technology innovation can help fuel that evolution.

Related Story:   Smart Farm Technology To Take The Drudge Out of Plant Breeding

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Source: https://dailyalts.com/agtech-startup-benson-hill-lands-150m/

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Private Equity

FinTech: Alliance Data Buys BNPL Fintech Bread For $450M

Alliance Data Systems (NYSE: ADS) said Thursday that it will acquire Bread and its digital platform for $450 million of which $100 will be paid through Alliance stock. The transaction would expand Alliance Data’s own digital offerings by including buy-now-pay-later (BNPL) products.

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FinTech: Alliance Data Buys BNPL Fintech Bread For $450M

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Alliance Data will pay in cash and stock for the acquisition.

Alliance Data Systems (NYSE: ADS) said Thursday that it will acquire Bread and its digital buy-now-pay-later (BNPL) platform for $450 million of which $100 will be paid through Alliance stock.

The transaction would expand Alliance Data’s own digital offerings by including BNPL products. BNPL is a major trend now that consumers have embraced the interest-free, zero-fee facility to pay in installments. Alliance is a provider of data-driven marketing, loyalty, and payment solutions. (Alliance)

Digital BNPL is particularly popular with millennials and the younger set. They prefer not to run up credit card debt and like the speed and convenience. The technology and products acquired from Bread will address this segment of the population.

Bread already has tie-ups with merchants such as online jewelry seller Noémie, the luxury watch seller Hublot and Newton Baby, the crib mattress provider.

BNPL customer experience

“Bread’s flexible, easily-integrated payment solutions, coupled with Alliance Data’s Enhanced Digital Suite, will improve the digital customer experience and support increased acquisition and checkout rates, offering the best payment product to the right consumer at pivotal moments in the customer’s online shopping journey,” Alliance said in a statement.

Alliance intends to leverage Bread’s solutions along with its own existing private label, general-purpose and commercial products.

COVID-19

Its brand partners will therefore get another advantage in the eCommerce channel, with online businesses already getting a boost from COVID-19.

“With the timing of the holiday season upon us, the COVID-19 pandemic has accelerated the adoption of digital technologies, and perhaps nowhere as significantly as in financial services and payments,” said Val Greer, chief commercial officer, Alliance Data.

BNPL is now crowded with cash-rich players

Payments giant PayPal (NASDAQ: PYPL) announced in August that it would begin offering BNPL services, recognizing that COVID-19 had triggered a dramatic increase in their popularity.

Other players in the BNPL field include Klarna, Affirm, Afterpay, and Quadpay.

In a recent study, Tech Crunch found that PayPal had the highest retailer coverage with a presence of 65% retailers. Afterpay was a distant second at 10%, then Affirm 6%, Klarna 5%, and QuadPay 2%.

The study concluded that PayPal was primed to dominate the BNPL wars.

Related Story:   PayPal Challenges Klarna In U.K. BNPL Tussle                                                

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Source: https://dailyalts.com/alliance-data-buys-bnpl-fintech-bread-for-450m/

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