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Seed, speed, and we’re still here: my first decade in venture

December will mark a decade for me in venture. I didn’t start full-time, but it was nearly ten years ago that I landed an internship with a small fund in Chicago and “screened” my first startup story. I was a first-year business school student with a flip phone. A year later when I graduated, only … Continue reading Seed, speed, and we’re still here: my first decade in venture

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December will mark a decade for me in venture. I didn’t start full-time, but it was nearly ten years ago that I landed an internship with a small fund in Chicago and “screened” my first startup story. I was a first-year business school student with a flip phone. A year later when I graduated, only one of my classmates went into venture full-time. It wasn’t I. After being an angel for several years further with my partner, Ira, we parlayed investing from a profession to an occupation in 2012.

On a personal basis, this run is unique for me against my prior three decades where people, places and engagements came and went in vignettes of 2-4 years. Now I have the pleasure of having known and worked with many of the same people – both entrepreneurs and investors – for ten years. Viewing the arc from original financial crisis to current 3.5% unemployment and from the launch of A16Z to the IPO fireworks of 2019, here are the changes that most impress upon me:

  • Seed: Ten years ago, seed investing was the uncouth cousin of venture capital, led by a group of pioneering angels and incubators, like Jeff Clavier and YC, who seeded for passion and intrigue, not management fees and prestige. That worked out nicely. Today, funds less than $100M represent about half of the partnerships being formed, and the data show that Seed may be the last refuge in venture for outsized returns. Later stages are unambiguously competitive with capital.
  • Speed: As summer approaches, entrepreneurs joke about us VCs taking the next two months off. In my earliest days as an investor, I saw some of that. No more. Entrepreneurs don’t slow down, and neither do (or can) we. There is more capital now, and there is no excuse for lazy money! On the startup side a decade ago, it wasn’t uncommon to see a struggling startup plod along for 3 or 4 years, still trying to raise that first round past angels. The forces of creative destruction are far swifter now. Companies form and then grow or bust much faster. Here in the mid-continent that is a measure of two positively increasing factors – the willingness to take risk (and accept failure) and a growing opportunity cost for founders and employees. Both good things.
  • FAANG: While Facebook, Amazon, Apple, Netflix and Google were all around ten years ago, they neither collectively represented >10% of public market caps nor greater than 3% of US GDP as they do now. Neither were they the menacing overlord of the tech ecosystems where our startups play. Since then, entrepreneurs and investors alike have repeatedly bet on innovating in their ecosystems, only to be (repeatedly) burned. This is a looming risk to future innovation that we worried less about “back then”, and it shouldn’t be lost on us that today Facebook may just have done the same again in crypto.
  • #metoo and beyond: As have most industries, venture has received its pro rata comeuppance for the under-representation and inequitable treatment of women, minorities and other constituents. Some progress has been made, but there is plenty more work for all of us to do.
  • It’s not just the valley now: 10 years ago, few believed you could build big companies outside of Silicon Valley. Now there are many examples – Grubhub, Shopify, Duo, Fieldglass, etc – and valley investors want in. Whether here in the Midwest, Texas, the Southeast, or Mountain West all the big venture funds are paying attention, hopping airplanes and writing checks. The valley’s cup truly runneth over, and that is game changing for entrepreneurs and us seed investors.

…yet some things don’t change. Despite two rounds of sirens foretelling the end of venture, we are still here! First the JOBS Act’s crowdfunding and then crypto ICOs were going to put us out of business. It turns out there’s more to what investors do and what entrepreneurs want than quick cash from strangers. Thank goodness.

So what’s ahead? As we dawn on the 2020s, our team has been thinking more about this. Next post.

Source: https://vcwithme.co/2019/06/18/seed-speed-and-were-still-here-my-first-decade-in-venture/

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” The Leapfunder Note is a sensible and attractive way to place capital in start-ups in the Netherlands “

” Diversification is important in angel investing. Leapfunder is a platform that allows angels to spread their investments. “

” Leapfunder investing allows you to become actively involved in a start-up, just as in classical angel investing, while taking all the hassle out of transaction execution “

” Leapfunder is ideal for investing smaller amounts in a start-up in the very early stages. Such investments can be a powerful addition to a portfolio “

” With Leapfunder you get a great opportunity to build up a diversified portfolio of start-up investments, often investors can play an active role in developing the company “

” When I saw the Leapfunder proposition I thought straight-away: this is what start-ups need. I am an entrepreneur and wish this system had been available when I started my company. “

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Pieter ter Kuile

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Wouter Kneepkens

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Ronald Bazuin

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Eric van der Maten

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Eric van Gilst

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Donald Res

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Source: https://www.leapfunder.com/companies/165

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Liquid Alternatives: Watch Out For These “Potholes” (Goldman Sachs)

Theodore Enders, Global Head of Goldman Sachs Asset Management (GSAM) Strategic Advisory Solutions, says that investors are sometimes disillusioned with their investments in alternatives. However, on closer analysis, it turns out that poor implementation choices within portfolios are more often the problem rather than flawed strategies.

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Liquid Alternatives: Watch Out For These “Potholes” (Goldman Sachs)

https://platodata.net/wp-content/uploads/2020/10/liquid-alternatives-watch-out-for-these-potholes-goldman-sachs.jpg

An incisive note from Goldman Sachs Asset Management details the three pitfalls in daily liquid alts investing.

Theodore Enders, Global Head of Goldman Sachs Asset Management (GSAM) Strategic Advisory Solutions, says that investors are sometimes disillusioned with their investments in alternatives. However, on closer analysis, it turns out that poor implementation choices within portfolios are more often the problem rather than flawed strategies. (GSAM)

GSAM used the equity market drawdown triggered by the coronavirus endemic in early 2020 as a case study.

Three common implementation pitfalls

 

·        Defining the term “alternative”

GSAM defines daily liquid alternatives (DLAs) more rigidly compared with Morningstar. In the opinion of GSAM, DLAs are similar to hedge funds because they reduce portfolio risk, better manage equity drawdowns, and provide differentiated returns from both equities and fixed-income. Several funds considered as alternatives by Morningstar do not fall within the ambit of this definition.

“During the Coronacrisis drawdown, the Morningstar funds that we exclude from our stricter definition exhibited sharp performance disparity—with nearly a quarter having deeper drawdowns than the S&P 500 (-34%),” writes Enders. “Investors owning these funds and expecting better performance were likely dismayed by the outcome.”

·        Lacking strategy diversification

Investors tend to crowd into the equity long/short strategy. However, there are other DLA strategies available such as tactical trading, relative value, and event-driven.

The problem with excessive use of the equity long/short strategy is that these funds also have the highest beta to equities.

“Therefore, they may disappoint exactly when investors hope to realize the benefits of alternatives,” says Enders. “During the Coronacrisis drawdown, the median Equity Long/Short fund fell -22%, double that of all other alternative funds.”

GSAM recommends the use of a multi-strategy approach.

·        Excessive manager concentration

The third pitfall identified by GSAM is the use by investors of only one or two managers. GSM points out that though the median DLA outperformed US large blend funds during the corona crisis, the range of outcomes was nearly 3 times as wide. This shows the greater potential of return dispersion across managers.

“If an alternatives sleeve was comprised of only one or two managers, investors were likely frustrated if those managers were at the bottom end of that range.”

GSAM’s recommendation: Use multi-manager strategies or hedge fund replication strategies.

Related Story:  Retail Investors Can Use Alternative ETFs To Their Advantage

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Source: https://dailyalts.com/liquid-alternatives-watch-out-for-these-potholes-goldman-sachs/

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Supernode Global rebrands with £28m fund for mediatech start-ups

Originally written by Timothy Adler on Growth Business

Supernode Global has rebranded with its £28m venture capital fund for media technology start-ups. The rebranded VC brings together Rooks Nest Ventures and media networking community Supernode in what CEO Michael Sackler believes will give media tech start-ups access to capital, while giving investors a route to the most exciting start-ups. Merging both sides of

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 Michael Sackler, CEO of Supernode Global

Evangelical: Michael Sackler believes venture capital has underserved or even ignored media start-ups

Supernode Global has rebranded with its £28m venture capital fund for media technology start-ups.

The rebranded VC brings together Rooks Nest Ventures and media networking community Supernode in what CEO Michael Sackler believes will give media tech start-ups access to capital, while giving investors a route to the most exciting start-ups. Merging both sides of his business will create a holistic platform.

To date, the old VC side, Rooks Nest Ventures, has made 14 early stage seed investments with an average investment of £400,000.

“We’ve done a little bit more and a little bit less,” said Sackler.

Supernode Global will invest in eight companies per year.

>See also: Draper Esprit raises £110m to invest in tech companies in just three days

Portfolio companies Sackler is particularly excited about include home workout app Fiit, which is in a Series B funding round; Rap Tech Studios, a rap app development company and social media platform for hip-hop fans; and Good Human, a searchable platform for sustainable brands, pitched as a cross between Amazon and Pinterest.

Supernode Global focuses on media infrastructure, both either consumer-facing user-generated-content platforms such as Rap Tech or the under-the-bonnet technology which powers those platforms.

“Any companies that are creating the picks and shovels of the media industry,” said Sackler.

He highlights mobile 3D games engine Unity, which sits under the hood of many of today’s popular games, as the kind of business he would like to invest in.

>See also: Over 1,000 tech start-ups have gone bust since lockdown

Sackler is evangelical about the potential of media technology, arguing the sector has been underserved or even ignored by most venture capitalists.

“These companies that are starting up now are going to have a huge influence on how individuals view the world and possibly even the way society even operates. It’s undervalued and possibly even ignored. You’re consuming media all day every day on these platforms,” he said.

Having founded Rooks Nest Ventures in 2017, the former film producer and angel investor began thinking about creating a global community for mediatech startups and investors last year.

Sackler said: “We thought, let’s focus on building a community which focuses on early stage media technology start-ups where they will get access to the best minds in the business. We didn’t want it to be just a top-of-the-funnel marketing exercise for us. We want to provide every resource we can for start-ups in this space, including venture capital.”

To date, Supernode is creeping up towards 1,000 handpicked members. Although membership is open to all – something which Sackler feels is important for diversity – those members are vetted before joining.

Sackler, a scion of the philanthropic Sackler family, believes that Supernode Global can act as a flywheel, accelerating the development of mediatech.

Sackler said: “We can provide access to a whole range of different services, whether it’s access to capital or talent, partners, workshops, peer-to-peer education, offering both access to start-ups and deal flow for investors.”

Further reading

25 of the most exciting fast growing technology companies in the UK

Source: http://s17026.pcdn.co/supernode-global-rebrands-with-28m-fund-for-mediatech-start-ups-2558200/

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