Ben Borton

Juniper Square recently released their look back at the state of venture in Q2 2024, and the data is interesting. 👉 The liquidity drought continues to stifle fundraising, with $37.4B committed to 255 funds YTD. 👉 In the current climate, established managers are securing 77% of fund value YTD, the highest concentration in the last decade.  👉 Over 63% of capital raised in 2024 so far is in funds of $500M+, the second-highest percentage in the last decade. 👉 Q2 reflects an uptick in US venture deal momentum, with quarterly deal count climbing to the highest level since Q2 2022. 👉 Q2 data shows a third consecutive upward quarter in both exit value and the total number of exits.  👉 Q2 hit a 9-quarter high in total number of exits, and the total exit value recorded was the second-best quarter since Q1 2022. The data shows that the landscape is especially competitive for emerging managers. When it comes to generating returns though, a fresh perspective can help find the most interesting deals. I wrote a bit about this last week, if you’re curious to dig into stats on unicorns at the seed stage, and the funds they’re raising from. You can check out the full report from Juniper Square here: https://lnkd.in/eN6VnY-k #emergingmanagers #stateofvc

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Within the venture industry, illiquidity in is sometimes viewed as a feature rather than a bug, as it protects investors from selling at the worst times (which as seen throughout history is commonplace in the public markets). However there are limits, and the problem of illiquidity will have to be solved in a more systematic way. LP driven secondaries are inefficient and opaque, large M&A comes with major regulatory hurdles, selling in traditional secondary rounds is limited given the focus on efficiency and the departure of crossover funds, and the IPO bar is expected to remain very high (don't see <$1B market cap IPOs). Meghan Reynolds and I talked a few weeks ago about this (see link in comments) as has Mark Suster in many recent pods. Agree that over the next decade, we should see more of the following to solve for the liquidity problem. 1) PE funds serving as an exit for VC backed companies, meaning companies that are near or at EBITDA positive. 2) Continuation funds that provide LPs with an option to rollover or get liquid (single asset or all assets). I'm spending a lot of time here. 3) A more efficient liquidity marketplace for LP sales/buys. 4) Strip sale of a set of assets. Planning a special roundtable pod with some secondary and primary managers to discuss the growing liquidity problem in VC.

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Assets in traditional finance are scattered across spreadsheets, PDFs, transfer agents, fund admins, and centralized clearinghouses like DTCC. The system is opaque, fragmented, rife with intermediaries, inaccessible to many, and fundamentally analog. But there’s a technology changing that. It offers potential 10x improvements in transparency, efficiency, and programmability. It’s called tokenization. In retrospect, it will be obvious. Traditional assets are being converted into the file format of a token, unlocking a new level of asset modality and sovereignty. ParaFi has been at the forefront, backing the infrastructure that’s making this possible: from originators like Securitize and Superstate to marketplaces like Centrifuge and Maple, to middleware like Fireblocks, and customizable blockchain protocols like Avalanche and Provenance. Stablecoins have captured much of crypto’s attention — they are tokenized dollars. But tokenization goes deeper: it’s transforming everything from treasuries, private credit, LP interests, carbon credits, and even tokenized physical collectibles. Perhaps that’s why Larry Fink, CEO of Blackrock, calls tokenization “a technological transformation for financial assets”. For years, we’ve been investors on the sidelines, backing the founders building tokenization technology. Now, we’re on the field. ParaFi has tokenized a sleeve of our venture fund because we believe this technology will drive long-term efficiencies for our business and reshape the future of finance. https://lnkd.in/e5bcBWZA

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Charles Hudson is hands-down one of the sharpest minds in early-stage investing. As the Founder and Managing Partner at Precursor Ventures, Charles has backed over 375 companies and supported more than 400 founders. → His portfolio includes hits like Clearco, Juniper Square, and Carrot → He's helped founders raise over $175 million across four funds → He's an active leader in the VC community, serving as the 2023-2024 Chair of the NVCA Board of Directors But even with all of his successes and accolades, what really sets Charles apart is his founder-first philosophy. He's not looking for "coachable" founders who hang on his every word. He wants founders who are decisive, independent thinkers. He believes his job is to give founders what they need, not impose his own agenda. Charles is the kind of investor every founder wants in their corner. One who shows up, follows through, and builds genuine relationships over time. And on this week’s episode of Minimum Viable Podcast, he's sharing his insights on what makes for a truly productive founder-investor partnership. Founders, this is a conversation you’ll want to hear. — What's the #1 quality you look for in an investor? Tune in to the full episode when it drops this Wednesday to hear much more from Charles and learn how to make the most of your investor relationships.

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Sony Bank launched NFT platform where users can collect and trade the NFTs they’ve received as promotions.Security token may be on a private blockchain, which is the regulator’s preference, SNFT uses the Polygon public blockchain. In order to make the experience more user friendly for new users, some apps try to hide blockchain functionality, such as the need to pay for gas fees. However, SNFT does not, although it lets users on-ramp with credit cards. Right combination of public and private blockchain for achieving relevant business goals. For making user experience better uses an on-ramp so users can pay with credit card instead of gas fees. #blockchain #nft #publicblockchain #privateblockchain #hybridblockchain https://lnkd.in/dMTqwmME

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Here’s a question investors are often asked: When evaluating early stage companies, how much time do you spend on due diligence around future exits? It’s not surprising we hear this question a lot. Also not surprising: it’s got a wide range of answers depending on the firm. Some don’t spend much time here at all. Others make it a point to put meaningful time in as part of their process. Our current thinking: take the time to do the work on public market comps. At Alpaca VC, we spend significant time understanding how public market investors will  realistically value a business based on margin profile, product, business model & TAM. In short, we want to know: how will this company be valued at scale when we get taken out? Yes, we can acknowledge that the journey toward exit is a windy road and that there may be pivots along the way, but there are still public market companies that have a business model similar to the early stage company you're evaluating. And you can always look at gross profit multiples if you think the margin profile will change over time. So we still do the work on the comps. Quantitative metrics we look at when making the comparison to public market comps include EBITDA multiple, revenue multiple, Gross Profit multiple or all of the above. As part of this process, it’s also important to factor in the public market company’s year-over-year revenue growth as this will also significantly impact the multiple it trades at. Simple example: if you have two public market companies with similar business models and similar margin profiles, but one's growing 100% year over year, and one's growing 50% year over year, then obviously the DCF (discounted cash flow) analysis is going to spit out a very different valuation for the one that's growing faster. Why this matters: When you take all of that information into account as you evaluate an early stage business, you can begin to create a realistic picture of how this company will be valued in the public markets at exit - or how an acquirer will value the company for an acquisition. Strategic acquirers may, of course, pay a premium, but we won’t underwrite for that. This allows us, for example, to form conviction around valuation based on revenue and gross profit predictions. If we think they can do $100M of revenue five years from now, we use this diligence process to form a thesis about whether the characteristics above (product, margin, business model, etc.) will cause the company to be valued at $200M vs. $500M vs. $1B at exit. Curious how other early stage investors think about underwriting an exit and how much time they’re spending on public market comps even though these companies are in their infancy.

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645 Ventures’ first fund was a scrappy $8 million seed round announced in 2014. In late 2022 the firm raised its largest funds ever with $350 million across two; a $195 million fourth flagship fund and a select fund of $153 million. Seed- and early-stage venture is a network-driven business. However, what differentiates 645 Ventures is that it has also built its own software to source investments at the seed stage.

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#QMIT's “HF In a Box” (HFIB #EMN) strategy continues marching along. Now ~+17.5% gross YTD & ~26% ann, having more than TRIPLED & outpaced AQR’s QMNIX emn fund by ~+130% in 5.4Y Live (not to mention RenTech). Coming to a Delta one desk near you via swaps/ structured notes: #quant #alpha #hedgefund #equity #longshort #mscf #mfe

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"Small funds may have more incentive to produce higher returns The alignment of incentives between GP and LP varies drastically based on fund size. Managers of smaller funds who have invested substantial personal capital demonstrate an unwavering commitment to lucrative returns, while managers at the helm of colossal funds, buoyed by significant management fees, may exhibit a diminishing drive. This constitutes an almost incontrovertible structural benefit of managing a small VC fund. Furthermore, fund managers of established funds may, over time, raise larger subsequent funds and grow more risk averse. This can present a sub-optimal outcome for their LPs and, by virtue, manifests a bad omen for VC investing." https://lnkd.in/gHKgea4e

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As real economic value begins to fuel the digital asset space, we’ll witness a paradigm shift. Utility driven tokens will rise, challenging the status quo and redefining the crypto landscape. The days of speculative dominance will fade as assets with real world use cases claim their place, creating a new dynamic where liquidity flows towards purpose and innovation. #CryptoUtility #fascotexchange #DigitalAssetRevolution #iamfascot #FutureOfFinance #CryptoAdoption #UtilityTokens #DigitalEconomy

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Coming soon on Aug 1: "Transformation to a Fresh Tomorrow." This is theme of our 3rd Annual Web3 Investor Day, as we welcome the innovators and investors convening in Chicago for these discussions around the next generation Internet. Our theme reflects the optimism, determination and commitment investors and innovators have solidified off the depths of the bear markets to drive success in the bull markets. Broader investor optimism suggests that fresh institutional funds into Web3 across both tokens and equity may endure.  Across adoption metrics, customer interest and developer activity, Web3 seems to have normalized. It’s refreshing to see the transformation and next evolution of Web3 and it’s refreshing to meet many of you on August 1.  And yet, even with the improved optimism from last year, there still remain open questions in the development and adoption of our next generation Internet:  1. the balance of speculative versus productive investor capital in this current cycle 2. the productive role of liquid trading capital in fostering Web3 innovation 3. the attractiveness of venture investments in follow on financings 4. the role of policy and regulation that may enhance innovation 5. the continued developer activity to improve the underlying infrastructure 6. other Web3 recovery characteristics in target customer use cases. We remain committed to navigating regulatory shifts, fostering investor optimism, and building the customer use cases for Web3.  Physical spaces enhance our innovation conversations.  In person relationships foster our collaboration.  Relationships drive breakthrough innovations.  Reach out to Rizza Torres at Decasonic if you would like to join us! #web3investorday #web3 #venturecapital

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The IRL Syndicate Strategy This week via Last Money In, I wrote about how I would get started as a syndicate lead today and build a power syndicate (link to full post in the comments). One thing we do not see much of, but is a great way to get started is to focus on IRL founder pitches and LP events. While this doesn’t scale if the goal is to run 30+ deals per year, it is a great way to build your syndicate brand and also build deeper relationships with both LPs & founders. When I started running SPVs, I would host these founder meet-n-greets with the founders I was putting an SPV together with. While I do not do this much anymore, below is an example of a syndicate that is heavily focused on IRL events and doing a great job in building an investing community. Meet Kelley Arena & Annie Evans… I met Kelley Arena of Golden Hour Ventures & Annie Evans of Dream Ventures and I loved how they have really focused on operating this syndicate in more of an in-person community experience. Golden Hour Ventures and Dream Ventures operate with the intention of bringing education and community to angel investing and deal flow. They deploy capital 3-6 times/ year. For each of their deals, they source carefully based on stage (Seed+ to Series A), industry (consumer, consumer tech, women's health), and their investor network's appetite. Their network is mostly women, spanning industries and expertise, all with their own superpowers and spheres of influence. For a founder to be the right fit for their syndicate, they see the value in having a group of invested ambassadors, who often are the brand's consumer, on the cap table. IRL STRATEGY... What makes their model unique is that they host investor events for the network, often roadshowing in NYC, LA and Miami, where the founder pitches live and fields an Ask-Me-Anything style of Q&A. They often pair this with angel investing education, with the intention of bringing in a new class of investor, and demystifying the asset class. Post-deployment, their investor syndicates will meet with the founder 1-2x year, IRL and virtual, to get investor updates, meet the other investors, and brainstorm on ways to amplify the brand. -- Powered by Sydecar, Last Money In is the most actionable Venture Capital newsletter with 60k+ subscribers. Written by Zachary Ginsburg and Alex Pattis, global syndicate leaders with 800+ VC SPVs closed.

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With the upcoming change in leadership at the SEC, tokenizing physical assets just might provide a road map that provides several benefits to businesses, including the fractional ownership of assets such as art, securities, collectibles and carbon credits. Tokenization can also create cost efficiencies in customer loyalty and rewards programs to encourage consumer engagement. #tokenization #blockchain

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Today, we're proud to announce the launch of Flywheel Capital, a new ‘hybrid’ secondaries fund pioneering next generation liquidity for growth-stage #founders, companies and VCs — without the discounts, friction or missed upside. By adapting innovations from the private-equity #secondaries market and re-modelling them for founders and VCs, we're re-designing liquidity #VC and #Growth — improving outcomes for liquidity seekers and bringing a new kind of capital partner to the #VCSecondary market. As we do so, we’re excited and grateful to be anchored by leading fund of funds, Allocator One. We believe that greater liquidity will transform #venture in the same way it has private equity. Despite the immense need among founders, companies and VCs — who need liquidity for everything from managing portfolios and distributions, to buying homes to paying taxes (all eyes on the UK #budget..!) — today creating liquidity is high friction and low satisfaction. From discounted price optics, wide valuation spreads, and opportunity cost gating sales, to high risk and uncertainty dissuading broader investment — these issues restrict the market’s full potential. Through our bespoke hybrid secondary structure, we provide a win-win-win solution — for founders, shareholders and funds seeking fair liquidity, for capital on the sideline seeking risk-managed investment, and for a market that’s ready to get moving. We're on a mission to unlock a new era of liquidity in venture — creating a flywheel effect of more investment, innovation and growth, and our team (Gavin Cunningham Ioannis Gryparis Darren Westlake Komal Sethi) is just getting started. Read more about us in Sifted below, and if you'd like to get in-touch, reach out at [email protected].

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What Dave McClure is building resonates well what we are doing with our Siena Secondary Fund. Although one focuses on fund stakes and the other company positions, the journey is the same - need to educate the market about what is #VC #secondary and how to benefit from it...

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[part 2 of 2 - cont’d from https://lnkd.in/g8Ar6qGj] ….. A very common pattern I see with “rookie” vs. master” operators is something like this: 🌱𝗥𝗢𝗢𝗞𝗜𝗘 (𝗥):  𝗘𝘃𝗲𝗿𝘆𝘁𝗵𝗶𝗻𝗴 𝗶𝘀 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝗮𝗻𝗱 𝗮𝘁𝘁𝗲𝗺𝗽𝘁𝘀 𝘁𝗼 𝗲𝘅𝗲𝗰𝘂𝘁𝗲 𝗮𝗻𝗱 𝘄𝗼𝗿𝗸 𝘁𝗵𝗿𝗼𝘂𝗴𝗵 𝗲𝘃𝗲𝗿𝘆𝘁𝗵𝗶𝗻𝗴 𝘄𝗶𝘁𝗵 𝗲𝗾𝘂𝗮𝗹𝗹𝘆 𝗶𝗻𝘁𝗲𝗻𝘀𝗶𝘁𝘆 𝗮𝗻𝗱 𝗲𝗳𝗳𝗼𝗿𝘁 👑𝗠𝗔𝗦𝗧𝗘𝗥 (𝗠):  𝗜𝗺𝗺𝗲𝗱𝗶𝗮𝘁𝗲𝗹𝘆 𝗽𝗿𝗶𝗼𝗿𝗶𝘁𝗶𝘇𝗲𝘀 𝘄𝗵𝗮𝘁 𝗶𝘀 𝗺𝗼𝘀𝘁 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁, 𝘄𝗵𝗮𝘁 𝘄𝗶𝗹𝗹 𝗱𝗶𝘀𝘀𝗼𝗹𝘃𝗲 𝘃𝘀. 𝗱𝗲𝗹𝗲𝗴𝗮𝘁𝗲 𝘃𝘀. 𝗱𝗲𝗳𝗹𝗲𝗰𝘁 ☐ 𝗧𝗼𝗽 𝘀𝗮𝗹𝗲𝘀 𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗲𝗿 𝗷𝘂𝘀𝘁 𝗻𝗼𝘁𝗶𝗳𝗶𝗲𝗱 𝘁𝗵𝗲𝘆 𝗮𝗿𝗲 𝗾𝘂𝗶𝘁𝘁𝗶𝗻𝗴  🌱Immediately sets up 1:1 call to spend time saving them 👑Group text to CRO and Head of People asking why they are leaving >> realize it’s not salvageable.  Authorize backfill (via text).  ☐ 𝗜𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝗺𝗲𝗲𝘁𝗶𝗻𝗴 𝘄𝗶𝘁𝗵 𝗮𝗻𝗰𝗵𝗼𝗿 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿 𝗶𝗻 𝟮 𝗱𝗮𝘆𝘀 𝘁𝗼 𝗰𝗹𝗼𝘀𝗲 𝗦𝗲𝗿𝗶𝗲𝘀 𝗕 - 𝗳𝗶𝗻𝗮𝗹𝗶𝘇𝗶𝗻𝗴 𝗽𝗶𝘁𝗰𝗵 𝗺𝗮𝘁𝗲𝗿𝗶𝗮𝗹𝘀 🌱 Set up 2 hour meeting with FP&A and CEO team to prep, review and polish ahead of the meeting.  Runs the meeting end to end. 👑Set up 30 minute meeting with just FP&A team and asks them to “mock run the meeting”.  Provide feedback and give 30 minutes to make edits and improve.  Set up follow-on 1 hour meeting, kicks off the call by “setting the table”, tells head of FP&A to lead and present.  CEO provides feedback. 30 minute call next day with CEO to go through pitch together. ☐ 𝗖𝗮𝘀𝗵 𝗯𝘂𝗿𝗻 𝗿𝗲𝗽𝗼𝗿𝘁 𝗳𝗼𝗿 𝘁𝗵𝗲 𝘄𝗲𝗲𝗸𝗹𝘆 𝗲𝘅𝗲𝗰 𝘁𝗲𝗮𝗺 𝗺𝗲𝗲𝘁𝗶𝗻𝗴 𝗶𝘀 𝗼𝘃𝗲𝗿𝗱𝘂𝗲 🌱 Carves out 30 minutes to review and sanity check the cash burn report in their inbox before 12pm 👑Sanity checks the numbers (60 seconds) to make sure nothing looks suspicious. Delegates to head of FP&A to check and publish.  ☐ 𝗧𝗲𝗮𝗺’𝘀 𝗾𝘂𝗮𝗿𝘁𝗲𝗿𝗹𝘆 𝗢𝗞𝗥𝘀, 𝟰 𝘄𝗲𝗲𝗸𝘀 𝗹𝗮𝘁𝗲 𝗻𝗼𝘄 🌱Sets up 1 hour meeting with team to review and another 1 hour to complete self-OKRs 👑Writes to team an apology for dropping the ball, and to ignore this quarter’s OKRs as they’ve gone stale and to focus on next quarter’s, taking into account latest pivot discussed. ☐ 𝟰𝟬𝟬 𝘂𝗻𝗿𝗲𝗮𝗱 𝗲𝗺𝗮𝗶𝗹𝘀 🌱 Attempts inbox zero by end of day 👑Scans emails for family/friend, customers, internal team (in that order) and leaves the rest to triage tomorrow.  ☐ 𝗡𝗮𝗻𝗻𝘆 𝗷𝘂𝘀𝘁 𝗰𝗮𝗹𝗹𝗲𝗱 𝗶𝗻 𝘀𝗶𝗰𝗸, 𝘆𝗼𝘂’𝘃𝗲 𝗴𝗼𝘁 𝗽𝗶𝗰𝗸-𝘂𝗽𝘀 𝗮𝘁 𝗮𝗹𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝗻𝗴 𝗹𝗼𝗰𝗮𝘁𝗶𝗼𝗻𝘀 🌱 Texts four friends and babysitters to see if they can help 👑Fires up the Starlink and goes mobile for the day, swings by Swirl for random Monday fro-yo  treat If you feel “seen”... join us: Operators Guild - the most elite business scalers  - https://hubs.la/Q02q1ty40 OG Next - the future masters of business scaling - https://hubs.la/Q02q1w4d0

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All of this happened in crypto this week 👇 1️⃣ Tether reports a $5.2B profit in H1 2024. "Tether announced a record with a new profit benchmark of $5.2B net profit in the first half of the year, with a $1.3B net operating profit in Q2 as USDT's market cap hit new highs." 2️⃣ Circle trades at $5B ahead of IPO. "Circle reached a $9B valuation in 2022 during a failed SPAC deal to go public. According to the report, Circle allows limited trading of its shares in the secondary market ahead of the IPO, but only on a case-by-case basis and in specific situations." 3️⃣ Coinbase posts $1.45B in Q2 revenue. "Net income dropped to $36 million compared to nearly $1.2 billion in Q1. Consumer transaction revenues declined to $665 million, a 29% drop when compared to Q1, while stablecoin revenues rose to over $240 million. " 4️⃣ Polymarket crosses $1B in cumulative volume. "From June to the end of July, Polymarket’s cumulative volume surged about 58%, from $663 million to $1.05 billion." 5️⃣ SEC sues BitClout founder Nader Al-Naji. "Nader Al-Naji, 32, raised more than $257 million from the 'unregistered offers and sales' of a native token, called BTCLT which is on the blockchain-based platform BitClout, the SEC alleged on Tuesday." 6️⃣ Mt. Gox moves $2B+ of BTC to a fresh address. "Mt. Gox has already transferred billions of dollars worth of bitcoin to designated crypto exchanges as part of its ongoing $9 billion payout." 7️⃣ Goldman Sachs CEO says bitcoin could be 'a store of value case.' "The answer came in response to CNBC’s Joe Kernan’s questions around the viability of bitcoin as a reserve asset, similar to gold reserves." 8️⃣ BlackRock says no other crypto ETFs in the foreseeable future. "BlackRock Head of Digital Assets Robert Mitchnick said at the Bitcoin 2024 conference that the launch of spot Ethereum ETFs is unlikely to open the door to funds that track other crypto assets." 9️⃣ US Government moves $2B in Silk Road Bitcoin. "The move comes just two days after former U.S. President Donald Trump, the Republican candidate in this year's presidential election, told the audience at Bitcoin 2024 in Nashville that he would create a national 'strategic Bitcoin stockpile' if elected." 🔟 Russia passes a bill to legalize crypto for international settlements. "Reuters reports that the law is expected to take effect in September and that first crypto transactions could take place before the year ends." --- #tether #USDC #coinbase 👨‍⚕️🧪 Read my free newsletter for the next best web3 products, strategies, and trends. Join 17,000+ web3 builders and investors at: https://launchy.app/

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