Crypto Corporate Venture Capital Faces Crash

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Hello and welcome to Pipeline. My name is Biz Carson and I wish two of my most loyal Pipeline readers, my father and my husband, a happy Father’s Day. I hope everyone takes the time to celebrate and reflect on Juneteenth this weekend as well.

This week in the startup world: Coinbase Ventures still exists, what it means to be Sherlocked, and another ugly startup CEO dispute, this time at an AI ethics company.

Can crypto enterprise funds survive the winter?

It was not a good, very bad week for crypto. Unless you want to work in crypto, because in that case it was a very good week for crypto.

For those in the crypto downturn camp: There were more disturbing signs that this might be more than a winter but a real crisis.

  • Layoffs rocked the industry, like Coinbase, BlockFi and Crypto.com all have laid off much of their workforce.
  • First it was the UST/luna crash. The news that is now causing chills in the ecosystem is that crypto lending firm Celsius has halted all withdrawals and hedge fund Three Arrows Capital has suffered massive losses as it sale of eyes its advantages.

For those who prefer a glass half full: There were plenty of encouraging signs, as CEOs reported that they were still looking to hire hundreds, if not thousands, of employees.

  • Changpeng Zhao, CEO of Binance tweeted sarcastically, “It wasn’t easy to say no to Super Bowl ads, stadium naming rights, big sponsorship deals a few months ago” (directly shading companies like Coinbase), but he now has 2,000 open jobs. Ripple and Kraken are also looking to hire hundreds of people.
  • The Consensus industry conference brought together thousands of people – and nobody even said the words “crypto winter”.

The question now is whether crypto firms like to invest in each other, what happens in a crisis if they are forced to cut costs? A major difference between the last crypto winter and this one is that many companies are investing in each other.

  • Many crypto companies have launched their own VC arms, including major funds like FTX Ventures ($2 billion) and Binance Labs ($500 million). Coinbase Ventures is one of the most active VCs. Unlike most enterprise funds, the crypto industry seems all set to invest in competitors.
  • Despite this week’s layoffs, “Coinbase Ventures exists and is still very much alive,” Shan Aggarwal, its head of Corp Dev and Ventures, told me. “Despite the market conditions and turbulence, we continue to invest.”
  • The pace of trading has slowed, and now investors are continuing to price-draw to understand what the new normal looks like in a market without a ton of comps. But price uncertainty is always an opportunity for investors, especially strategic CVCs, to jump into an investment.
  • “Frankly, Binance Labs is in a very good position right now because the valuations of many of these companies will be depressed given the crypto winter, and those that survive this winter will thrive in a bull market,” Binance.US CEO Brian Shroder told my colleague Ben Pimentel. “So to the extent that investors are actually investing now, that actually has the biggest return from my perspective.”

“I think HVAC is going to back down as much as the VC world,” predicted Robert Le of PitchBook. Depending on who you ask, it’s going to be a lot or a little. The one thing everyone agrees on is that there is always an opportunity in a crisis.

To learn more about what’s happening in crypto venture capital, read my full story on Protocol.com.

Understood

“Most American women have been brainwashed in modern times.” This comment is not something you would expect to see from a CEO in a Slack channel, but it is an example of a culture war inside crypto exchange Kraken widely sparked by its CEO, Jesse Powell, who sometimes seems gleefully defiant on Twitter. Anticipating a New York Times article published this week, the company published a cultural noteCo-opting Coinbase’s ‘mission-driven’ corporate stance, Powell adding his own tweet storm. The whole thing is a DEI nightmare, but Kraken offers a new “jet ski program” to give employees four months pay before leaving and pledge never to work for the company again. No, the jet ski is not included, but they hope employees will happily jet off into the metaphorical sunset on one instead.

sherlock – the term for what happens when Apple releases a new feature that could potentially wipe out a startup. According to TechCrunchthere could be a lot of pain ahead after this year’s WWDC, where Apple “Sherlocked” Oura with its new sleep tracking and Klarna and Affirm when it released Apple Pay Later.

The Winklevoss twins’ next act is one you need to hear, literally. The famous billionaire twins are currently on tour with their band, Mars Junction. If you want to grab their blankets from “Do not stop Believing” and “Mr. The Good Side” in person they are heading to the west coast next week.

Speaking of upcoming acts, Anna Sorokin (aka Anna Delvey) says NBC she’s “trying to get away from this quote-unquote hustler persona”. His solution? Start an NFT collection. At least now there’s more hope for a second season of ‘Inventing Anna’.

A MESSAGE OF CONFIDENT FUTURE

At the same time that the pandemic has demonstrated all that is possible in an interconnected world, we have seen in new and increasingly stark ways how some communities continue to be marginalized and harmed by a persistent digital divide and how this divide exacerbates other inequalities in our society.

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inside track

Sequoia did not issue a single warning to startup founders. Instead, he turned it into a four-part series. The firm has released three other bridges on driving through tough times, how to extend your trail and how to forecast and scenario plan.

Entrepreneurs need a plan A, a plan B and even a plan Z sometimes. Greylock’s Reid Hoffman says everyone should be apply ABZ thinking to their careers, especially right now – where you might need a Plan B or Plan Z sooner than you think.

The biggest venture capital freeze is certainly in the late stages, but January Ventures Maren Bannon argue that the seed market is also frozen.

Being called an “overachiever” at work might not be the compliment you think. In an analysis of over 25,000 people performance reviews, Textio Kieran Snyder found some pretty striking data points on where the biases creep in.

must know

Klarna’s valuation could drop from over $45 billion to $15 billion, according The Wall Street Journal. It’s a steep haircut but not surprising given the free fall of fintech.

The “Tiger 40” are targeted. Tiger Global could end the poster child crash as short sellers continue to target its top 40 equity holdings.

Not all funding has dried up, even for food delivery. Investors have renewed interest in AI accounting startups, but the most surprising funding round announced was raised by former Jet.com founder and CEO Marc Lore. In the same week as Jokr stopped US Ops, Lore raised $350 million at a $3.5 billion valuation for his food delivery startup. His name is appropriate: Wonder.

Hundreds of venture capital funds could be “the new walking dead”. Unlike startups, venture capital firm closures overnight are rare. Instead, they tend to hang around over the years, Insider reported.

Mapbox has been sued by labor regulators for firing union organizers. Tech companies don’t like unions, but Mapbox went too far when it allegedly threatened to lose its job and then fired union organizers after a failed labor campaign last summer.

Another nasty startup CEO argument. Twitter’s AI ethics director is embroiled in a legal battle with the CEO of the startup she founded.

From the protocol: It’s not just the price of groceries. In technology, stock inflation is unleashed.

Also on Protocol: Low-code and no-code tools are very promising. Their backers are always waiting for a moment of escape.

Also also on Protocol: Enter the calendar of Faire CTO Marcelo Cortes, where the most important meeting of his week is called “Debate”.

Your reading of the weekend: It’s been a strange week for greater awareness at Google. First, an AI engineer went public with his belief that Google’s AI won sentience (Google says it doesn’t). Now a lawsuit claims that a religious sect that believes in the power of fine art has taken over a team that produces videos for Google.

A MESSAGE OF CONFIDENT FUTURE

There is so much more we need to do to ensure our future is more equitable and inclusive and maximizes America’s potential. It’s not enough to make sure everyone is connected. We must also extend the full reach of digital opportunities to people, communities and institutions.

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