Ignition Lane Weekly Digest: Venture Capital Is Down, But Far From Over

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welcome to Ignition way’s Tech Wrap, where they cut through the noise to bring you their favorite insights from the world of tech and startups.

Ignition Lane works with ambitious business leaders to apply the Startup Mindset to their technology, product, and go-to-market challenges.

This wrap comes out Free for subscribers. Don’t forget you can catch Gavin Appel fortnightly on Startup Daily on ausbiz Mondays at 2 p.m. If you miss it, you can find the shows of the week here.

Here’s their review of all the big tech news.

Down. An investor update leaked this week revealed that Square Peg had reduced the valuation of funds 1, 2 and 3 by approximately 15%. It’s safe to assume that other VCs are busy doing the same.

The update also confirmed that Square Peg had “slowed the pace of investment in new and existing portfolio companies” – a strategy that Blackbird Niki Scevak disagrees with (more in the thread):

The data, however, matches Square Peg’s sentiment. Seed investments last month were down 52% from the same period last year, according to Cut Through Venture. In June, $408.6 million was invested in 44 deals, bringing the total raised in the second quarter to $1.23 billion (for context, $1.6 billion was raised in February alone) .

Recognizing that now is not the right time to raise, there have been a number of layoffs at venture-backed companies as they cut burn rates to expand the track.

Unfortunately, the losses also began. Neobank Volt was forced to close after struggling to raise enough capital (class action lawyers are now circling). zipper close Pocketbook money management app.

On the bright side, this means startups will have a better chance of recruiting great talent.

But not outside! Don’t worry, it’s not all gloomy. There is still strong breeding activity in the early and middle stages. A few picks this month:

  • mx51 raised $32.5 million for its payment platform as a white label bank-grade service.
  • Winteran “optimization platform” for merchants, raised $30 million led by Tiger Global.
  • Quantify Photonics raised $15 million led by Intel for its high-density photonics test and measurement solutions.
  • FileInvite raised NZ$10 million led by Icehouse Ventures for its document collection platform.
  • Starting business insurance Cover raised $2.7 million in equity and $2 million in debt.
  • BlendAIwhich simplifies and centralizes online advertising for e-commerce stores, raised $1.5 million led by EVP.

In addition, new funds are flowing into the ecosystem, with Archangel Ventures raising $25 million for its seed fund, and based in Silicon Valley SVG Companies launch a $50M AgTech Fund for ANZ.

Add to that well-established VCs currently raising new funds – Tidal, Blackbird, Square Peg, OIF and OneVentures – and there will always be plenty of dry powder to roll out. The future still looks bright.

If you plan to raise capital at some point, but don’t have investors in your network, consider applying to attend Rampersand’s Giant Warm Intro. Applications close Wednesday, July 27.

Local News

Inspo. The Australian published The List: Innovators 2022. Many inspiring leaders, including teachers who create three-dimensional heart tissue with complex beats from stem cells, revolutionizing the science of recycling – transform old tires into steel and use lasers to obtain world’s first hydrogen nuclear fusionwhich could be an answer to clean energy production.

Enter the game. Australia’s Digital Gaming Tax Offset came into effect this month, providing game developers with a 30% tax offset. Globally, 2022 is shaping up to be the hottest year in gaming, according to a new Drake Star Partners report. In the first half of 2022, more than 651 mergers and acquisitions and investment transactions were announced or completed worth more than $107 billion. We’ve also seen several new gaming-focused funds announced recently, including Sydney-based Immutable, a16z (which ran the Melbourne-based company $10 million seed round from Lumi Interactive), Binance and Konvoy Ventures.

An unlikely couple. The transport workers union and Uber have agreed to support the creation of an independent arbitrator to enforce greater worker protections for Uber’s more than 100,000 workersincluding a guaranteed minimum income “safety net”.

Why now? Uber knows that regulation is looming under the new government. This partnership gives it a head start when it comes to advancing its own agenda (whistleblower documents leaked last week, Uber excels in lobbying). It also means Uber can avoid further lawsuits and the uncertainty of whether drivers are “employees” or “contractors.” In return, the union can represent workers on demand – a right that has been under the threat.

Mass surveillance (retail). Bunnings, Kmart and the Good Guys could be in hot water with the privacy regulator for their use of facial recognition technology on customers.

Sydney hosts SXSW in October 2023. This will be the first time in its 36-year history that the technology, film, music and arts festival will be held outside of the United States.

Not technical but Melbourne’s Starward Whiskey took top honors at the San Francisco World Spirits Competition 2022named most awarded distillery of the year.

Offers and anti-offers

Forward loading. A group of Australian automobile clubs acquired Australia’s largest electric vehicle charging network, Chargefox, in a deal that values ​​the company at $56 million. Clubs plan to double the number of fast-charging outlets across the country to 5,000 over the next three years to meet growing demand. It comes like the The ACT government has announced that the sale of new fossil fuel cars will be banned from 2035.

Money moves. Australian payment automation provider Monoova merges with Moneytech FX. Over the past five years, Monoova claims to have moved approximately $50 billion through its platform, serving Jacaranda, Hnry and Wise. Moneytech FX has moved approximately $12 billion over the past 18 months.

Pay now, never buy. Zip and Sezzle are terminate their merger agreement due to rising interest rates and falling consumer spending. The all-equity deal initially valued Sezzle at A$491 million. Instead, Zip will pay Sezzle A$16 million. BNPL doesn’t look pretty – Klarna’s $800m raise saw its 85% drop in valuation at $6.7 billion.

Comment of the week: Adir Schiffman on ANZ’s rumored acquisition of MYOB (didn’t happen):

The most notable part of the MYOB plan was the $4.5 billion prize, which had investment bankers celebrating like its 2021 and whispering to each other, in their best Basil Fawlty accents, “Don’t mention not the Nasdaq”.

MYOB’s current owner, KKR, acquired MYOB for approximately $2 billion in 2019.

In global capital markets

Figures in USD

QVC for children. YouTube and Shopify have teamed up to allow Shopify merchants to integrate their online stores with their YouTube live streams, videos, and shop tab. ICT Tac, Facebook, pinterestand eBay also introduced similar features. Live shopping is popular in countries like Chinabut he has not yet taken off in the United States or Europe.

Snaps not good enough. Snap revenue only grew 13% in the second quarter, well below its initial forecast of 20 to 25%. Its net loss rose to $422 million from $152 million in the same period last year. Snap said brands were cutting their digital advertising budgets, and Apple’s privacy changes were making it more difficult to target advertising and measure the success of campaigns. Snap will “significantly reduce” hiring and review its strategy. The news caused Snap shares to fall 26% in after-hours trading.

Hot fries. Dutch semiconductor equipment supplier ASML is seeing extraordinary demand for its chipmaking machines, reports a record €8.5 billion (A$12.5 billion) in bookings and €5.4 billion (A$8 billion) in revenue last quarter. China accounted for 10% of that revenue, but now the US is pushing the Netherlands to prohibit ASML from selling in China in an effort to thwart China’s plans to become a world leader in chip production.

One-click medicine. Amazon is continuing its mission to break into U.S. healthcare, announcing plans this week to acquires One Medical for $3.9 billion – its third largest acquisition. One Medical offers telehealth and in-person medical consultations. Amazon launched its own digital health service, Amazon Care, nearly three years ago.

Stimulate growth. Tesla exceeded expectations in the second quarter with $2.26 billion in profits. Total revenue increased 42% year-on-year to $16.9 billion. Automotive margins declined, impacted by inflation and increased competition for battery cells and other electric vehicle components – margins were 27.9%, down from 32.9% last quarter and 28.4% a year ago. Cash flow would have actually been negative had it not been for the sale of 75% of its Bitcoin position ($936 million). After analysis here.

It’s a wrap! We hope you enjoyed it.

Bex, Gavin and the Ignition Lane team

look Gav discusses all things tech with Startup Daily at 2 p.m. on Monday!

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