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Friday, December 9, 2022

Ignition Lane’s Weekly Wrap: Venture capital is down, but far from gone

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Welcome to Ignition Lane’s Tech Wrap, where they cut through the noise to bring you their favorite insights from the technology and startup world.

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

This shawl is going out free for subscribers. Don’t forget that you can see Gavin Appel every two weeks on the Startup Daily show on Australia Monday at 2 p.m. If you miss it, you can view the shows of the week here.

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

down. A leaked investor update this week showed that Square Peg has written off the valuation of Funds 1, 2 and 3 by about 15%. It is safe to assume that other VCs are doing the same.

The update also confirmed that Square Peg has “slowed down the cadence of investing in both new and existing portfolio companies” — a strategy Blackbird’s Niki Scevak disagrees with (more in wire):

However, the data is consistent with Square Peg’s sentiment. According to Cut Through Venture, startup investment fell 52% last month compared to the same time last year. In June, $408.6 million was invested in 44 deals, bringing the total in the second quarter to $1.23 billion (for context, $1.6 billion was raised in February alone).

Recognizing that it’s not a good time to raise, there have been a number of layoffs at venture capital backed companies for lowering the burn rate to extend the runway.

Unfortunately, the victims have also started. Neobank Volt was forced to close after struggling to raise enough capital (class action lawyers are now circling). zip shut down money management app pocketbook.

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

But not out! Fear not, it’s not all doom and gloom. There is still solid activity in the early and middle stages of parenting. A few choices this month:

  • mx51 $32.5 million raised for its white-label bank-grade Payments as a Service platform.
  • hivyan “optimization platform” for retailers, raised $30 million led by Tiger Global.
  • Quantifi Photonics raised $15 million led by Intel for its high-density photonics test and measurement solutions.
  • FileInvitation NZ$10m raised led by Icehouse Ventures for its document collection platform.
  • Start up business insurance Cover has raised $2.7 million in equity and $2 million in debt.
  • BlendAIthat simplifies and centralizes online advertising for e-commerce stores, $1.5 million raised led by EPP.

In addition, new money is flowing into the ecosystem, with Archangel Ventures Raising $25 Million For Its Seed Stage Fund And Based In Silicon Valley SVG Enterprises launch a $50 Million AgTech Fund for ANZ.

Add to the mix of established VCs currently raising new funds – Tidal, Blackbird, Square Peg, OIF and OneVentures – and there will still be plenty of dry powder to bet. The future still looks rosy.

If you’re considering raising capital at some point, but don’t have investors in your network, consider applying to attend Rampersand’s. Huge warm intro. Registration closes on Wednesday 27 July.

Local news

insp. the Australian issued The list: innovators 2022. Many inspiring leaders, including the professors who create complex beating three-dimensional heart tissues from stem cells, revolutionize recycling science – turn old tires into steel and use lasers to reach the world’s first hydrogen fusionwhich could be a response to clean energy generation.

Go game. Australia’s Digital Games Tax Offset came into effect this month, giving game developers a 30% tax offset. 2022 is set to be the hottest year in gaming worldwide, according to one new Drake Star Partners report. In the first half of 2022, more than 651 mergers and acquisitions and investment deals were announced or closed with a value of more than $107 billion. We’ve also seen several new gaming-focused funds recently announced, including Sydney-based Immutable, a16z (which led to Lumi Interactive’s $10 Million Seed Round), Binance and Konvoy Ventures.

An unlikely combination. The Transport Workers’ Union and Uber agreed to support the creation of an independent arbitrator to apply better worker protection for Uber’s 100,000+ gig workersincluding a guaranteed minimum income “safety net”.

Why now? Uber knows that regulation is on the way under the new government. This partnership gives it an edge in pushing its own agenda (whistleblower documents leaked last week showed that Uber excels at lobbying). It also means Uber can avoid further lawsuits and uncertainty about whether drivers are “employees” or “contractors.” In return, the union can represent gig workers – a right that is threatened.

Mass surveillance (market retail). Bunnings, Kmart and the Good Guys could get in trouble with the privacy regulator for their use of facial recognition technology at customers.

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

No tech but Melbourne’s Starward Whiskey took top honors at the 2022 San Francisco World Spirits Competitionvoted the most awarded distillery of the year.

Offers and anti-deals

Charge ahead. A group of Australian car clubs acquired Australia’s largest electric vehicle charging network, Chargefox, in a deal that values ​​the company at $56 million. The clubs plan to double the number of fast-charging plugs across the country to 5,000 over the next three years to meet rising demand. This comes as the ACT government announced that the sale of new cars that run on fossil fuels will be banned from 2035.

Money moves. Australian payment automation provider Monoova merges with Moneytech FX. Over the past five years, Monoova says it has moved about $50 billion through its platform, serving Jacaranda, Hnry and Wise. Moneytech FX has transferred approximately $12 billion in the past 18 months.

Pay now, never buy. Zip and Sezzle are terminate their merger agreement as a result of rising interest rates and lower consumer spending. The all-stock deal initially valued Sezzle at AU$491 million. Instead, Zip pays Sezzle AU$16 million. BNPL Doesn’t Look Pretty – Klarna’s US$800M Raise Saw Its valuation drop 85% to $6.7 billion.

Response of the week: Adir Shiffman on ANZ’s rumored acquisition of MYOB (not happening):

The most notable part of the MYOB plan was the $4.5 billion price tag, which made the investment bankers partake in 2021 and whisper to each other, in their best Basil Fawlty accents, “Don’t report the Nasdaq.”

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

In the global capital markets

Figures in USD

QVC for the kids. YouTube and Shopify work together to enable Shopify merchants to integrate their online stores with their YouTube live streams, videos, and store tab. TikTok, facebook, Pinterestand eBay have also introduced similar features. Live shopping is popular in countries like Chinabut it has not yet taken off in the US or Europe.

Snaps not good enough. Snap’s revenue increased by just 13% in the second quarter well below the original 20-25% guideline. Net loss grew from $152 million in the same period last year to $422 million. Snap said brands were slashing digital ad budgets, and Apple’s privacy changes have made it harder to target ads and measure campaign success. Snap will “significantly reduce” hiring and review its strategy. The news sent Snap’s shares plummeting 26% in after-hours trading.

Hot fries. Dutch semiconductor equipment supplier ASML sees extraordinary demand for its chip machines, reporting a record €8.5 billion (AU$12.5 billion) in bookings and €5.4 billion (AU$8 billion) in revenue in the quarter. China accounted for 10% of that turnover, but now the US is forcing the Netherlands to do it Ban ASML from selling to China in an effort to thwart China’s plans to become a global leader in chip manufacturing.

One click medicine. Amazon continues its mission to break into U.S. healthcare, announcing plans this week to… acquire One Medical for $3.9 billion – the third largest acquisition. One Medical offers telehealth and personal doctor consultations. Amazon launched its own digital healthcare service, Amazon Care, nearly three years ago.

Boost growth. Tesla exceeded expectations in Q2 by $2.26 billion profit. Total revenue grew 42% year-over-year to $16.9 billion. Automotive margins declined, impacted by inflation and increased competition for battery cells and other EV components. Margins were 27.9%, down from 32.9% last quarter and 28.4% a year ago. Cash flows would actually have been negative without the sale of 75% of his Bitcoin position ($936 million). More analysis here.

It’s a wrap! We hope you enjoyed it.

Bex, Gavin and the team at Ignition Lane

Watch Gav chatting about all things tech with Startup Daily Monday at 2 pm!


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