Most active investors continue investing despite the crash 💸; Meta goes live with NFTs: major crypto catalyst or failure underway? 🤔; Celsius’ tentacles in Germany 🇩🇪
You're missing out big time... Weekly Recap 🔁
👋 Hey, Linas here! Welcome back to a 🔓 weekly free edition 🔓 of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.
If you’re not a subscriber, here’s what you missed this week:
What SoftBank’s collapse means for the future of FinTech investments 🥶
Open Banking is coming to Canada, and it will transform the country forever 🇨🇦
Coinbase earnings: disappointing, but you shouldn’t lose hope yet 📉
Crypto funding in H1 2022 already surpassed all of 2021 🤯
and more!
As for today, here are the 3 FinTech stories that were making a difference this week. It was arguably the most intense week this year! (definitely check all the above stories!)
Most active investors continue investing despite the crash 💸
Spotting trends in a downtrend 🔍 While some countries might debate whether we’re in a recession or not, one thing is clear for sure - we are currently in an investment downturn. Global VC funding has declined in the second quarter this year by around 25% (the deal count is also trending downward), according to various data sources.
But there’s one positive trend nobody is talking about - most active venture investors haven’t slowed down by much and they continue investing despite the market crash.
More on this 👉 40 most active VCs that Crunchbase has tracked reveal some interesting data. Here’s what you need to know:
In the first half of 2022, the 40 tracked firms invested actively in new portfolio companies on par with 2021.
For the perspective, in 2021, this cohort had upped its pace by more than 50% YoY compared to 2020.
The proportion of investments in new portfolio companies compared to follow on in the first half of 2022 was higher at 55%, compared to 50% in the first half of 2021.
Yet, follow-on fundings (investing in existing portfolio companies) for this group of investors are down compared to 2021.
Overall, VCs are investing more actively in Seed and Series A.
Round sizes at Series A have not come down but for Series C stage investments and later, averages were down with fewer fundings above the $100M mark.
At first sight, it might seem counterintuitive but it all makes sense once you start thinking about it. Here’s the takeaway (+ a powerful template to make VCs eager to invest in your startup):
✈️ THE TAKEAWAY
Making sense of the market 💸 First and foremost, it’s pretty clear now that the most active investors are still out there and actively hunting for their next big opportunity 🦄 This is definitely a spark of light in somewhat darkish times, especially for those who are building right now (particularly Seed & Series A startups). Furthermore, it’s interesting and quite counterintuitive that new companies are dominating vs. the current ones as investors in a crisis usually focus on the health of their portfolio companies. Yet, once you zoom out, you realize that many companies raised significant funding in the 2021 VC runup. Provided they have not exhausted their funding, portfolio companies might be better placed to ride out this more stringent funding environment and can afford to delay raising new funding beyond 2022. At the end of the day, if you don’t really need that extra cash, you probably shouldn’t raise right now (especially if you are Series C & beyond). Therefore, the least you should worry right now is about the dry powder in the market - there’s enough of it, and most active investors haven’t taken their feet off the gas pedals. And to make your fundraising efforts easier, use this cheat sheet:
Bonus: Triple your chances of getting funded with this cheat sheet 💸
Meta goes live with NFTs: major crypto catalyst or failure underway? 🤔
The launch 🚀 Following a series of testing phases, non-fungible tokens (NFT) integration is now live on Instagram across 100 countries. IG’s parent Meta META 0.73%↑ has started to roll out NFTs after integrating with Coinbase COIN 6.15%↑ Wallet and Dapper.
More on this 👉 Meta's founder and CEO, Mark Zuckerberg, confirmed the rollout in a post on Facebook. Instagram users in certain countries will now be able to showcase their NFTs after a successful testing phase in May.
The impact 👉 Instagram should simplify the process of buying and selling NFTs, thereby lowering the barriers to entry.
Why does this matter? 🤔 Bringing non-fungibles to Instagram’s large audience has the potential to supercharge the overall market going mainstream. But there’s one huge risk that could turn it into a massive failure. Here’s the takeaway:
✈️ THE TAKEAWAY
Rewards worth the risks 👀 Despite the current collapse, the NFT market is in growth mode which saw an increase of about 250 times last year from the total volume of around $95M seen in 2020. That’s massive! Also, the market opportunity for NFTs is very large, with the total addressable market (TAM) estimated to be over $1 trillion, led by such categories as art, collectibles, and gambling. Hence, it’s not surprising that Meta is following the money as they want a piece of this lucrative pie too. Zooming out, Facebook has been struggling to expand its business beyond social networking, or just ads (as they drive the absolute majority of its revenues). They failed with crypto (Diem/Libra was shut down), Facebook Pay/Payments (including WhatsApp) is somewhat questionable while Facebook Marketplace doesn’t have a meaningful share of the e-commerce sales. Hence, this might be their best shot right now. And it would be foolish not to take it. But there’s one but. It has the brand, the userbase, and the eyeballs. But what about trust? That’s something I raised back in March, and it’s still an open question from me here.
Celsius’ tentacles in Germany 🇩🇪
The news 🗞 Just on Wednesday I covered Nuri’s insolvency but the story doesn’t seem to stop giving…
More on this 👉 Today, out of the blue I get this:
I can’t access my account anymore (thank god there’s barely any money there) despite Nuri assured otherwise earlier:
Why I’m talking about this again? Well, it seems that the problem with Nuri wasn’t poor biz model or market downturn - it was their risk management…
✈️ THE TAKEAWAY
Celsius’ tentacles 🦑 Once again, let’s remember - Nuri was one of the largest German crypto companies with ~500,000 customers. It appears that one of Nuri's products was a "Bitcoin savings account" through Celsius (I clearly wasn’t using them enough to spot this…). What a surprise they have just filed for insolvency, right? Hence, it seems that Nuri joins another set of dominos that are going to fall along with Celsius. The sad thing here is that this is definitely a loss for the ecosystem (both German & European). Yet, they should have known better than offering Celsius products to their clients. Risk management is crucial in today’s business, especially if you’re in crypto. Nuri clearly ignored that.
🔎 What else I’m watching
NFTs aren’t dead! 😎 Tiffany's "NFTiffs" — digital passes that entitle collectors to a bejeweled, physical pendant of their CryptoPunk — have enjoyed exceedingly healthy demand. A total of 250 digital passes were made available, with each costing 30 ETH. And according to Tiffany & Co. it took just 20 minutes for them to sell out. The high-end jewelry brand has now suggested that further mints may be on the horizon. Given how 30 ETH is worth $1,700 at current market rates, all of this means Tiffany's generated $12.8M in revenue from the sale. Despite the current bear market, it seems that crypto enthusiasts still have money to spend… 🤷♂️
Accelerating Web3 🚀 Techstars and Polygon are partnering on a new Web3 accelerator programme. Techstars is a global network of entrepreneurs bringing together investors and startups. Polygon is a crypto platform with a leading blockchain protocol based on Ethereum. Founders in the 13-week accelerator, which will run in the first quarter of 2023, receive personalized programmes aimed at developing their businesses, including one-to-one mentoring from industry experts and investor networking opportunities. The Q1 cohort will focus on ambitious startups that leverage Web3 technologies such as blockchain, crypto, and NFTs.
💸 Following the Money
Argentine FinTech Geopagos just left the bootstrap life behind as it took in $35M in new capital to help businesses launch their own financial services products.
Asset Management firm Brevan Howard launched the largest crypto hedge fund to date by raising an estimated $1B.
Kontempo has raised $30M in a seed round to continue expanding its buy now, pay later (BNPL) solution for B2B transactions in Latin America.
👋 That’s it for today! Thank you for reading and have a relaxing Sunday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up: