Venture Capital
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The official channel of V3V Ventures. We share updates on our investments, portfolio companies, and fund activities.

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πšƒπš‘πšŽ π™½πšˆπšƒπš’πš–πšŽπšœ π™Έπšœ πš‚πšŽπš πšƒπš˜ π™°πšŒπššπšžπš’πš›πšŽ π™ΌπšŽπšπš’πšŠ πš‚πšπšŠπš›πš-πš„πš™ πšƒπš‘πšŽ π™°πšπš‘πš•πšŽπšπš’πšŒ

The New York Times has a new year's resolution β€” to get in shape. It plans to do so by splashing $550m in cash on acquiring The Athletic, the sports media start-up founded in 2016.

The idea that millions of people would be willing to pay $5 or even $10 a month for coverage of their favorite sports was a fairly wild one back in 2016. After all, there were already plenty of free opinions to read on the internet. But, The Athletic didn't listen to any of that conventional wisdom, building a 1.2 million subscriber base.

To get there The Athletic took a leaf out of the early Facebook growth model, targeting specific sports city by city, as Facebook did with colleges.

From the NYTimes perspective this deal is a big step towards achieving the company's target of 10 million paid subscribers by 2025 and strengthens their sports coverage.
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πšπš˜πšžπšπš‘πš•πš’ π™·πšŠπš•πš π™Ύπš πš„πšœ π™²πš˜πšžπš•πš π™½πšŽπšŽπš π™Άπš•πšŠπšœπšœπšŽπšœ π™±πš’ 𝟸𝟢𝟻𝟢

Myopia, or short-sightedness, is on the rise.

Data from the BHVI predicts that by 2050 almost half of the global population could be affected by Myopia β€” more than a doubling of the rate from the year 2000.

Has the pandemic made it worse?

With increased amounts of screen-time, it feels intuitive that our eyes might have been put under more strain in the last two years β€” and there's a decent amount of scientific evidence to back that up, as myopia has long been associated with spending more time indoors.

Although there haven't been any conclusive studies in adults since the pandemic, a study of children in Hong Kong from 2021 found that "the rate of nearsightedness that developed during the pandemic more than doubled what was found in a pre-pandemic study of children the same age". Good time to be a glasses maker.
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π™²πš‘πš’πš™πš˜πšπš•πšŽ π™ΌπšŽπš‘πš’πšŒπšŠπš— π™Άπš›πš’πš•πš• πš†πšŠπš—πšπšœ πšƒπš˜ π™΄πšŠπš πšƒπšŠπšŒπš˜ π™±πšŽπš•πš•'𝚜 π™»πšžπš—πšŒπš‘

Fast Mexican (or Tex-Mex) food is a really hot market β€” and Chipotle is catching up to Taco Bell, the biggest Mexican-based fast food chain in the US. Last year Taco Bell's sales were flat YoY, but Chipotle grew 7%.

So it's interesting that recently Taco Bell announced its latest innovation to re-invigorate growth: the Taco Lover's Pass subscription, which gives you one taco a day for a whole month for $10.

The idea is that you might stop by Taco Bell for your free taco, and decide that actually you were hungry and thirsty after all, and end up adding to your order.

Taco Bell isn't the first to experiment with subscriptions. Panera has one for drinks, and Sweetgreen just launched a loyalty subscription for its salads.

So far the jury's out on whether these subscriptions actually work, or if they're more of a short-term gimmick.
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π™Όπš˜πš‹πš’πš•πšŽ π™ΆπšŠπš–πšŽ π™ΌπšŠπš”πšŽπš› πš‰πš’πš—πšπšŠ π™Έπšœ π™ΆπšŽπšπšπš’πš—πš π™°πšŒπššπšžπš’πš›πšŽπš π™΅πš˜πš› $𝟷𝟸.πŸ½πš‹πš—

Zynga, the gaming giant responsible for FarmVille, Words With Friends, Zynga Poker, Mafia Wars and many others is getting bought for $12.7 billion by Take-Two Interactive, the publisher behind Grand Theft Auto and the 2K sports series, in one of the biggest video game deals ever.

From its founding in 2004, until it hit one billion active users in 2012, the early years of Facebook presented an enormous opportunity for game makers. Facebook's rise meant that game makers could get in front of millions of procrastinating people by building a game directly into the Facebook platform, instead of competing for traffic on the wider internet.

Zynga took advantage of that creating some of the most popular Facebook games. Every time you, or that distant cousin, successfully "invited" someone to play FarmVille on Facebook, Zynga got a new user, for free.
πšƒπš‘πšŽ πš…πš’πšπšŽπš˜ π™ΆπšŠπš–πšŽ π™Έπš—πšπšžπšœπšπš›πš’ π™Έπšœ π™±πš’πšπšπšŽπš› πšƒπš‘πšŠπš— πšƒπš‘πšŽπšŽ π™±πš˜πš‘ π™Ύπšπšπš’πšŒπšŽ... π™±πš’ 𝙰 π™»πš˜πš

The chart gives some context on just how big the video game biz is. Last year the video game industry was pegged at somewhere around $180bn. That's roughly 10x what the global movie industry brought in at the box office last year. Admittedly last year the movie industry was still dealing with a pandemic hangover, but even in its best ever year the box office only brought in $39bn.

Video games may not carry the cultural impact of movies yet, but as a market they are in a completely different league. Mobile games, that is games played on a smartphone or tablet, have grown so quickly that they are now bigger than console & PC games combined.

Zynga's pivot to mobile is a great example of a company that's been flexible to its rapidly changing surroundings. Mobile games that almost killed them, now is the reason that got them $12.7bn.
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πšƒπš‘πšŽ π™»πšŠπšπšŽπšœπš π™³πšŠπšπšŠ πš‚πš‘πš˜πš πšœ π™°πš–πšŽπš›πš’πšŒπšŠπš—πšœ π™°πš›πšŽ πšπšŽπšŠπšπš’πš—πš π™΅πšŽπš πšŽπš› π™±πš˜πš˜πš”πšœ

A new survey from Gallup in December reveals that Americans reportedly read just 12.6 books each on average last year, down from the 15.6 average in 2016. The data includes all forms of books, including printed books but also electronic books and audiobooks.

Gallup notes that the "decline in book reading is mostly a function of how many books readers are reading, as opposed to fewer Americans reading any books".

Reading optimists could argue that it's possible that everyone is just reading longer but fewer books than they used to, but when the data is combined with the fact that just 6% of US adults named reading as their favorite way to spend an evening, down from 12% in 2016.

The survey also found that women read more than men, with women getting through 15.7 books, compared to an average of 9.5 for men. Also 18-34 year-olds read more than others.
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VCs will get liquidity in 2024 from the secondary market, not IPOs

In 2023, many VCs thought 2024 would see the IPO market bounce back, according to TechCrunch. Yet, with Q1 almost done, there's hardly a major IPO in sight except Reddit. Speculation about potential IPOs, like Shein and Turo, continues with little action. Despite hopes, a Reddit IPO might not kickstart a wider trend, with big names like Databricks, Stripe, and Plaid steering clear of going public this year. High interest rates and low valuations from the 2021 highs make IPOs less appealing.

But it's not all bad news. The secondary market, where private shares are sold, is booming as an alternative to IPOs. It's grown massively, with transactions reaching $138 billion in 2023. This market allows companies to offer liquidity without the pressure of going public, showcased by Stripe's $65 billion secondary sale. Even venture funds are getting in on the action, buying or selling shares to manage their portfolios. While the IPO freeze might continue, the secondary market thrives, offering a workaround for companies and investors alike.

Source β€” Tech Crunch

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πŸ•― Features of Venture Capital

⭐️It is in the form of equity capital.

⭐️Investment made only in high risk but high growth potential projects.

⭐️There is continuous involvement in business after making an investment.

⭐️Venture capital is not just injection of money but also an input needed to setup firm.

⭐️Investment is usually made in small & medium scale enterprises.

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πŸš€ The World’s Largest Companies by Market Cap, 2024

Which one is the biggest company in the world by market cap? Here’s a list of the top companies by market cap in 2024:

1️⃣MICROSOFT CORPORATION $2,992 billion

2️⃣APPLE INC. $2,627 billion

3️⃣NVIDIA CORPORATION $2,116 billion

4️⃣SAUDI ARABIAN OIL COMPANY $2,041 billion

5️⃣AMAZON, INC. $1,809 billion

6️⃣ALPHABET INC. $1,656 billion

7️⃣META PLATFORMS, INC. $1,250 billion

8️⃣BERKSHIRE HATHAWAY INC. $868 billion

9️⃣ELI LILLY AND COMPANY $700 billion

1️⃣0️⃣BROADCOM INC. $622 billion

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πŸ’²Alternative Sources of Funding for Startups Besides Venture Capital

In the early stages of a startup, when funding is scarce, it is important to look for alternative sources of funding besides venture capital. There are many options available to startup companies, including government grants, corporate sponsorships, angel investors, and crowdfunding.


πŸ”ΌGovernment grants: The Small Business Administration (SBA) is a good place to start looking for government grants. The SBA offers a variety of programs and services to help small businesses get started and grow.

πŸ”ΌCorporate Sponsorships: Many large corporations offer sponsorship programs to help small businesses get off the ground. These programs can provide funding, mentorship, and access to resources and network

πŸ”ΌAngel investors: Angel investors are individuals who invest their own money in early-stage companies. They typically provide smaller amounts of capital than venture capitalists, but they can be a valuable source of funding for startups

πŸ”ΌCrowdfunding: crowdfunding is a way to raise money by asking many people for small contributions. There are many platforms available for crowdfunding, such as Kickstarter and Indiegogo.

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⬆️ Ten Tips to Attract Venture Capital Read

βœ”οΈCraft a Compelling Pitch: Your pitch should succinctly convey your business idea, the problem it solves, its market potential, and why your team is the one to make it happen.

βœ”οΈKnow Your Market: Understanding your market, including its size, trends, and competitors, shows that you are well-prepared and increases your credibility.

βœ”οΈBuild a Strong Team: Assemble a diverse team of competent individuals who are passionate about your business idea and are ready to execute it.

βœ”οΈShow Traction: Prove your business model by demonstrating user engagement, market demand, and early sales or partnerships. Nothing attracts investment like evidence of momentum.

βœ”οΈPrepare a Solid Business Plan: Your business plan should provide a roadmap for your company’s growth, detailing how you will use the investment to achieve your goals.

βœ”οΈHave a Clear Path to Revenue: Be clear about how your business will generate revenue and when it will become profitable. This is crucial information for investors considering a return on their investment.

βœ”οΈNetwork Effectively: Networking is critical. Attend industry events, leverage LinkedIn, and reach out to VC firms directly. Warm introductions can significantly increase your chances of securing a meeting with a VC.

βœ”οΈBe Patient and Persistent: Raising venture capital takes time and involves numerous meetings and presentations. Stay persistent, follow up promptly, and don’t get discouraged by rejection.

βœ”οΈChoose the Right VC: Not all VCs are the same. Research to find those that align with your industry, stage of development, and business values. A VC who understands your market can provide invaluable strategic guidance.

βœ”οΈBe Open to Feedback: VCs often provide feedback during meetings. Be open to it, as it could help improve your business strategy or pitch.

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πŸ“ŒCharacteristics of Venture Capital

Venture capital as a source of financing is distinct from other sources of financing because of its unique characteristics, as set out below:

πŸ”—Venture capital is essentially financing of new ventures through equity participation. However, such investment may also take the form of long-term loan, purchase of options or convertible securities. The main objective underlying investment in equities is to earn capital gains there on subsequently when the enterprise becomes profitable.

πŸ”—Venture capital makes long-term investment in highly potential ventures of technical savvy entrepreneurs whose returns may be available after a long period, say 5-10 years.

πŸ”—Venture capital does not confine to supply of equity capital but also supply of skills for fostering the growth and development of enterprises. Venture capitalists ensure active participation in the management which is the entrepreneur’s business and provide their marketing, technology, planning and management expertise to the firm.

πŸ”—Venture capital financing involves high risk return spectrum. Some of the ventures may yield very high returns to more than Compensates for heavy losses on others which may also have earning prospects.

In nut shell, a venture capital institution is a financial intermediary between investors looking for high potential returns and entrepreneurs who need institutional capital as they are yet not ready/able to go to the public.

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πŸ•― Record amounts of dry powder will put downward pressure on returns

The rise in capital raised, and therefore left to deploy, was driven by the bull-run of VC returns between 2010 and 2015. Since 2015, venture capital dry powder has increased by 385%. In the period between 2010 and 2015, 1st quartile managers achieved >3.0x TVPI across in each vintage. In 2024, record amounts of dry powder, or committed but unallocated capital that firms have on hand, will put downward pressure on returns as investors chase deals in a bid to deploy capital.

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πŸ’»The hype around LLMs won’t last

Paul Amara famously pinned Amara's law, that we β€˜overestimate the impact of new technology in the short term and underestimate it in the long term.

The same is true for large language models (LLMs). Despite the incredible advancement in LLMs, it's unclear if there's enough market pull from enterprise organizations to justify all the dollars going into the sector. Expect many of these seed-stage startups to either fold or pivot into solving a more meaningful, less hype-y business problem.

β€” Ramy Adeeb, General Partner, 1984 Ventures

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πŸ‘ We will see a drop in β€œbridge” rounds in 2024, meaning more cash for new startups

In 2024, the insider round (also known as a bridge or extension) will regress from 38% of all rounds back down to 25% or so. 2023 was full of extensions as investors gave additional cash to their current portfolio companies in the hopes of helping them get by until the next primary round. I expect VCs will be less generous to current portfolio companies next yearβ€”but hopefully this means more cash devoted to new companies.

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