What is Happening in Venture Capital?


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What is Happening in Venture Capital?
By Keith Teare • Issue #259 • View online
Are Micro VCs eating the startup world, or is it Tigers?

No apologies for the apparent similarity of my recent newsletter themes. The changes in Venture Capital are exercising my mind and reading a lot recently and this newsletter is the sum of my weekly reading.
Tracking the evolution of startup investing is an important signpost of the near future. And a lot is happening in that space.
This week Forbes claims that the “crop” of Micro-Funds are “punching above their weight” while also indicating that there are fewer Micro VCs than before.
For those taking the pulse of the venture market from the online discourse, micro VCs seem everywhere. But the data suggest a different story: there aren’t more of them — they’re just amplified, using specialized approaches and savvier Internet distribution to punch above their weight. “For those who are raising now, there is a different breed of VC,” Bahn says. We have no choice but to be self promoting. Gone are the days that you just needed to raise the capital and people will come to you.”
The truth is rather different as this graph of Micro VCs operating since 2005 shows
Based on CrunchBase queries
Based on CrunchBase queries
The growing number of Micro VCs is complemented by their growing importance in early stage financing. These are line graphs showing the total $ value of Micro VC led rounds since 2005. Series A and B rounds are now often led by funds in this category.
Data based on Crunchbase queries
Data based on Crunchbase queries
Why is this important? The reason is to do with understanding the makeup of the venture ecosystem across all three asset classes - seed, venture and growth. Micro VCs are growing in importance in the first two. But the growth stage is also changing. In prior weeks we mentioned Tiger Global. This week Crunchbase published an overview of the fund, including the following from authors Gené Teare and Marlize Van Romburgh:
The 20-year-old New York-based investing firm — part hedge fund, part private equity investor — has not only quietly become the most prolific investor in billion-dollar startups, it is also significantly picking up the pace at which it deploys capital in 2021, according to our analysis.
How did the firm, now with an estimated $65 billion in total assets under management, become one of the biggest startup investors in the world? And how does Tiger, which first began investing in private companies in China and India less than two decades ago, now routinely outmaneuver some of Silicon Valley’s most sophisticated venture investors?
With these questions in mind, we decided to take a closer look at the strategy and portfolio for Tiger Global, which Crunchbase data shows is investing in startups in 2021 at 10x the pace it did just a year ago.
The article is an excellent deep dive into understanding the firm and what it changes in the market.
My own fascination with this area is selfish. I believe that the seed stage of investing will become as much of a recognized asset class as the venture and growth stages. My stealth startup SignalRank Corporation is building data analytics and investment models that would allow it to invest in up to 200 of the best unicorn candidates in each three-year cohort of seed-funded companies. It is possible because of the excellence of the Micro VC funds themselves and their contribution to the creation of future value.
Just looking at the 175 unicorns that have reached the status in 2021, they did just over 1500 rounds of financing between them with an average of just over 3 investors per round. 304 Micro VCs invested in at least one of them. But only 30 invested in more than 4.
Here is the leaderboard of Micro VCs in 2021 unicorns with associated scores:
Airtable - Micro VC Leaderboard 2021 Unicorns
More in this week’s video
That Was The Week 2021, #22 Video
That Was The Week 2021, #22 Video
What is Happening in Venture Capital?
How Venture Capital’s New Crop Of Micro Funds Punch Above Their Weight
Under The Hood: How Tiger Global Earned Its Stripes As The World’s Biggest Unicorn Hunter – Crunchbase News
Billionaires are racing to sidestep President Biden’s plan to raise their taxes
Techies aren't moving to Miami. They're moving to Austin.
Tuesday Capital, formerly Crunchfund, casts a wide net with a fourth, $30 million fund - TechCrunch
Twitter Goes After Clubhouse
Twitter redesigns its mobile app to make Spaces the center tab – TechCrunch
China Syndrome
Apple’s Supplier List Shifts Towards China Despite Trade War
Bitcoin is a Savings Account?
Bitcoin Is A Savings Account With An Average Growth Of Over 100% A Year
African Startups
Venture Capital funding to Nigeria & Africa expected to hit record levels in 2021 - CNBC Africa
Dauda Barry
Where Africa's Startup Activity is Concentrated https://t.co/Fle4pX6LYv
Startup of the Week
Photo Sharing App Poparazzi Reportedly Raising $20M Series A, Fresh Off Buzzy Launch
Tweet of the Week
Boom Supersonic
Introducing the United supersonic fleet.

@United will purchase up to 50 Overture airliners and fly the fleet on 100% sustainable aviation fuels.

https://t.co/zVG2aMCVKx #BoomSupersonic https://t.co/kg9eoFT2Ww
United Airlines agrees to purchase 15 Boom supersonic airliners
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Keith Teare

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Keith Teare, Palo Alto, California