2023 startup trends Archives - Product Management Confabulation

March 7, 2023

7 investors reveal what’s hot in fintech in Q1 2023

The global downturn has impacted every sector, but fintech bore the brunt of it as public-market valuations fell off a cliff last year.

However, it appears that even though VCs are proceeding more cautiously than before and taking their time with due diligence, they are still investing.

CB Insights recently found that two of the largest global VC firms, Sequoia Capital and Andreessen Horowitz, actually backed more fintech companies in 2022 than any other category. In both cases, about 25% of their overall investments went into fintech startups.

And, while global fintech funding slid by 46% to $75.2 billion in 2022 from 2021, it was still up 52% compared to 2020 and made up 18% of all funding globally, proving that investors still have faith in fintech’s future.

You could even say some are bullish: “If anything, I expect our investment pace to increase this year as early-stage fintech companies prioritize operational discipline and product differentiation,” said Emmalynn Shaw, managing partner of Flourish Ventures.

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The tougher conditions created in the past year has resulted in down (and smaller) rounds, M&A, and an emphasis on fundamentals. Gone are the days of investing on a whim.

But for Ansaf Kareem, venture partner at Lightspeed, the tough times can be seen as a good thing because they often create the best companies. “If you study previous compression periods in the ecosystem (e.g., 2008 and 2000), not only have we seen outstanding companies being formed, we’ve also witnessed great venture firm performance during these windows,” he said.

“The last two years in the venture ecosystem were an anomaly, but I believe we are coming back to a healthy ‘normal.’ Diligence cycles have extended, better relationships with founders can be formed, investors can enter new spaces with more preparation, and a thoughtful approach to early-stage venture capital can emerge,” Kareem added.

Challenging market conditions drive a sense of discipline and perspective that can be a gift. Emmalyn Shaw, managing partner, Flourish Ventures

So whether you’re seeking to raise your first round or your third, make sure you focus on fundamentals, save cash and don’t shy away from raising a down round if you think your idea may change the world, several investors said.

“Grow in a way that’s smart and sustainable for the long run,” advises Michael Sidgmore, a partner at Broadhaven Ventures. “We can’t control the macro environment, and today’s geopolitical climate means that there may always be the threat of exogenous shocks on the market. But the markets will bounce back at some point. So just grow in a manner that lets you focus on unit economics and profitability so that you can control your own destiny no matter what market we are in.”

To help TechCrunch+ readers understand what fintech investors are looking for right now (and what they’re not!) as well as what you should know before approaching them, we interviewed seven active investors over the last couple of weeks.

Spoiler alert: B2B payments and infrastructure remain on fire and most investors expect to see more flat and down rounds this year. Plus, they were gracious enough to share some of the advice they’re giving to their portfolio companies.

We spoke with:

Charles Birnbaum, partner, Bessemer Venture Partners
Aunkur Arya, partner, Menlo Ventures
Ansaf Kareem, venture partner, Lightspeed Venture Partners
Emmalyn Shaw, managing partner, Flourish Ventures
Michael Sidgmore, partner, Broadhaven Ventures
Ruth Foxe Blader, partner, Anthemis
Miguel Armaza, co-founder and general partner, Gilgamesh Ventures

Charles Birnbaum, partner, Bessemer Venture Partners

Many people are calling this a downturn. How has your investment thesis changed over the last year? Are you still closing deals at the same velocity?

We continue to invest in great companies regardless of the market. However, many entrepreneurs have opted to remain heads down and build more efficiently instead of testing this new valuation environment.

While our investment theses are always evolving, the shift in the macro environment has not changed which areas we are most excited about.

Do you expect to see more down rounds in 2023? Are you seeing more companies raising extensions or down rounds compared to 2021 and 2022?

We do expect more flat and down rounds to come later this year as runway tightens for many companies that raised more than two years ago.

Private market valuations, at any point in time, are not only a reflection of a team’s hard work and progress, but are also impacted by the financing environment.

What are you most excited about in the fintech space? What do you feel might be overhyped?

We see tremendous opportunity for innovation in the world of B2B payments. The infrastructure groundwork laid by modern developer platforms over the past decade and the upcoming catalysts in the real-time payments world, with the launch of FedNow, could spark much faster adoption.

We are excited to see how entrepreneurs leverage these tools to enhance our archaic B2B payments ecosystem.

Consumer fintech businesses without long-term, durable customer acquisition advantages are overhyped and will continue to struggle to live up to the lofty expectations set by investors over the past several years.

We’re expecting to see significant consolidation across the consumer fintech landscape this year.

What criteria do you use when deciding which companies to invest in? Would you say you are conducting more due diligence?

We look deep into all areas of innovation, including fintech, and focus on startups that align with our theses. We try to predict where there will be opportunities for seismic innovation before we find the entrepreneur. This helps us with diligence, as we work to understand the market before we make any investments.

We also work hard to perform due diligence on every investment opportunity we pursue by spending significant time with the company, with a deep market study, and as many references as possible on the teams we back.

Have fintechs gotten close to growing into their 2021 valuations? How many will not manage the task in 2023?

Given the sharp run up in valuation over the past few years in the private market and the precipitous fall in the public market over the past year, it is difficult to say how many companies have grown into 2021 valuations.

For the top tier of companies that were able to raise larger rounds, the reality is they don’t need to answer that question for quite some time.

What advice are you giving to your portfolio companies?

The most important thing for me is to not give the same advice across different companies. There is no one-size-fits-all solution. Every business is at a different point along their journey to find product-market fit, prove the sustainability of a business model, execute on a repeatable go-to-market motion, etc.

Rethinking growth targets, in light of the rising cost of capital, to focus more on efficiency in this environment is a consistent thread in board meetings these days.

How do you prefer to receive pitches? What’s the most important thing a founder should know before they get on a call with you?

From my experience, you often have to find the most exciting companies and earn the right to invest. We are always reaching out proactively to founders building in the areas where we have active investment theses.

We are also always looking at exciting opportunities that come in through referrals from entrepreneurs we work with or have worked with in the past, and other investors in the ecosystem. We do our best to review and evaluate inbound messages we receive.

Aunkur Arya, partner, Menlo Ventures

Many people are calling this a downturn. How has your investment thesis changed over the last year? Are you still closing deals at the same velocity?

We’re definitely seeing the reset we expected to see after a decade of operating in a macro environment where the cost of capital was near zero. It’s a difficult but very healthy reshuffling of the deck.

I’d say that our core theses within fintech have largely remained the same: we’re investing in developer infrastructure and embedded finance APIs, vertical banking, end-to-end consumer and business financial services, and the Office of the CFO. We’re also looking at thoughtful enterprise applications of AI that intersect with each of these segments of our fintech thesis.

We continue to avoid balance-sheet heavy businesses that take undue risk to generate revenue, and ultimately look less like pure technology companies and more like insurance companies or lenders. These are the first businesses to suffer during a downturn because they’re heavily indexed to the macro environment.

We were less active in 2022, but are already seeing an uptick in deal flow in fintech in the first few months of 2023.

7 investors reveal what’s hot in fintech in Q1 2023 by Mary Ann Azevedo originally published on TechCrunch

January 24, 2023

A VC’s perspective on deep tech fundraising in Q1 2023

Karthee Madasamy Contributor

Karthee Madasamy is the managing partner at MFV Partners, a deep tech-focused venture firm.

Like nearly every other sector, deep tech faced significant headwinds in 2022. As interest rates skyrocketed, deep tech deals, which inherently take more capital than other kinds of software businesses, became less attractive to many VCs and their LPs than lower-risk investments.

For instance, even though quantum computing suddenly became popular in the public markets as D-Wave, Rigetti and IonQ listed in the last year, private investment declined significantly — the sector received just over $600 million in venture capital in 2022, down from $800 million in 2021, according to Crunchbase.

Seasoned investors and operators in different segments of deep tech have been adapting to these changes in real time as the cheap money days dwindle in the rearview. For instance, in this environment, space tech startups would never have been able to raise the kind of money they did in 2021 to be able to deploy the technologies they’re working on today. As Delian Asparouhov, a principal at Founders Fund and the founder of Varda Space Industries, shared last month, it would be impossible to raise the $42 million his startup did in 2021 for its space factory “idea” in today’s market climate.

While some investors will continue to sit on the sidelines as we kick off 2023, it’s important to note that many funds are still sitting on amounts of dry powder like they’ve never had before. That doesn’t mean they or their LPs will be in a rush to deploy that capital, but money will be available to startups that can demonstrate current demand and are realistic about their valuations. As it becomes increasingly difficult to realize big exits in the years ahead, the technologies within deep tech that are transforming entire industries offer some of the only paths to “10x exits.”

These are positive signs for deep tech founders preparing to raise money this year. Another positive note is that some of the logic driving VCs to stay away from deep tech startups in down markets may be unfounded. Our team recently analyzed recent deep tech unicorns to understand how much money it took for them to get to the $1 billion mark. The results reinforced what we knew from experience: Deep tech startups’ capital and time requirements are on par with companies in other sectors. In fact, the median deep tech startup took $115 million and 5.2 years to become a unicorn.

While the space economy will continue to provide numerous opportunities to invest in atoms, there will also be an opportunity to invest in the bits moving atoms across our skies.

With that as a backdrop, let’s look at a few areas where deep tech will find interest from investors in 2023.

Startups moving beyond launch tech in space

While Delian noted correctly that funding for long-term “moon shots” will be tough to find in the current market, I still believe investors will look for startups that are closer to commercialization in the sector. To date, 99% of the total investment in the space tech market has gone to the satellite and launch industries. Now is the time to focus on moving objects around in space rather than just getting them there.

For instance, investors are increasingly interested in solutions that tackle astrodynamics or propulsion to guide the motion of satellites and other spacecraft — for example, AI startups working on ways to simulate scenarios and generate maneuver plans for operators so they can avoid space collisions. Investors are also interested in future machine learning and neural networks use cases for astrodynamics, such as orbit predictions and spacecraft flight modeling.

Space missions also call for hardened software and hardware. As we look toward edge solutions for space-bound vehicles and objects, startups that can create radiation-safe applications will be in demand. So while the space economy will continue to provide numerous opportunities to invest in atoms, there will also be an opportunity to invest in the bits moving atoms across our skies.

Deep tech riding climate’s regulatory wave

Software alone will never solve the multitude of issues contributing to our climate crisis. Hardware solutions and engineering-led innovations in deep tech are needed to solve our most significant climate challenges.

A VC’s perspective on deep tech fundraising in Q1 2023 by Ram Iyer originally published on TechCrunch

January 20, 2023

TechCrunch+ roundup: 2023 unicorn slump, global VC slowdown, email marketing 101

Due to a phenomenon called semantic satiation, if you repeat a word or phrase too frequently, it can sometimes lose all meaning.

That’s what happened to “unicorn:” We wore it out like a pair of sneakers that leak in the rain but are too comfortable to part with.

In fact, most of the startups in CB Insights’ unicorn index are on the bubble and “are actually hovering right at the $1 billion mark,” reports Rebecca Szkutak.

“How many of these will stay unicorns through this calendar year?” Out of 35 investors she surveyed, “the vast majority felt the herd has likely already been winnowed,” she found.

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“It’s not just about whether they’ll still command ‘unicorn status,’ but rather whether or not they will be fundable, at any value, period,” said Harley Miller, founder and managing partner at Left Lane Capital.

By all accounts, the IPO window is nailed shut. Any startups that hope to weather this downturn must raise additional funds.

I’m sure the hunt is already on for another mythical animal that best represents startup attainment in a down market, like ‘ARRmadillo.’ You can have that one for free.

My greater hope: investors and founders will use this era of austerity as an opportunity to create value, and not just wealth.

Thanks very much for reading,

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

Losing the horn: VCs think majority of unicorns aren’t worth $1 billion anymore

Teach yourself growth marketing: How to boot up an email marketing campaign

A megaphone with colored streams flaring out as if a message were being amplified

Image Credits: Jasmin Merdan (opens in a new window) / Getty Images

In the third article of a five-part series, growth marketing expert Jonathan Martinez (formerly of Uber, Postmates and Chime) explains how to create and optimize email campaigns that will “push consumers through your funnel and drive conversions.”

Martinez shares fundamentals for segmenting customers and anticipating where leaks will occur along the funnel you’re developing. Startups that recapture these users can eke out higher ARR, and every little bit counts.

“It is crucial to distill user segments as much as possible because we must ensure that we’re sending the right messaging to the right consumers.”

Teach yourself growth marketing: How to boot up an email marketing campaign

Putting numbers on the global venture slowdown

an isometric illustration for The Exchange, rendered in blue

Image Credits: Nigel Sussman/TechCrunch

According to CB Insights’ State of Venture report, VC funding fell 35% in 2022. Although estimated deal count didn’t drop proportionately, “global venture funding was down by 19% quarter over quarter in Q4 2022,” reports Anna Heim.

“How long things will take to improve is anyone’s guess, so we will be looking forward to more data as the year progresses,” she writes.

Putting numbers on the global venture slowdown

Dear Sophie: What are some fast options for hiring someone on an expiring grace period?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

I’m a co-founder of a very early-stage startup. My co-founder and I are considering bringing on a third co-founder, who was recently laid off. She is currently in the United States on an H-1B with a grace period that will expire soon.

What are the fastest, least risky immigration options that we should consider? What’s going on with potential increases to USCIS filing fees?

— Careful Co-founder

Dear Sophie: What are some fast options for hiring someone on an expiring grace period?

Pitch Deck Teardown: Scrintal’s $1M seed deck

Image Credits: Scrintal (opens in a new window)

Visual collaboration tool Scrintal says it has more than 40,000 people on its waitlist, but that didn’t stop its founders from raising €1 million.

Co-founders Ece Kural and Furkan Bayraktar shared their pitch deck with TC+ — click through to learn why their value proposition, vision and product plans connected with investors:

Cover slide
Problem slide part 1
Problem slide part 2
Solution slide part 1
Solution slide part 2
Value proposition slide
User testimonials slide
Traction slide
Revenue slide
Retention slide
User profile slide
Growth projection slide
Vision slide
The ask slide
Contact slide
Appendices cover slide
Appendix 1: Why now?
Appendix 2: Competitive landscape
Appendix 3: Product and growth model

Pitch Deck Teardown: Scrintal’s $1M seed deck

TechCrunch+ roundup: 2023 unicorn slump, global VC slowdown, email marketing 101 by Walter Thompson originally published on TechCrunch

January 18, 2023

Losing the horn: VCs think majority of unicorns aren’t worth $1 billion anymore

The past few years have been a rollercoaster for the startup world’s herd of unicorns.

Two years ago, we saw a record number of companies cross the $1 billion valuation milestone. But that momentum slowed to a trickle last year, and this year’s market conditions look likely to reverse course to a point that we may witness some of those companies losing that status.

Down rounds are likely to become the norm this year as venture firms and investors look to bring valuations back to earth. We’ve already started to see some decacorns, like Stripe and Instacart, lowering their valuations, but they are so highly valued that they aren’t at risk of losing their unicorn status. But most unicorns don’t enjoy that luxury.

CB Insights’ unicorn index shows that there are 1,205 companies currently worth over $1 billion. But if you look closely, you’ll notice that the majority of these startups are actually hovering right at the $1 billion mark. Currently, 685 unicorns were last valued between $1 billion and $2 billion — that’s more than half the list.

How many of these will stay unicorns through this calendar year? To find out, we recently surveyed more than 35 investors on how many startups they thought would drop below the $1 billion valuation mark in 2023. While nobody could peg a specific number, of course, the vast majority felt the herd has likely already been winnowed.

Losing the horn: VCs think majority of unicorns aren’t worth $1 billion anymore by Rebecca Szkutak originally published on TechCrunch

January 17, 2023

TechCrunch+ roundup: Space tech predictions, startup IP strategy, finding feasible funding

I once aspired to own San Francisco real estate. Now, I’m only interested in acquiring intellectual property.

Case in point: “Scooby-Doo” aired on TV before I was born, but the spin-off “Velma” just premiered on HBO Max.

It’s getting ripped to shreds on social media, which means people watched, so we can expect more to come.

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Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription

Hollywood studios are adept at wringing every ounce of value from their IP. Similarly, cost-effective IP management strategies can fortify startup valuations over the long-term, according to Kyle Graves, counsel at Snell & Wilmer, but only if founders are vigilant.

Do you have IP counsel? Does your app have a UX protection strategy? Have you ever conducted an audit?

“There are a thousand little oopsies that can become big oopsies when word gets out that a big payday may be coming.”

Thanks for reading,

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

Cost-effective IP strategies can lead to massive exit valuations

7 space tech predictions for 2023

The crowd cheers at Playalinda Beach in the Canaveral National Seashore, just north of the Kennedy Space Center, during the launch of the SpaceX Falcon Heavy rocket, on Feb. 6, 2018. Playalinda is one of closest public viewing spots to see the launch, about 3 miles from the SpaceX launchpad 39-A. (Joe Burbank/Orlando Sentinel/Tribune News Service via Getty Images)

Image Credits: Orlando Sentinel (opens in a new window) / Getty Images

As of January 17, Wikipedia notes that there have been eight successful spaceflight launches so far this year.

New spaceports are entering operation, cell phone users will soon have connectivity from space, and the Artemis program backed by NASA is one of several ventures that will bring robots (and eventually human crews) to the Moon.

“Despite the economic uncertainty, we believe new records will be established in spacetech as giant commercial projects get funded,” says Mark Boggett, CEO and co-founder of Seraphim Space Manager LLP.

7 space tech predictions for 2023

4 tips to find the funding that fits your business

A row of sphere trying to get through an opening of wall to another side. A bigger sphere stuck, not able to get through due to it's size causes the rest of the smaller sphere behind not able to get through as well.

Image Credits: Getty Images

Raising money without a detailed business plan is a proven way for losing value.

Before seeking capital, founders need a firm plan for ramping up hiring, going to market and expanding into new areas. Otherwise, they may be “mistaking funding for validation,” writes Carlos Antequera, CEO and co-founder of Novel Capital.

“Not all capital providers are equal, so seeking financing isn’t just about securing capital. It’s a matter of finding the right source of funding that matches both your business and your roadmap.”

4 tips to find the funding that fits your business

TechCrunch+ roundup: Space tech predictions, startup IP strategy, finding feasible funding by Walter Thompson originally published on TechCrunch

January 17, 2023

TechCrunch+ roundup: Space tech predictions, startup IP strategy, finding feasible funding

I once aspired to own San Francisco real estate. Now, I’m only interested in acquiring intellectual property.

Case in point: “Scooby-Doo” aired on TV before I was born, but the spin-off “Velma” just premiered on HBO Max.

It’s getting ripped to shreds on social media, which means people watched, so we can expect more to come.

Full TechCrunch+ articles are only available to members
Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription

Do you have IP counsel? Does your app have a UX protection strategy? Have you ever conducted an audit?

“There are a thousand little oopsies that can become big oopsies when word gets out that a big payday may be coming.”

Thanks for reading,

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

Cost-effective IP strategies can lead to massive exit valuations

7 space tech predictions for 2023

Image Credits: Orlando Sentinel (opens in a new window) / Getty Images

As of January 17, Wikipedia notes that there have been eight successful spaceflight launches so far this year.

7 space tech predictions for 2023

4 tips to find the funding that fits your business

Image Credits: Getty Images

Raising money without a detailed business plan is a proven way for losing value.

4 tips to find the funding that fits your business

TechCrunch+ roundup: Space tech predictions, startup IP strategy, finding feasible funding by Walter Thompson originally published on TechCrunch

January 17, 2023

7 space tech predictions for 2023

Mark Boggett Contributor

Mark Boggett is the CEO and co-founder of the Seraphim Space Manager LLP, the world's first listed fund focused on space tech.

Cell phone connectivity from space

Multiple players in the industry have recently set their sights on direct-to-mobile connectivity from space. While it’s still a very early market with limited existing capabilities, companies such as Apple, T-Mobile, Globalstar, SpaceX, AST SpaceMobile and Lynk Global are targeting this area. Multiple mobile network operators are already on board, even before some of the first operational spacecraft have been launched.

Apple has partnered with Globalstar to provide SOS connectivity with its new iPhone 14, and T-Mobile is planning to begin low-earth orbit (LEO) connectivity in 2023 through SpaceX, which recently filed an application with the US FCC to include direct-to-cellular capabilities in its Gen 2 Starlink satellites. Amazon is also set to launch its first batch of LEO satellites for Project Kuiper.

Most of these early projects will not provide high-speed broadband from space, and will instead offer low-bandwidth connectivity suitable for emergency calls and texts. All of this aims to service the currently underserved population around the world, which does not live within reach of traditional cell tower networks.

Commercialization of the moon begins in earnest

Despite the economic uncertainty, we believe new records will be established in spacetech as giant commercial projects get funded.

Extensive government and commercial efforts are underway to head “back to the Moon” decades after the Apollo program finished in 1972. This has been kicked off by NASA’s Artemis program, which saw the Artemis 1 mission’s Orion capsule returning to Earth after spending almost a month traveling around the Moon.

At almost the same time, the first fully-privately-funded lunar mission was launched by SpaceX for Japanese company iSpace, which is taking a fuel-efficient trip to the Moon and is due to get there in April. This would be the first fully commercial mission to land on the Moon, a milestone in the cooperation between Japan and the U.S. in space. Other commercial companies, such as Intuitive Machines and Astrobotic, are also targeting Moon landings.

With the first commercial companies headed moonward alongside national efforts, we expect 2023 to be a breakthrough year for the cislunar ecosystem.

Three drivers underpin revenue growth

Developments in the defense, cybersecurity and climate sectors will prove to be strong tailwinds for revenues in spacetech in 2023. Record growth in defense budgets driven by the war in Ukraine and rising geopolitical tensions will drive business, and governments’ increasing desire for sovereign capability from space assets will lead to some huge orders in the sector. And, since cybersecurity is another tool in the geopolitical toolbox, satellite resilience against attacks is a priority.

A growing reliance on datasets generated in orbit means the security demands for the flow of data from the satellite to the cloud and ground stations are growing exponentially. We see 2023 as the year when the industry embraces quantum capabilities.

7 space tech predictions for 2023 by Ram Iyer originally published on TechCrunch

January 17, 2023

7 space tech predictions for 2023

Mark Boggett Contributor

Mark Boggett is the CEO and co-founder of the Seraphim Space Manager LLP, the world's first listed fund focused on space tech.

Cell phone connectivity from space

Commercialization of the moon begins in earnest

Despite the economic uncertainty, we believe new records will be established in spacetech as giant commercial projects get funded.

With the first commercial companies headed moonward alongside national efforts, we expect 2023 to be a breakthrough year for the cislunar ecosystem.

Three drivers underpin revenue growth

7 space tech predictions for 2023 by Ram Iyer originally published on TechCrunch

January 11, 2023

Predictions for the longevity industry in 2023

Abby Miller Levy Contributor

Abby Miller Levy is the managing partner and co-founder of Primetime Partners. She formerly served as the SVP of strategy and growth at SoulCycle and founded Thrive Global with Arianna Huffington.

Last year was when we all got the wake-up call about longevity. From major reports published on the impact of longevity by the National Academy of Medicine and McKinsey to every leading newspaper, public discourse highlighted how our global healthcare, financial and housing infrastructure was failing to serve a rapidly growing older adult population.

While this demographic data is not new, from kitchen table talk to Congress, there was a heightened call for urgency and immediate action.

At Primetime, we observed this wake-up call beyond the research and media attention. First, our deal flow of early-stage businesses in the sector increased from 70 in Q4 2021 to 120 in Q4 2022. And, we were one of only three dedicated funds investing in aging and longevity when we launched in 2020, but we are now aware of at least six more agetech funds in formation, in addition to many other existing funds keen to expand their team to cover the sector.

We are very optimistic for 2023 as we see incredible founder momentum, untapped areas to build new businesses and a window to an increasingly tech-accessible, rapidly growing consumer market.

Here are our top predictions for the longevity industry in 2023.

By 2030, the 50-plus market is projected to swell to 132 million people, who are projected to spend an average of $108 billion every year on tech products.

Health span is the new life span

The COVID-19 pandemic had a dramatic impact on older adult behavior with regard to technology usage, penetration of telemedicine and remote health monitoring, early retirement and financial insecurity. Sadly, one of the harshest implications of the pandemic was that life expectancy in the U.S. declined to 77 from 79.

This year will shift the conversation from “life span” to “health span” — how we live healthier for longer.

While telemedicine usage has declined from its peak during the pandemic, the new average is much higher than before the pandemic. We are particularly excited about companies that will accelerate the growth of 100+ primary and specialty-care telemedicine startups by managing their technology, patient payments and reimbursement, as well as provider acquisition and certification.

In an effort to prevent costly hospital visits, the past few years have seen a proliferation of startups offering supplemental health plan benefits for older adults — from transportation to home modification.

Predictions for the longevity industry in 2023 by Ram Iyer originally published on TechCrunch

January 10, 2023

Six crypto investors talk about DeFi and the road ahead for adoption in 2023

The crypto venture capital industry has become more selective thanks to the general market downturn and wavering trust caused by a slew of scandals and market disruptions, but investors at major firms are still writing checks in the space.

Amid market volatility, decentralized finance, or DeFi, is an area that continues to be in focus in both the crypto VC world and across the community as new use cases, protocols and projects arise.

Anywhere from 20% to 50% of crypto-related pitches today are DeFi-focused, several investors we surveyed said. That shows there’s a vast number of DeFi projects looking for funding.

“To stand out in this crowded space, founders should focus on highlighting unique technology and a clear advantage for a specific use case, as well as a defensible moat,” Alex Marinier, founder and general partner at New Form Capital said.

Ultimately, DeFi is a mirror reflection of traditional finance (TradFi), and founders who have deep sector expertise in TradFi, coupled with a fundamental understanding of blockchains will stand out from the other teams, Paul Veradittakit, general partner at Pantera Capital, shared.

Last year, the crypto world faced a handful of massive industry-changing events like the Terra/LUNA ecosystem collapse in May and the cryptocurrency exchange FTX collapsing in early November. Both events brought down a lot of smaller startups and big players who intermingled with those now defunct market players.

As the market looks toward the future, some venture capitalists are revamping their investing strategies, while others are holding to their current plans, with perhaps a small tweak or two. Read on to find out how active investors are thinking about DeFi, how they’re advising their portfolio companies amid the lack of funding, the best way to approach them, and more.

We surveyed:

Michael Anderson, co-founder, Framework Ventures
Alex Marinier, founder and general partner, New Form Capital
Samantha Lewis, principal, Mercury
Paul Veradittakit, general partner, Pantera Capital
David Gan, founder and general partner, OP Crypto
Mike Giampapa, general partner, Galaxy Ventures

Michael Anderson, co-founder, Framework Ventures

How big is the DeFi market today? How much do you expect it to grow in the next five years?

When thinking about the DeFi market, we look at the total market cap of DeFi assets, total value locked (TVL), and trading volume. While total value locked (TVL) as a metric certainly has its flaws, we think it’s still a decent measure of activity in the sector. As TVL increases, we also think it’s possible that total market cap could follow.

We’re keeping a close eye on the sector’s relative activity, like trades, volumes and users, compared to centralized alternatives like exchanges. Despite the negative sentiment surrounding crypto today, we still believe activity will eventually return to the industry. However, in the aftermath of all of these dramatic centralized finance (CeFi) explosions, we think that the next time users decide to enter the space, they’re going to think twice about trusting a CeFi exchange or company, and instead opt to use decentralized protocols.

What were the biggest challenges your firm faced in 2022? What steps are you taking to better prepare for 2023?

As with most investors in the space, our biggest challenge has been navigating the seemingly endless CeFi blowups and failures that have rocked our industry. We were able to avoid the vast majority of these blowups, as we passed on several FTX ecosystem projects.

As a result, Framework wasn’t hit nearly as hard as many of the big VC firms in the space, and we’re in a pretty strong position to continue deploying capital in this new market.

These CeFi incidents have caused plenty of collateral damage across the industry, so a major priority over the last 12 months has been making sure all of our portfolio companies are sound, liquid, well-capitalized, and can survive the next 1-3 years. This means helping the founders in our portfolio cut costs, prioritize high growth activity, and providing advice on product, growth, and future fundraising strategy in a less friendly funding environment.

In general, our position is a validation of our core theses over the last 3 years, and we’re going to continue doubling down on DeFi, web3 gaming, and more. Given that a lot of the other firms aren’t actively investing at this time, we see this market as a great opportunity for Framework to selectively deploy capital.

How are you advising your portfolio companies going into 2023?

We’re working with them to cut costs and focus on surviving the next 1-3 years. We believe in crypto long-term, but we don’t know how quickly the market could bounce back, and so survival should be the top priority.

We’re also encouraging founders to think more strategically about project development. If a team was focusing on three different areas, we’re encouraging them to instead prioritize the highest-growth activity only.

Of all the pitches you get, what percentage are DeFi protocols or projects? What can they do to stand out in the broader crypto landscape?

These days, around 30%-35% of the pitches we receive are firmly DeFi-focused.

If a DeFi project wants to really stand out, we want to see that they’re thinking about where the puck is going. We’re looking for projects that have the potential to be regulation-friendly. It’s a non-starter if the team is not thinking about regulation, or thinks they can just figure it out down the line.

Additionally, we’re interested in projects that have direct connections to institutions or at least a compelling growth strategy that involves institutions. We don’t think that retail will offer projects a large enough market in DeFi over the next two years, so creating something attractive to institutions should be more of a core focus than previously.

We also want to see that the project is differentiated from a product perspective. We’re not interested in another Uniswap clone, or an Open Sea copycat of the flavor of the week alt-L1.

What is your current strategy for investing in DeFi protocols and projects? How has that changed from past quarters?

In 2020, during the height of DeFi summer, the market was big enough that projects courted retail and DeFi degens [a nickname for people interested in risky, niche, speculative crypto projects]. The market is totally different now.

Unfortunately, retail was blown up more than a dozen different ways last year, and they’re unlikely to come back for a few years. As a result, we’re focusing more on projects that are thinking about addressing new, more institutional users and markets.

We understand that regulation is likely coming down the line, so we’re very interested in projects that are pro-regulation, or at the very least, regulation-friendly.

What types of DeFi use cases do you think will gain more mainstream adoption going forward? Which areas of DeFi are now perceived as more significant than they used to be?

With the Merge officially behind us, liquid staking has become a big area of excitement for us. We think liquid staking projects will receive much more attention after Shanghai goes live and users have the opportunity to withdraw their assets without worrying about illiquidity.

How can the gap between traditional finance (TradFi) and DeFi be bridged?

We need to see more DeFi products and services that more realistically accommodate institutions. This means projects that have pro-regulatory elements baked into the products themselves, including KYC, the ability to limit certain assets, and more. Projects that institutions will be able to transact with won’t look and feel like the traditional DeFi we’re accustomed to and will co-exist as a relatively different ecosystem.

How do you think regulatory frameworks can affect the DeFi space? Which country or region seems to be going in the best direction?

At some point in 2023, we’ll have the landmark crypto regulation that everyone has been waiting on for years. More clarity could be very positive.

We don’t have a firm position, but on the surface, it looks like the UK is rapidly becoming one of the most open, from a thought-leader perspective.

How do you like to receive pitches? What’s the most important thing a founder should know before they talk with you?

We really like a good storyline. We want to know why you’re working on this problem, why it needs to be solved now, and why you think you can beat everyone else. Competitive advantage is key for us.

Alex Marinier, founder and general partner, New Form Capital

How big is the DeFi market today? How much do you expect it to grow in the next five years?

The DeFi market is currently around $50 billion in TVL. In the next five years, we expect the market to bifurcate into two categories: permissioned and permissionless.

Permissioned DeFi will gain traction among institutions, because it marries the benefits of blockchain technology with the compliance standards of traditional finance. If just a small percentage of traditional finance activity moves on-chain, it could create a market opportunity worth more than $1 trillion.

When you add in permissionless DeFi, which is more geared towards individual users and makes up most of DeFi today, the combined market has the potential to become worth anywhere from $500 billion to $2 trillion by 2028.

That said, DeFi’s growth will depend on more than just an increase in use cases. It will also be influenced by developments in infrastructure, regulation and financial innovation.

What were the biggest challenges your firm faced in 2022? What steps are you taking to better prepare for 2023?

Navigating the high-profile collapses (Terra, Celsius, FTX) was certainly the focus of 2022. We had to take more time to support our founders and ensure they have sufficient runway to endure an extended bear market.

This year, our focus is on helping founders find creative ways to grow through this market and position themselves for the next bull market. We’re also focused on sourcing opportunistic investments at attractive valuations and incubating more projects in-house.

Six crypto investors talk about DeFi and the road ahead for adoption in 2023 by Jacquelyn Melinek originally published on TechCrunch