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Crypto, CVC


#383
Friend Or Foe?

Published:

Apr 17, 2021


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Posted In:

Crypto, CVC

Published:

Apr 17, 2021


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Corporate venture investing is a familiar concept, with the likes of Microsoft, Salesforce and Google having dominated the CVC landscape in the past. However, there are a whole new host of names that are taking this world by storm - and while this is in theory good for the tech industry as a whole, rising concerns about competition and potential conflicts of interest (e.g. investing in a company where your own investors are also major shareholders) have undoubtedly surfaced.

Stripe, Coinbase, Slack and Snowflake are some of the most noteworthy new(er) players in the space, with Stripe most recently leading a $50m round in Ramp, valuing the company at $1.6b. Stripe primarily invests in early-stage companies and according to Crunchbase, has made 33 such investments since its founding in 2010 (others include Fast, Monzo, Rapyd, and Paystack - the latter which it acquired).

Coinbase created a VC arm in 2018 with the goal of backing other promising crypto startups, and has invested in over 100 companies to date. In a sign of the opportunity it sees in the current market, 19 of those investments took place in the first quarter of 2021 alone. The non-fintech focused venture funds have been similarly active, with capital primarily being deployed in companies that have strategic value.

There are several reasons why CVC activity has remained so robust, and why newer players are entering the space at such a rapid pace. First, these investments provide insight into new technology and ideas - no matter how successful a startup may be, they always want to stay ahead of the game. Second, partnerships are important, especially when they come with access to new markets. Third, it is important to establish ties to promising startups early as they may become very attractive acquisition targets down the road. And fourth (but not least), there is potential for large financial returns.

While these CVCs may be the new kids on the block relatively speaking, they have certainly made their presence known, helping to drive CVC funding volumes to record highs in 2020 (+24% v. 2019). The big question going forward will be if founders actually want them on their cap tables - and will they continue to be friends or foes....

Portfolio News


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Friend Or Foe?


Coinbase’s VC disclosure underscores tight bonds of crypto investors - Coinbase’s public listing documents revealed an unusual set of circumstances for a startup: Its venture arm, Coinbase Ventures, had acquired stakes in a handful of companies partially owned by some of Coinbase’s own major investors, including Andreessen Horowitz and Union Square Ventures. Such disclosures are the side effect of a growing trend in venture capital. Well-funded startups such as Stripe, taking a page from older tech companies such as Google and Salesforce, are becoming increasingly active VC investors. Read more

Spend management startup Ramp confirms $115m raise at a $1.6b valuation - What to make of Stripe on the Ramp cap table? Stripe itself has a corporate card and spend management product, and was picky when one of its backers put capital into a company that it construed as a rival. According to Glyman, the decision to take investment from Stripe came down to whether his team wanted to work with the larger company — they did — and whether they trusted the payments giant. He decided to. Stripe did not receive a board seat as part of its investment. Read more

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Industry News


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Microstrategy will now pay board of directors in Bitcoin as treasury grows to nearly 100K BTC - The company will now pay non-employee directors in bitcoin, citing its commitment to the cryptocurrency “given its ability to serve as a store of value, supported by a robust and public open-source architecture, untethered to sovereign monetary policy.” Read more

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Select Financings


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Better.com - New York based digital mortgage lender raised $500m in new funding led by Softbank. Read more

Clearcover - Chicago based car insurance startup raised $200m in Series D funding led by Eldridge. Read more

ConsensSys - New York based Etherium startup studio raised $65m in new funding from investors including J.P. Morgan, Mastercard and UBS. Read more

Enso Finance - Zurich based social trading platform for decentralized finance raised $5m in new funding led by Polychain Capital and Beacon. Read more

Hatch - San Francisco based neobank for SMBs raised $20m in new funding from Kleiner Perkins, Foundation Capital and SVB. Read more

Level - New York based maker of financial products for employers raised $27m in Series A funding led by Khosla Ventures and Lightspeed Venture Partners. Read more

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Routable - San Francisco based B2B payments company raised $30m in Series B funding led by Sam Altman and Jack Altman. Read more

Sunday - Atlanta based restaurant payment app raised $24m in Seed funding led by Coatue. Read more

The Zebra - Austin based insurance comparison site raised $150m in Series D funding led by an unnamed investor. Read more

Wage - San Francisco based payroll data sharing company raised $5m in Seed funding led by Gradient Ventures. Read more


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