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Atomico Need-To-Know 8 January 2018


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Atomico's Need-to-Know, 8 January 2018 - Essential Information for Founders and VCs

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Atomico Need-To-Know 8 January 2018

  1. 1. 8 January 2018 1 Atomico Need-to-Know
  2. 2. This is a regularly-updated collection of things we (@atomico) found interesting and important in tech and VC land, but that didn’t necessarily get the attention they deserve. We think of them as our hidden little gems. We’ll add to the collection over time, so bookmark the page and keep coming back for updates or to dig into the archive. 2
  3. 3. Top 3 Key Points ● Community: Even if there is a correction (many ‘dubious’ utility tokens that are likely to ‘go to zero’), expect to see a large expansion of the crypto community in 2018 in terms of individuals, participating enterprises (think FB), investors (institutions!), and, most importantly, developers ● Usability: Important progress on improving the core tech infrastructure (e.g. initiatives such as Casper on ETH chain, transition from PoW to PoS), as well as in terms of accessibility of crypto (focus on UX/UI, services, etc) to further strengthen the fundamentals of decentralized technology. ● Oversight: There will be material advances to improve oversight in the space, covering many infrastructural and regulatory aspects including models for fundraising/token issuance, investor protection, taxation, security, code integrity, etc. 3 Thinking ahead about crypto/blockchain in 2018 Source(s):,,, The Takeaway Irrespective of which way the total coin market cap counter swings (now at $0.8T, up 46x from $17B a year ago), 2018 will be a year of much-needed breakthroughs that lead to material progress in the deployment, adoption, regulation and use of crypto technology Points of Debate / Next Steps ● Where will total coin/token market cap end up in 2018? :) ● Will ‘mainstream’ talent flow into the space from established (centralised) companies? ● How will regulation help to create better certainty for participants in the decentralised ecosystem? The Story “How many unbanked people have we banked? How much censorship-resistant commerce for the common people have we enabled? How many dapps [distributed applications] have we created that have substantial usage? How much value is stored in smart contracts that actually do anything interesting? How many Venezuelans have actually been protected by us from hyperinflation? How much actual usage of micropayment channels is there actually in reality?” - Vitalik Buterin, Ethereum
  4. 4. Top 3 Key Points ● Over the past few decades, there has been a decline in both “communal” and “live” entertainment and activities with the proliferation of social networks and on-demand viewing ● The success of examples such as HQ Trivia (with ~2x daily live trivia) and Peloton (with ~14x daily live spin classes) indicate that there is also a desire to connect synchronously - to do the same thing at the same time in a connected way ● While on-demand and asynchronous will certainly continue to be the bulk of the media we consume, live communal viewing appears to still hold a unique strategic value 4 The rise of live communal interactions in the age of Netflix Source: The Takeaway Despite an ever-increasing transformation towards on-demand entertainment and activities, the success of models such as HQ Trivia, Peloton and Cheddar suggest that there is still value in, and a desire for, certain forms of live communal interactions Points of Debate / Next Steps ● What is the fundamental driver of a desire to do the same thing at the same time in a connected way? The content, interactions, or participation etc.? ● How do these models scale sustainably? Is there a critical mass that needs to be hit, and conversely, a breaking point at which is becomes ‘too big’? ● Is it possible to sustain the appeal of these models, or is a faddish element inherent to them? “It’s antithetical to the way social networks have been predominantly used, connecting people but doing so asynchronously. What if there’s a desire for people doing the same thing at the same time in a connected way?” - M.G. Siegler, GV
  5. 5. Top 3 Key Points ● $148B in private tech funding rounds globally breaks 2015’s record, while total deal count continues to fall. Funding driven by large rounds such Deliveroo, Airbnb, Lyft and the entry of Softbank ● Exit activity however slowed, driven by larger late stage investments delaying IPOs. Median time to IPO has risen over the last decade, from 4.9 years in 2006 to 8.3 years in 2016 ● VC LP fundraising also declined to $48B (chart not shown). This follows 2016’s record-setting year at $65B 5 Record amounts of VC invested in 2017; exits decline Source: The Takeaway Large late stage rounds lead to a new record in terms of $ invested, while deal count declined. This also contributed to fewer exits as companies delay IPO or M&A discussions Points of Debate / Next Steps ● Is this the new normal? ● People originally thought 2017 would see a wave of IPOs / exits. Is this now 2018? VC $ raised “2015 previously held the mark for most venture capital invested globally in a single year over the past decade. But now it's 2017, and massive VC financings are the new normal.” - Pitchbook, Dec-17 VC-backed exits in decline
  6. 6. In case you missed it 6 Footnotes Companies What happened? Sequoia Sequoia is raising $5-6bn growth fund. Fundraising rumoured to start in Q1 2018. Previous growth fund was $2bn and was raised in 2015. Guesses at what is driving the big increase in fund size focus on impact of SVF, but motivation is likely simpler: Sequoia sees an opportunity to deploy and deliver outsized returns on a fund of this magnitude Spotify Spotify made confidential filing for NYSE IPO via a direct listing. It would be the first major company to carry out a direct listing, an unconventional way to pursue an IPO without raising new capital. Hit 70M paid users. Uber Softbank succeeded in tender offer for Uber shares at valuation of $48bn, a ~30% discount to last round at $68bn. The deal was 42% oversubscribed. Uber also regulated as traditional taxi service by EU - means member states can apply their own transportation laws to Uber Founders Fund Rumoured to have invested hundreds of millions of dollars into cryptocurrency, including $15-20m in bitcoin. The bet has been spread across several of the firm’s most recent funds Pantera Pantera Bitcoin Fund sees returns of roughly 25k percent following its investment in bitcoin; Pantera launched the fund in 2013, investing $150M in the cryptocurrency; the firm estimates its made $2.1B for its investors; there are now 175 such funds, 150 of which were launched in the last yea Spectre/Meltdown Major security flaws have been found in processors designed by the likes of Intel and ARM. Meltdown and Spectre were discovered by security researchers at Google’s Project Zero. The scale of the impact is enormous and vulnerabilities could be present in most modern computers, including smartphones, tablets and PCs from all vendors and running almost any operating system. Patches to fix the flaws are coming thick & fast Ant/Moneygram CFIUS (US committee ruling on foreign investments in US companies) blocked Ant Financial’s proposed acquisition of Moneygram. This marks a strengthening of US protectionism in the context of deepening anti-Chinese sentiment in trade A16Z Raised a second biotech fund under Vijay Pande at $450M. This follows its first biotech fund at $200M that was closed in 2015. The focus is on companies that seek to “engineer biology”. Has made 12 investments to date.
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