What goes up, must come down
Gil Dibner

There is a moment that I am experiencing now. I do not know if it’s because I am over 40, or because I began working in venture in 2003 (and Wall Street in 1999), or if it’s just a matter of personality.

But this is it:

I used to think I knew something about how the world worked, but for the past five years, no one cared about what I thought I knew — because everyone had become convinced that all the rules had been suspended.

In this new reality, companies never needed to be profitable or even have products. Investors didn’t need to do any diligence or have any rights whatsoever. No one needed to go to the office, or meet anyone in person, or even do any actual work.

And today all of a sudden (perhaps only temporarily) it’s as if we have rediscovered gravity and entropy and economic reality. And so suddenly (and perhaps only briefly), the things I used to think I knew from learning the lessons of my elders are suddenly meaningful again — and the world makes sense again. Which is oddly a relief.

When you are in the business of taking calculated risks against impossible odds, it is disconcerting when everyone starts telling you that risk has disappeared. I know this has been confusing and disoriented for experienced VCs, and I also believe it has been similarly distressing for experienced and thoughtful founders. But today, now that risk and its cousin fear are back, the worlds of venture capital and entrepreneurship suddenly feel familiar again. While I’m sobered by the markets and the difficult times ahead, I am incredibly energized by the challenges we all face collectively as a community of entrepreneurially-minded people. We’ve all been getting ready for this for our entire lives.

It’s not that I like market crashes or the suffering of people. But I do believe in gravity and I did believe in gravity even when everyone was saying it has been canceled. So yes, it’s nice to see all those objects we threw into the air falling back to earth.

EVENTS

Sep 7 / The Evolution of Collibra’s Product Positioning & How They Created a Category
Stan Christiaens, Co-Founder & Chief Data Citizen, Collibra

Sep 21 / A Talk with Jason Green
Jason Green, Founder & General Partner, Emergence Capital

FROM THE BLOG

The Right Stuff
How to build a commercial team.

Mapping the New World of Business Collaboration
Why we invested in Reco.

What do a 2003 BMW and Microsoft Excel have in Common?
Leaving users feeling empowered and energized, rather than managed and disconnected.

Fewer, but Better Than Ever
The Israeli tech eco-system ponders a slowdown in startup creation.

EUROPE & ISRAEL FUNDING NEWS

UK/SME Payments. SumUp raised $622M for its mPOS solutions for offline retailers.
France/IT Infrastructure. Platform.sh closed $140M to provide developers with the ability to deploy a complex architecture with a single click.
UK/Industrial. CloudNC raised $45M for its software that enables factories to autonomously manufacture precision parts.
Germany/Financial SaaS. Solarisbank raised $42M for its Banking-as-a-Service solution.
UK/Financial Services. Hokodo raised $40M to give online B2B merchants flexible payment (BNPL) options at checkout.
France/SW Development. Strapi raised $31M for its open-source content management solution.
Israel/Security. Cyberint raised $28M for its threat intelligence and digital risk protection platform.
Ireland/Marketing. &Open raised $26M for its customer engagement platform for brands & retailers.
Israel/Health Software. AIVF raised $25M for its AI-based diagnosis platform for IVF treatment.
Germany/Energy Services. Enviria raised $40M for its solar energy projects aimed at businesses.
Belgium/Health SaaS. Lynxcare raised $28M for its platform enabling hospitals to unlock siloed, legacy data to gain insights into the real-world performance of treatments.
Spain/Health SaaS. Idoven raised $25M for its AI algorithms helping daily clinical workflow for practitioners working on cardiovascular diseases.
France/Marketing. Onepilot raised $25M to enable e-merchants to outsource their customer care.
Sweden/Data Tooling. Validio raised $15M for its cloud-based data quality monitoring solution.
Israel/IT Infrastructure. CloudQuery raised $15M for its cloud asset inventory management solution.
UK/Industrial Systems. BotsAndUs raised $13M for its mobile robots that quickly process pallets at every stage in their journey throughout a warehouse.
Germany/Logistics. Tradelink raised $12.5M for its supply chain collaboration platform.

WORTH READING

ENTERPRISE/TECH NEWS

Zendesk acquisition drama. After spurning a $17B takeover offer earlier this year, Zendesk has agreed to be acquired for $10.2B by a consortium of private equity firms led by Permira and Hellman & Friedman. This is a 34% premium over yesterday’s price, but still far below the $17B offer from February. The deal is expected to close in the fourth quarter, at which point Zendesk will go private again. More from WSJ here.

Crypto contagion. Is a contagion in crypto upon us? In hopes of avoiding further failures across the DeFi ecosystem, Sam Bankman-Fried of FTX offered to bail out BlockFi with a $250M loan this past week. This is just a week after Bankman-Fried bailed out cryptocurrency platform Voyager Digital with nearly $500M of loans. In response, Twitter users are meme-ing that Bankman-Fried is the JP Morgan of the 2022 downturn. As it turns out, Bankman-Fried’s BlockFi bailout offer would effectively wipe out all BlockFi shareholders (protecting the depositors, not the equity holders). In response, Morgan Creek (an equity holder in BlockFi) announced late Saturday that they’re trying to raise money to counter the offer. In other crypto contagion news, Goldman Sachs is reportedly raising $2B from investors to buy distressed assets from crypto lender Celcius in the event they file for bankruptcy.

Future of remote work? In The Atlantic this past week, Derek Thompson opined that the coming recession may “weaken the remote work revolution” as employees’ bargaining positions are weakened. On the other hand, following the suit of companies like Twitter, Airbnb and Slack, Yelp CEO Jeremy Stoppleman has doubled down on remote work. Calling hybrid policies “the worst of three options” and “the hell of half measures,” Stoppleman has responded by shuttering many offices and transforming its remaining spaces, like its San Francisco HQ, by leveraging a “hoteling” model where employees reserve desk space for the day.

AI programming is here. Github’s AI-powered Copilot was made publicly available this past week. Copilot will cost $10/month, but will be freely available for students and maintainers of open source projects. Copilot can “suggest complete methods and complex algorithms alongside boilerplate code and assistance with unit testing” inside a range of IDEs. In projects where it’s enabled, Github claims Copilot is writing 40% of the code. Following the launch, Amazon announced the launch of CodeWhisperer, their own version of an AI pair programming tool similar to Copilot. CodeWhisperer is now available in preview as part of the AWS IDE Toolkit.

HOW TO STARTUP

End of indifferent capital. For founders wondering what venture used to look like, Eric Paley of Founder Collective wrote a thread this week arguing that the end of the era of indifferent capital may be upon us. “Historically, VC was a boutique business…VCs were financially driven, but they also put considerable relationship capital to work in each startup,” Eric writes. But over the past half-decade, we’ve seen the rise of indifferent VCs. From Eric: “Indifferent VCs are speculators and see each startup as part of a portfolio of lottery tickets…If it’s a winner, you’ll guard it with your life. But if not a winner, it’s tossed in the trash without a second thought.” The bull market hid the weakness of this model, but Eric argues that the macro downturn will make the weakness of this kind of “capricious capital” apparent. The whole thread is worth a read.

HOW TO VENTURE

Late stage slowdown. The slowdown in late stage investing isn’t just anecdotal anymore. Though investors with large public portfolios, like Tiger, Coatue and Greenoaks, have been much more likely to pull back than more established pure-play venture capital firms, like Accel, Lightspeed and Sequoia. From The Information: “Coatue Management, Greenoaks Capital Partners and Index Ventures participated in at least 35% fewer deals this year compared with the same period last year.” Accel and Lightspeed’s deal count fell slightly (down just 8%), and Sequoia’s remained the same. Crunchbase has collected similar data about a16z (from $7.5B invested in Q2 2021 to $2.5B invested in Q2 2022), Softbank (poised to end the Q2 2022 with its lowest number of deals since the first quarter of 2021) and Accel (Q2 2022 is trending to be the firm’s lowest in both deals and size of deals since the first quarter of last year).

PORTFOLIO NEWS

Groundcover’s CEO, Shahar Azulay, shared his vision on a redefined no trade-offs modern reality for kubernetes cloud native observability.

Aquant’s CEO, Shahar Chen, was selected as one of the top 25 software leaders of New York for 2022.

Planable’s CEO, Xenia Muntean, shared how to get better at social media management.