March 26, 2022
Image: BAYC; Protocol
Hello and welcome to Pipeline! This week: how to Ape like a pro, Instacart’s valuation drops and a changing IPO market.
Yuga Labs’ ApeCoin experiment could point out a Web3 way to democratize access to VC-backed startups. Or it could be the glaring example that brings the SEC in to spoil the DAO party. Either way, expect more debate about whether Web3 is really decentralized, or just a technological coat of paint on the old Silicon Valley model where insiders profit off of outsiders.
Who’s behind ApeCoin? That’s the $3.5 billion question.
The line between centralized and decentralized is blurry, but crucial. That’s why ApeCoin might end up being such an interesting test.
The SEC isn’t unaware of these token issues. Tokens have been on the agency’s radar for years.
There’s a crucial difference between tokens and private shares. And that’s that tokens are immediately liquid.
So is the DAO the new IPO? It does point out a way to profit twice from a crypto investment — once in the company itself, and again in the economy that grows up around tokens it issues. If everyone’s making money, things will probably work out. But what if a company and a DAO end up in conflict — if, say, Yuga dumps ApeCoin for a different token, rendering the tokens effectively worthless? There don’t appear to be any guarantees.
“I get a weekly ‘Unicorn List’ email of secondary shares available in notable companies (via a broker). On 10/4/21 there were 32 names. Today there were 103 names ... Probably nothing,” tweeted GGV’s Jeff Richards. “For those who aren’t in the private markets, an increase in people selling secondary in highly valued companies is generally a negative signal. People generally don’t want to sell when things are good/they believe there’s 10X upside.”
LPs are getting worried about Russia exposure, markdowns and the upcoming date of March 31, when valuations get adjusted, says Meghan Reynolds of Altimeter Capital.Points for consistency? “The great irony is that we are the least Russian fund right now and have been because we made a consistent effort,” DST’s Yuri Milner told Bloomberg Businessweek of his efforts to distance himself from Russia.
In a few years, we may be largely living “on the edge.” As the amount of data grows exponentially, there is a greater need for edge computing solutions to aid in real-time decision-making.
What to know about token compensation at a startup, according to Paradigm’s Dan McCarthy.
Web3 investor Variant Fund is hiring a consumer investment partner who wants to dig into “marketplaces, NFTs, DAO infrastructure, crypto wallets, decentralized social networks.”
Some takeaways from Ramp’s recent big fundraise from Hustle Fund venture partner Haley Bryant.
The IPO market has shifted. Not many IPOs are getting out lately — and bankers are seeking more companies with actual profits.
Sequoia Capital China is raising $8 billion in new funds. It comes despite a downturn in tech stocks and a range of regulatory issues in the U.S. and China affecting China.
Instacart cut its 409A valuation to $24 billion. This was a steep drop from the previous $39 billion. But … this was the 409A price, not the typical “valuation” that is cited in news stories, because the latter is what outside investors pay for preferred equity shares. The change means employees can get cheaper RSUs and more upside in a potential exit, but it doesn’t trigger ratchets like a down round would have.
Lux Capital launched a digital health ETF. The fund, with First Trust Advisors, comes after it previously released a Nasdaq Lux Health Tech Index.
Return of the Denominator Effect? The Wisconsin Investment Board approved a cushion to address the issue that occurs when public-market shares drop while private-market valuations stay high — which can force LPs to cut private-markets investing.
On Protocol: A Ukrainian crypto pioneer’s crusade: “We need to protect our home”
Your weekend reading: Researchers are working on new “contagious” vaccines for animals designed to stop wildlife from spreading Ebola, rabies and other viruses.
As a form of distributed computing, edge computing enables processing to happen where data is being generated. The convergence of 5G networks with edge computing means data is not only traveling faster, but can be quickly translated via media, inferencing and analytics into insights and action, enabling new, ultra-low latency applications to come to life.
Thanks for reading, see you next week!