Copy
View this email in your browser
Forwarded this email by a friend (or enemy)?  Click 👉 HERE 👈 to subscribe...and HERE to catch up on past issues.
Happy New Year! We hope you were able to unplug and recharge, and have a safe and happy holiday season. We're thrilled to be back with the first issue of the 2-Minute Drill of 2022, and can't wait to see--and invest in--all the great innovations to come in 2022 and beyond!
--
Welcome to the 2-Minute Drill -- a curated selection of the week's hottest stories from the world of tech, all in 2 minutes.


As a reminder, join us on Tuesday mornings at 8am PT / 11am ET in the Crossover Club on Clubhouse where we talk through the week's stories in more detail and with a rotating panel of special guests from the worlds of pro sports, entertainment and technology. 

As always, shoot me a note to learn more or if you just want to say 👋.

-Noah  


✉️ noah@crossovervc.com
📱 650.468.9543
📸 @crossovervc 
👋 @ndl / the Crossover Club


On my whistle...
Special Event


 

Raising Capital in the New Venture Landscape (Webinar)
In late Q4, Noah organized and co-hosted a webinar in partnership with Salesforce and Brex on the topic of raising capital in the new venture landscape. In that session, we brought together experienced founders and investors to offer a deep dive into the fundraising market today, tools for navigating when, where, and with whom to raise, as well as some predictions for how the environment may evolve in 2022.

Noah co-hosted the event with Athletic Greens President and COO Kat Cole, and Speakers included Y Combinator’s Anu Hariharan, Salesforce Ventures’ Katie Thiry, and DocSend CEO Russ Heddleson.

The full webinar is now available to be watched here.

(Highlights of the discussion summarized here)
FIRST DOWN


 

2021 Was Big Big Big For Investments, Valuations, and More
By now you've all read the dozens of 2021 recaps and 2022 predictions, so we'll spare you yet another "think piece." What we do want to touch on briefly though is just a few stats that caught our eye that puts some data behind what we've all been sensing throughout 2021 -- that it was a massive year for investment in the private tech sector, and with that influx of money, downstream effects were felt in the form of volume, cadence, valuation, and more.

Why so much investment into the sector? Well first, the technology sector as a share of the overall economy is growing steadily. So if you believe that technology will play a larger role in the economy 10 years from now than it does today, then you likely believe that investing in the sector makes a lot of sense (rising tide lifts all boats, and whatnot). And with so much of the wealth creation through tech taking place in the private sector, institutions and individuals of all stripes have been finding ways to reallocate their asset management strategies to adjust to this new reality where private technology and venture capital investment plays and ever-increasing role.

Further bolstered by a hot IPO window with companies like DoorDash and Snowflake providing strong liquid returns to venture investors (and their institutional backers), and you've got further incentive to allocate more capital to the sector (remember, mark-ups on valuation are VERY different from liquidity. It's like having a nice stack of chips at the poker table in Vegas...it's nice, and it's an indicator that things are going well, but until you get to the cashier and trade those chips for cold, hard cash, they aren't worth a dime).

Drawing from Pitchbook data, here area few of the headlines:
  • Investors in 2021 poured $93 billion into early-stage U.S. startups through Dec. 15, which is by far a record, and is triple the amount from just five years earlier and nearly double last year's $52 billion.
  • Overall, $329.8 billion was invested into private technology companies, which is nearly double the previous record of $166.6 billion set in 2020.
  • Mega rounds led the way with deals of at least $100 million accounting for nearly $200 billion of the total in 2021. 
  • The median valuation for early-stage startups jumped to $26 million, up from $16 million last year and $13 million five years ago.  And note, that's the median. For repeat founders, and others with pedigree, the entry valuation is often double that valuation, if not more.
  • The NYC-based hedge fund (note: not VC fund) Tiger Global invested in 340 private tech investment rounds this past year, up from just 78 the year prior. Wow.
There are many, many implications for this trend for those investing in the sector, ranging from portfolio construction, ownership targets, speed of diligence, differentiation, and more. One good read in particular on this dynamic comes from Fred Wilson, if you want to dive in more. But one thing is for certain--capital is now a commodity for early stage startups, and if you want to access and win the best deals, you need to bring more than just your checkbook to the table. (Which coincidentally, is our thesis behind Crossover and our unique strategy and investor base).

The public markets weren't insulated from the froth as well, with Apple earlier this week becoming the first public company to cross the once-unfathomable $3 Trillion market cap threshold. 

And lastly, let's not forget about crypto. The team at Chanalysis shared that users spent nearly $41 billion on digital artwork and collectibles (NFTs) in 2021, with a whopping 75% of transactions less than $10k. That said, just 9% of NFT owners hold 80% of the market value.

Again, there are lots of great (and not so great) 2021 recaps and thought pieces out there, but these are a few of the headlines to keep in mind as we enter the new year where we expect to see continued froth, pivots into "web3," consolidation, and eventually at least a partial correction in the early-stage market--while continuing to see markups due to ever-larger outcomes and billions and billions of dry powder VCs and Growth Equity investors are sitting on and need to deploy.
SECOND DOWN


 

Arcade Nabs $15M to Enable Collateralized NFT Lending
Well it was bound to happen. With the ability to stake cryptocurrencies taking off, it was only a matter of time before startups began enabling users to borrow against their NFT holdings. This week, NYC-based startup Arcade raised a fresh $15 million Series A round of funding to do just that, bringing the year-old startup's total funding to nearly $18 million.

In traditional finance, users can borrow against practically any form of asset, from their home equity to their car to a future paycheck, and more. With the booming NFT market, Arcade is looking to connect collateralized lending to the world of decentralized finance (DeFi) by enabling users to borrow against their NFTs

Let's say you were early to the NFT game and were able to snag a Bored Ape that is now worth hundreds of thousands of dollars. On paper you have a very valuable asset, but you can't make a rent payment or put down a mortgage on your house with an NFT. One option is to sell your NFT, but then you no longer own it, and lose all the rights and privileges (and potential future earnings) associated with it. Here is where Arcade looks to step in. The startup appraises and validates NFT collections and then connects them with lenders who are looking to gain access to a new source of income. This enables the NFT holder to retain ownership while at the same time achieving liquidity on their holdings.

Beyond just playing matchmaker, Arcade has also developed a Wrapped NFT technology that enables NFTs to be bundled together to secure one single loan against a collection of disparate tokens.

With the new funding Arcade plans to add headcount--including in the essential legal and regulatory sector, which remains incredibly murky and difficult to navigate across the nascent world of DeFi. It has just recently come out of private release, and reports $3.3 million in total loan volume secured on $10 million worth of assets. Very small numbers to be sure, but if the NFT market continues to boom, expect to see far more innovation and far larger numbers for these types of DeFi transactions. One thing to account for however is the incredible volatility associated with NFTs relative to a more stable collateralized asset like a house.

(more here)
THIRD DOWN


 

Little Otter Swims Its Way to a $22M Series A for Family Mental Health
We've talked at length during the pandemic about the toll the upheaval and uncertainty associated with Covid has played on the mental health of people worldwide. We have also written extensively about the record levels of funding pumped into startups leveraging technology to provide better access to mental health services. However, the bulk of these startups have been focused on the adult population.

To help support family and pediatric mental health nationwide, this week San Francisco based mental health startup Little Otter announced a new $22 million Series A round of funding. This brings the two-year-old startup's total funding to just over $26 million.

Unlike the startups focused on treating the adult mental health epidemic, Little Otter looks to bring a holistic solution to the family unit that helps address the challenges faced by the children and the family as a whole. As one can imagine, the mental health of the adults in a family plays a significant impact on the mental health of the children. There was already a mental health crisis for children before the pandemic, and Little Otter reports in its studies that more than 80% of 2-12 year old children are now suffering from depression and anxiety -- with a big deficiency in social skill development.

While the startup is still young, it reports 45% month over month growth since launch, with 85% of families reporting clinical improvements in just 6 sessions.

The Money Quote:  “We created Little Otter to bring mental health and wellness to every family. Simply training more providers cannot address the children’s mental health crisis, and that’s why we have built a one-of-a-kind model and team with expertise from child mental health and the best minds in product, engineering, and machine learning to create a platform and build a brand that grows with families over time.” -- Rebecca Egger, CEO and co-founder of Little Otter

(more here)
FOURTH DOWN


 

Mojo Picks Up $45M & Teams Up with Sports Brands for AR Lenses
This week, Silicon Valley-based smart contact lens startup Mojo Vision announced a fresh $45 million in venture funding as it seeks to build the world's first augmented reality (AR) smart contact lens with built-in display to deliver "invisible computing." This brings the seven-year-old startup's total funding to more than $200 million.

As we wrote about in our coverage of Mojo back in May 2020, Silicon Valley has long held an obsession with trying to get compute power onto the face. Yet one of the challenges that approaches like Google Glass and Magic Leap struggled with is that consumers seem to resist wearing devices that cover their faces. That's the (ahem) vision behind Mojo's approach--to reduce the form factor all the way down to the contact lens, so you eventually have a product that sits snugly on your eyeball, and that you recharge + clean once a day, much like AirPods (sans the cleaning feature, sadly).

Mojo has been working on the idea for some time now, and is working with the U.S. Food and Drug Administration (FDA) through its Breakthrough Devices Program to try to speed up approvals. And while the long-term goal of the company is to help the visually impaired, with this new funding, the startup also announced partnerships with a number of sports brands, including Adidas (terms of the partnership were not disclosed) to help determine applications for performance training.

While the technology is still nascent, it makes sense for the company to try to find sectors of early adoption that may fall outside of the more challenging medical usage bucket. We all know that wearables are a booming market, and that athletes want more detailed and real-time feedback on their performance. Through this partnership and with the additional funding, Mojo hopes to better understand applications for providing a real-time heads-up display overlaid in the user's field of vision through the form factor of a tiny contact lens.

The device is still yet to receive approvals, but with $200 million in funding, Mojo proves that Silicon Valley's obsession of getting compute power onto the face is alive and well. It will be exciting to see if Mojo can pull this off, and how this kind of technology can be applied in the years to come.

(more here)
EXTRA POINT



Talent in Tech: AvantStay
Just before the new year, Los Angeles-based high-end vacation rental platform AvantStay announced a new $160 million Series B round of funding to help cater to those looking for a curated higher-end luxury rental experience. This new funding brings the total capital raised for the five-year-old hospitality brand to $186 million.

When most people think of home rentals today, they usually think of Airbnb or VRBO. AvantStay is looking to go a step further by offering a vertically-integrated solution that helps homeowners more easily list their properties, while at the same time creating a more elevated experience for more discerning renters. On the AvantStay platform you can now choose from over 1,000 properties across dozens of destinations, with offerings ranging from expertly designed 3 to 10+ bedroom estates to ranches with horses and private beaches. A key component of the AvantStay offering is that it includes access to a dedicated concierge. The goal here is to go beyond simply where you will lay your head, and instead help create a 5-star hotel experience that can include anything from hot air balloon rides to attending a music festival or sporting match.

While the traditional hotel industry has suffered massively during the pandemic, home rental platforms have come back strong as people looked for ways to escape staying at home, taking advantage of remote work policies, and doing so while avoiding being among large crowds. AvantStay helps home owners easily equip and rent their homes, and has also found a particular niche with corporate off-sites and retreats.

The startup reports a 10x increase in revenues over the past two years, has added more than 700 homes, hosted more than 750,000 guests, and with the new funding plans to invest further in technology and expanding its portfolio of properties

Of course AvantStay is not the only player in the luxury rental sector--and Airbnb itself is investing heavily into its own upper-market offering, but with the new funding and a specific focus on the experience of this segment, AvantStay is hoping to secure a leading position in the luxury home rental market.

Athletes + Entertainers involved include: NBA star Paul George and entertainer Shawn Mendes.

(more here)
 

Know others who would enjoy the 2-Minute Drill? 

Click 👉 HERE👈 to share                              
 
Disclaimer: The content in this newsletter is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It also does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security.



Want to change how you receive these emails?
You can update your preferences or dash our hopes and unsubscribe from this list.

Email Marketing Powered by Mailchimp