The SpaceX Effect – Companies founded by SpaceX Alumni

Macro Tech Titan on April 1, 2024

From Jeff Burke and Michael Madrid:

Note to readers: This is my first co-authored piece. Michael Madrid and I bonded after the Varda Space piece ~1.5 years ago. Since then, we have wanted to write together. There are a few things to know about this piece:

This is just part one. We completed a deep-dive on SpaceX culture (similar to my Sutter Hill Ventures piece) that can be found here.

Part Two: The Culture of SpaceX

This piece has been a work in progress for months. We have spoken to many SpaceX’ers in the process, and we feel good about a lot of the content you will see! Enjoy!

The scale of Elon Musk

Elon Musk is one of the most captivating people on the planet. Not only is he the richest man in the world, but he captivates millions daily as a master meme lord. While SpaceX and Tesla are well documented, Musk’s impact on US technology extends far beyond that. At a time of offshoring manufacturing, slowing public institutions, and large scale building demise, Musk has built two massive hardware companies. And in the process, he has trained and inspired an entire generation of builders.

For now, put aside any perspective you may have on politics, tax policy, and Musk’s personal life. Since moving to the United States ~30 years ago, Elon Musk has been a founding part of seven main companies: Zip2 (sold), PayPal (X.com merged), SpaceX, Tesla, OpenAI, Neuralink, and The Boring Company.

Exhibit 1: Total Value Created by Elon Musk Companies

These companies have generated +$1T in value, +$80B in annual revenue, and +135,000 jobs…

The numbers alone are astounding, but the list is actually even more impressive than it might seem. Each one of these companies fully disrupted or innovated in a space:

  • PayPal —> Accelerated Fintech & disrupted traditional payments
  • SpaceX —> Created the commercial space launch market
  • Tesla —> Made electric cars cool & a preferable choice
  • OpenAI —> Pushing the bounds of AI with models like GPT-3

Today, we want to focus primarily on SpaceX. (The Tesla story requires its own piece.) SpaceX drove innovation in a space (get it?) that people thought was fundamentally impossible. The industry had dramatically slowed. The excitement of landing on the moon was decades past. The level of regulation was, and remains, super high. Reigniting (get it again?) the space industry was going to be a totally different ball-game than anything Elon Musk (or most others) had done to date.

Exhibit 2: Space launches per year

And yet, if you look at launches per year, SpaceX has accelerated scale over the past few years. Prior to SpaceX, the industry was largely stagnant from 2005-2017. I would argue that SpaceX’s scaling (and success) in 2014-2017 finally turned heads. Since then, the number of private space companies, as well as investment, has dramatically increased.

Of course, Musk is just one person. Along the way, thousands of builders joined him. That’s the impact that few have spoken about.

Exhibit 3: Manufacturing output and employment

The US has increased real manufacturing output while reducing the total number of jobs. This is primarily a function of step-changes in technology. On the whole, however, manufacturing has been heavily deemphasized in our culture. Tech has increased. Jobs have been offshored.

But when you consider recent geopolitical issues, building big, amazing things in the US is imperative. For the past 15 years, Musk has been training thousands of people to build hardware at MASSIVE scale… and fast. As a result, not only has SpaceX succeeded, but those builders have gone on to continue building. The ripple effect is real. We call it the SpaceX effect.

The SpaceX Effect | Companies founded by SpaceX Alumni

Exhibit 4: SpaceX Alumni companies (Credit to the Tesla / SpaceX Alumni Map for the list of companies)

Ultimately, the growth of SpaceX has become fairly obvious. Constant launches. Paired landings. Passenger spaceflights. All of this tweeted through Elon Musk’s channels, with the entire world following. And while this is all amazing and something we should be thankful for, most people have yet to see the former SpaceX employees now building new companies. Within years, there have been tens of sizable companies founded that are building real, critical things.

These founders are not optimizing ad clicks or emojis! They are building companies that are fighting for visions which will fundamentally change the world.

Exhibit 5: 12 companies founded by SpaceX alumni

While we cannot walk through all ~60 of the companies, we can give a sample! In Exhibit 5, we have listed just 12 companies that we find fascinating. Most of the companies are:

  • Relatively early stage
  • Raised significant money (+$500M in total)
  • Building innovative solutions for large scale problems, including nuclear reactors, freight trains, hypersonic reusable engines, and more

Companies of this scale take years (maybe decades) to build. Right now, it may not be apparent to most, but SpaceX has massively altered the trajectory of US large-scale hardware innovation, and the positive impacts of that will be showing for years to come.

The companies

Ursa Major

Founded by SpaceX engineer Joe Laurienti, Ursa Major is becoming the market leader in propulsion. For years, space companies have been faced with a tough decision. Design my own engine in-house or purchase Russian-made RD-series engines? The former is very expensive, time-consuming, and inefficient. The latter is outdated and has geopolitical implications. The Ursa Major Hadley, Ripley, and Arroway engines are market-leading, ubiquitous engines. For more on Ursa Major, read my previous piece.

Reliable Robotics

Aircraft that fly themselves. By making autonomous, commercial aircraft, Reliable Robotics can increase everyone’s access to air transportation. Reliable Robotics is creating the airline of the future. SpaceX’ers Robert Rose and Juerg Frefel are the founders of Reliable Robotics.

First Resonance

The surge in large-scale manufacturing is exciting… but complex! As this trend continues, companies will need to better understand their systems. First Resonance is building the operating system for manufacturing. Eliminate data capture. Understand your processes. Operate efficiently. SpaceX’er Karan Talati is the founder & CEO.

Varda Space

SpaceX and many others are building machinery on earth to be used in space. But what if we made things in space that we can use on earth? That’s what Varda Space is doing, with microgravity manufacturing. High quality materials (e.g., pharmaceuticals, fiber optics) can be fabricated to higher specifications if the process is done without influence from Earth’s gravity. Varda Space will be the logistics supplier to carry out these manufacturing processes, and was co-founded by SpaceX’er Will Bruey. For more on Varda, read my previous piece on them.

Epsilon 3

After more then 10 years at SpaceX, Epsilon3 co-founder and CEO, Laura Crabtree, noticed something that had not existed a decade prior when she started at Elon’s company: an expanding startup ecosystem in the space industry. As a result, Crabtree founded Epsilon3 to help such companies reduce risk and increase efficiency by migrating spacecraft testing and ops procedures from static documents, spreadsheets, wikis, and paper checklists to digital alternatives based on a modern software platform.

Relativity

Relativity is building the first autonomous rocket factory. By “disrupting 60 years of aerospace”, Relativity predicts they can be more reliable (100x fewer parts), better speed (10x faster production time), more flexible (no fixed tooling), and win with optimization (compounding iteration quality). At $1.3B, Relativity is the highest funded company of the group. Co-founder Jordan Noone worked at SpaceX in 2014 and 2015.

Xona Space Systems

GPS is a critical part of our infrastructure, from payment processing to driving cars to syncing clocks. But the painful truth is that GPS is vulnerable… and beyond current risks, the exciting applications of the future demand more and better position, navigation, and timing (PNT) support. Enter Xona Space Systems, which is building a precision LEO PNT constellation called Pulsar that offers a more secure, robust, and accurate alternative to legacy systems. The use cases are many, and co-founder & CEO Brian Manning is leading the charge.

Radiant Nuclear

Nuclear energy is our most scalable green source of energy, yet it is not universal. Reactors are huge projects, often mired in bureaucratic debates at the state or municipality level. Radiant is changing that with portable nuclear microreactors. Instead of a diesel generator, people could use Kaleidos. This provides a green alternative to fossil fuels that is both sustainable, scalable, and flexible. Founder Doug Bernauer is a former SpaceX engineer.

Phantom Space Corporation

SpaceX, Varda Space, and many more are proving the economic potential of space. But getting to space is expensive! SpaceX has done wonders lowering launch costs, but that is just the start. Phantom Space is a SpaceX alternative that is using mass manufacturing to drive down the costs of satellite builds and launches. This will lower the barrier to entry in space, creating more businesses and market opportunities. Founder Jim Cantrell was the first VP of Business Development at SpaceX back in 2001.

Impulse Space

Building a rocket. Creating the payload. Launching it to space. It is all very complex, and that may seem like the hard part (maybe it is)… but the job is not quite done! What do you do with it once it gets to space? Impulse Space is building orbital maneuvering vehicles that are focused on last-mile delivery. Think about your Doordash driver… just ergh…. in space! Jokes aside, this is a critical need in the industry. So much so that founder Tom Mueller left SpaceX after 17 years to pursue it!

Astro Forge

Asteroids consist of a variety of raw materials, many of which we actively use on earth (ex., gold, cobalt, iron). Resource depletion on earth is a concern for many. Astro Forge is working on a cost-effective and scalable solution for asteroid mining. This would give us the opportunity to expand our access to resources, as well as reduce on-earth mining and the downstream effects that has. Founder and CTO Jose Acain spent years at SpaceX as an aviation integration engineer.

Parallel Systems

Freight trains are a critical part of American logistics. The trains, however, run on fossil fuels. Parallel Systems is decarbonizing freight by building a cleaner, automated rail future. Long-term, their solutions will reduce the carbon footprint of rail, but they will also allow more of the $700B trucking industry to convert to decarbonized freight! SpaceX’er Matt Soule spent 13 years at SpaceX prior to founding Parallel Systems.

Conclusion

These twelve companies are clearly just the start. There are many more SpaceX alumni companies already, and we believe there are certainly many more to come. We will release Part II in ~2 weeks, and in that piece, we will do a full breakdown of how and why. How does SpaceX build and maintain such a high-performance culture? Why does this lead to so many entrepreneurial alumni? More to come!

What founders and reps can do to limit liability when raising capital

Macro Tech Titan on March 25, 2024

Founders need capital to grow, and registered reps often help them get there – but it’s not only about the capital.  If you search “Issuer Liability” most of the results will talk about the regulations.  When you raise money from someone else (not friends and family) you are selling a security, which is a regulated activity.  When you take an investors money there is liability, they are expecting something in return.  Many founders ask what they can do to protect themselves from investor lawsuits, so we wanted to provide a short guide.  We are not lawyers and this is not legal advice, this is information about the market in general for education purposes.  Founders should always seek guidance from a lawyer and if you are planning on raising capital with or without a broker-dealer you should probably have an attorney who you feel comfortable with on retainer.

  1. Follow the rules

This is pretty straightforward, and if you are working with a registered rep of a broker-dealer they will ensure your offering ticks all the right boxes.  Broker dealers are regulated by FINRA and their job is to understand and implement the rules.

  1. Get a lawyer

Lawyers are like Doctors, you don’t need them when you’re healthy, you need them when you’re sick or if you just got run over by a bus (in that example you’ll need both).  If you’re raising capital as your business grows you’ll need a lawyer to create documents and to provide legal advice for a range of issues well beyond your offering.

  1. Disclose, disclose, disclose

One of the biggest drivers of investor lawsuits is the failure to disclose material facts.  If you disclose everything, it will greatly reduce the risk of getting sued.  Investors understand that there are risks with private investing, they are taking the risk and will be rewarded if it pays off and the project works.  For example, if the company has a loan that needs to be paid off and you fail to disclose that, investors would be very unhappy about that (and so would the regulators).  Most of the regulations center around disclosure, they don’t evaluate the quality of an individual offering or sector – when you file an SEC registration statement, the SEC will verify the format, and that you have addressed all the required points, they will never evaluate the quality of the offering or tell you if it’s a good idea or not.  What they do require is that all material facts are disclosed, including the backgrounds of the principals, financials of the company (if any), audits, reports, articles, business plans, patents or other intellectual property, etc.  The reason for this is simple, investors can only make informed decisions when they have all the facts.

  1. Target sophisticated investors

This is more about strategy; if you target investors who have experience in early stage companies, they are going to be in a better position to make a decision, and may even provide valuable feedback based on their experiences in other deals.  If you are dealing with someone who has never invested in a private offering before, that’s probably not your best investor.

  1. Explain to investors the Use of Proceeds well

This is actually the most important requirement when doing a raise with a FINRA BD; the reason is simple.  Investors want to know where their money is going.  Things don’t always work out, and investors may be receptive to that – where they get angry is if you do something outside the scope of your plan, or something they believe to be reckless.  If you explain that with $500,000 you’re going to do A,B,C, – and then you do it, and it doesn’t work out as anticipated, there’s a much lower chance of having a problem with investors vs. a situation where you went far off the business plan and invested in something not on the Use of Proceeds list.  Founders have multiple roles with investors, they are fiduciaries of the shareholders, and managers of the business.  They have an obligation to the shareholders to maximize their value.  As an executive of the business, their job is to ensure that they execute the business plan to the best of their ability.

  1. Get an Umbrella insurance policy

If you have a house, a ranch, or other family assets, you should probably get an Umbrella insurance policy which covers those assets if you get sued.  The umbrella insurance is not specifically for people raising funds, it’s for general situations like if a stranger trespasses on your property and breaks their leg and sues.  The insurance agent can explain the benefits of it, but the idea is to provide some protection to your core assets in the case of lawsuits.

  1. The LLC or Corp provides basic protection

Incorporation when starting a company is key, it means that any lawsuit would be against the entity, not the individuals.  Having said that, a founder is in a unique position because they typically are the main shareholder, the executive, and the person responsible for the entity.  However, this is the most basic protection and the reason that entities are formed, the group of shareholders are stakeholders who share in the profits or the losses of the business together.

  1. Setup a Trust

If you have children, having a Trust is a great idea to pass assets however modest without dealing with Probate.  A Trust can provide other advantages of asset protection, but it does cost money to set it up.  This varies from state to state, but you should talk to a local attorney near where your primary residence is located.  A Trust should be local, it shouldn’t be in Delaware where most Corporations are registered.

  1. Keep in touch with investors

There’s a reason why publicly traded companies have quarterly investor calls.  Imagine the following scenario-  you have an investor who gave you a decent amount of money to start your company and you don’t hear from him for years.  Time goes by and your business grows, and then you face a huge problem from a competitor, and there is a loss.  You call to tell him that, he’s not going to be happy to listen to this.  But it’s always about the lack of info and attention, if you were calling them or if you write an investor letter at least quarterly, you probably wouldn’t be in such an awkward position.  Regular updates are a great way to keep investors informed, and if they are displeased with anything they’ll tell you that then.

  1. Under promise and over deliver

Getting caught in litigation is usually because an investor feels they were abused, lied to, tricked, or that they got an unfair deal.  If you under promise, and then over deliver – this vastly reduces the chance of someone feeling bad about the investment.  Investors don’t expect miracles and founders are not magicians, things happen, everyone knows that.  But if you provide great results, defined as better than what you originally told them, how could anyone have a problem with that?

This goes to the core of writing great terms, be conservative, be reasonable, explain the risks.  Many will say, that it will be ‘harder’ to raise money if your projections are conservative – exactly!  It’s a filtering process, you don’t want someone to EXPECT a huge return because then if you don’t do it, it will be a problem.  There was a FINRA case where a REIT promised 8%, delivered 5%, and got sued (we’re paraphrasing the terms for the sake of the example).  Or in other words, the 5% return was actually very good, but they hard sold and promised 8%, so it left some to feel that it was misleading.

11. When Speaking, Speak Honestly

According to one lawyer, what can prevent lawsuits is simple honesty.  Don’t exaggerate claims or speculate about the future, and certainly don’t speak about future potential as if it’s fact.  Avoid superlatives such as “Will” and instead use language like “May” because you really don’t know what will happen in the future.

Conclusion

This is not an exhaustive list, but it should provide the idea of how to risk mitigate the potential for getting sued, which is a real liability for founders, issuers, and reps.  There isn’t any language you can add to an investment contract that prevents an investor from suing (which is logical, if you think about it, because real scammers could use that language to shield themselves).

So consider taking the high ground, the ethical approach, disclose more than necessary, be above regulatory standards, don’t just meet the minimum requirements.

Announcing the 2024 Human Health 100

Macro Tech Titan on March 22, 2024

From SOSV: https://sosv.com/announcing-the-2024-human-health-100/

Welcome to the third annual SOSV Human Health 100. The list features SOSV’s 100 most exciting companies in the health category, which for SOSV ranges very widely, from assistive robotics and remote care to therapeutics and diagnostics.

In the past two years (see the 2023 and 2022 lists), venture rounds and company valuations grew strongly, but in the past year funding has become much harder to secure and valuations are fragile at best. We asked founders in our recently concluded and very well attended VC-Founder Health Matchup (more on that below) what they thought of the funding environment: 71% reported that it was worse than prior years; no respondent reported it was better.

We see that trend in our Health 100. As in past years, about 2/3 of the companies are at the seed stage, 1/3 at Series A or more, and 2 have reached ‘Late stage’ (unicorns Opentrons and Formlabs). Compared to the strong numbers the Health 100 posted in the past two years, growth was modest. The Health 100’s aggregate valuation is $6.67 billion (+3% from $5.47B in 2023), and all told the Health 100 have raised $1.43 billion (+1% from $1.42B in 2023).

SOSV, which invests starting at pre-seed and continues through later stages, has invested $99 million (+3% from $96M in 2023) in the 100. Due to the slowdown in follow-on investing last year, SOSV’s investments were mostly in new companies entering our programs or raising seed rounds.

Progress of the Health 100 – 2022-2024

Total Valuation Total Raised SOSV Funding Countries Female Founders PhD Founders
2022 $5.65B $1.0B $73M 19 30% 62%
2023 $6.47B $1.42B $96M 17 30% 67%
2024 $6.67B $1.43B $99M 16 35% 70%

Note: this table is based on actual funding amounts.

This year’s list welcomes 16 newcomers, who are listed below. Individual companies on the Health 100 experience ups and downs due to new fundings, regulatory breakthroughs and commercial partnerships. Joining or leaving this list is not a reliable indicator of future outcomes!

The Health 100 Founders

As with the SOSV Climate Tech 100, the diversity and sophistication of our health companies and founders is striking.

  • 35% of the companies have at least one woman co-founder.
  • 16 countries are represented; topping the list are the US (64), the UK (9) and Canada (6), followed by France, Ireland and Singapore (3).
  • 70% of the startups have at least one PhD co-founder.

A total of 52 companies graduated from the bio-focused IndieBio while another 38 hail from hard-tech focused HAX, and five came from the SOSV Consortium.

SOSV is continually expanding its health portfolio by accepting pre-seed health startups into our HAX and IndieBio startup development programs with checks ranging from $250,000 to $500,000. As the companies progress, SOSV also participates in their series seed, A and later rounds. That helps account for our strong showing in PitchBook leaderboards for active investors in categories such as healthcare devices & supplies, women’s health, pharma and biotech.

The 16 New Health 100

All the new companies in the Health 100 are at the seed stage; 9 of them were founded in 2020 or later.

  • Afynia (Canada): The first diagnostic blood test for Endometriosis
  • Cell Bioengines (US): ‘Off-the-Shelf’ Cell Therapies to Cure Cancer.
  • DropGenie (Canada): Accelerating the pace of drug discovery through automated gene editing workflows
  • HelEx (US): Re-shaping gene editing drug design by leveraging nature’s own operating system- the epigenome,
  • Kinexcs (Singapore): AI-driven digital therapy platform & wearables empowering recovery and mobility
  • LightHearted AI (UK): AI-based diagnostics device offering faster, accurate, and affordable solutions for the detection of heart conditions.
  • MedIQ (Pakistan): Integrated virtual care platform providing on-demand healthcare at the point of need.
  • Neuroqore (US): Developing neuromodulation treatments for various neurobehavioral conditions using rTMS (Repetitive Transcranial Magnetic Stimulation)
  • Oli Technologies (US): Helping kidney disease patients see better outcomes at lower costs via portable dialysis devices.
  • OpenShelf (US): Provides flexible “vending machine”-like robots that manage inventory for thousands of unique contact lenses.
  • Portable Diagnostic Systems (US): Microfluidics-based drug testing platform for law enforcement.
  • Rizlab Health Diagnostics (US): A handheld device that allows clinicians to test patient white-blood cell counts in minutes.
  • TippingPoint (US): Attacking cancer with a platform that makes genome packaging states druggable.
  • Unlocked Labs (US): Probiotics with an enhanced ability to biodegrade toxins that are the root causes of serious chronic conditions.
  • ViAn Therapeutics (US): Ophthalmology pharma startup combating microvascular retinal diseases (AMD and DME) with a simple eye drop.
  • Vitarka Therapeutics (UK): Developing RNAi therapies and a non-viral delivery platform technology to activate the immune system and normalize tumor vasculature

The VC-Founder Health Tech Matchup

The health category may be little better than flat year-on-year, but SOSV’s second annual VC-Founder Health Tech Matchup, produced results consistent with a very vibrant category. There were 1092 participants (416 investors and 676 founders) for the free, online event, which took place over the past two weeks, and those folks took approximately 1,500 founder-investor meetings. Year-on-year, matchup registrations were up 52% and meetings up 134%. Some of that energy may derive from the wave of AI-based technologies moving through the health sector: 63% of founders reported that AI was now playing a significant role in their work.

The 2024 Human Health 100

Checkout Sensill @ VCCross.com at the following page:

https://vccross.com/primary/sensill 

Google-backed Anthropic debuts its most powerful chatbot yet, as generative AI battle heats up

Macro Tech Titan on March 4, 2024

From CNBC:

  • Anthropic on Monday debuted Claude 3, a chatbot and suite of AI models that it calls its fastest and most powerful yet.
  • The company, founded by ex-OpenAI research executives, has backers including Google, Salesforce and Amazon, and closed five different funding deals over the past year, totaling about $7.3 billion.
  • The new chatbot has the ability to summarize up to about 200,000 words, or a lengthy book, compared to ChatGPT’s ability to summarize about 3,000. Anthropic is also allowing image and document uploads for the first time.

Anthropic on Monday debuted Claude 3, a suite of artificial intelligence models that it says are its fastest and most powerful yet. The new tools are called Claude 3 Opus, Sonnet and Haiku.

The company said the most capable of the new models, Claude 3 Opus, outperformed OpenAI’s GPT-4 and Google’s Gemini Ultra on industry benchmark tests, such as undergraduate level knowledge, graduate level reasoning and basic mathematics.

This is the first time Anthropic has offered multimodal support. Users can upload photos, charts, documents and other types of unstructured data for analysis and answers.

The other models, Sonnet and Haiku, are more compact and less expensive than Opus. Sonnet and Opus are available in 159 countries starting Monday, while Haiku will be coming soon, according to Anthropic. The company declined to specify how long it took to train Claude 3 or how much it cost, but it said companies like Airtable and Asana helped A/B test the models.

This time last year, Anthropic was seen as a promising generative AI startup founded by ex-OpenAI research executives. It had completed Series A and B funding rounds, but it had only rolled out the first version of its chatbot without any consumer access or major fanfare.

Twelve months later, it’s one of the hottest AI startups, with backers including Google, Salesforce and Amazon, and a product that directly competes with ChatGPT in both the enterprise and consumer worlds. Over the past year, the startup closed five different funding deals, totaling about $7.3 billion.

The generative AI field has exploded over the past year, with a record $29.1 billion invested across nearly 700 deals in 2023, a more than 260% increase in deal value from a year earlier, according to PitchBook. It’s become the buzziest phrase on corporate earnings calls quarter after quarter. Academics and ethicists have voiced significant concerns about the technology’s tendency to propagate bias, but even so, it’s quickly made its way into schools, online travel, the medical industry, online advertising and more.

Between 60 and 80 people worked on the core AI model, while between 120 and 150 people worked on its technical aspects, Anthropic co-founder Daniela Amodei told CNBC in an interview. For the AI model’s last iteration, a team of 30 to 35 people worked directly on it, with about 150 people total supporting it, Amodei told CNBC in July.

Anthropic said Claude 3 can summarize up to about 150,00 words, or a sizeable book (think: around the length range of “Moby Dick” or “Harry Potter and the Deathly Hallows”). Its previous version could only summarize 75,000 words. Users can input large data sets, and ask for summaries in the form of a memo, letter or story. ChatGPT, by contrast, can handle about 3,000 words.

Amodei also said Claude 3 has a better understanding of risk in responses than its previous version.

“In our quest to have a highly harmless model, Claude 2 would sometimes over-refuse,” Amodei told CNBC. “When somebody would kind of bump up against some of the spicier topics or the trust and safety guardrails, sometimes Claude 2 would trend a little bit conservative in responding to those questions.”

Claude 3 has a more nuanced understanding of prompts, according to Anthropic.

Multimodality, or adding options like photo and video capabilities to generative AI, whether uploading them yourself or creating them using an AI model, has quickly become one of the industry’s hottest use cases.

“The world is multimodal,” OpenAI COO Brad Lightcap told CNBC in November. “If you think about the way we as humans process the world and engage with the world, we see things, we hear things, we say things — the world is much bigger than text. So to us, it always felt incomplete for text and code to be the single modalities, the single interfaces that we could have to how powerful these models are and what they can do.”

But multimodality, and increasingly complex AI models, also lead to more potential risks. Google recently took its AI image generator, part of its Gemini chatbot, offline after users discovered historical inaccuracies and questionable responses, which have circulated widely on social media.

Anthropic’s Claude 3 does not generate images; instead, it only allows users to upload images and other documents for analysis.

“Of course no model is perfect, and I think that’s a very important thing to say upfront,” Amodei told CNBC. “We’ve tried very diligently to make these models the intersection of as capable and as safe as possible. Of course there are going to be places where the model still makes something up from time to time.”

Clarification: Anthropic clarified with CNBC that Claude 3 can summarize about 150,000 words, not 200,000.

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Comparison of Equity Crowdfunding and Venture Capital Funding For Startups

Macro Tech Titan on March 2, 2024

From Colonial Stock:

Choosing the right funding source is pivotal for startups, impacting their growth, control, and future success. While venture capital (VC) has been a coveted source of startup financing for a long time, equity crowdfunding, especially under Regulation Crowdfunding (Reg CF), has quickly risen in popularity. It is crucial to explore the complexities and nuances of both options so that startups can make informed decisions.

Startup financing is the fuel that powers the generation of new ideas into tangible products and services. Venture capital and equity crowdfunding are distinct options, each with its own set of rules, expectations, and ecosystems. VC funding offers significant capital injection but at a cost of equity and, often, operational control.

On the other hand, equity crowdfunding democratizes the investment process, allowing a broader base of investors to participate in a startup’s growth journey. The right choice for one startup is not necessarily the right choice for another, and it is crucial for each startup to consider its current financial situation and long-term goals.

Startup Funding: What are the New Trends?

Equity crowdfunding under Regulation Crowdfunding (Reg CF) allows startups to raise capital directly from the public, with individuals investing small to medium amounts of money. This regulation, part of the JOBS Act, was designed to ease securities laws, making it more straightforward for startups to access funding while providing investors with a share in potential success. Reg CF has democratized investing and opened up a new vein of capital for startups, bypassing traditional gatekeepers like banks and venture capitalists.

Venture capital funding is a form of private equity investment provided by venture capital firms or individual investors to startups and small businesses with strong growth potential. This financing is about both the investment and a partnership where venture capitalists often provide strategic guidance, networking opportunities, and operational expertise. In exchange for their investment, VCs receive equity in the company, betting on the company’s future success to earn a substantial return.

The allure of equity crowdfunding lies in its ability to leverage the power of countless smaller investors, offering startups a platform to connect with potential supporters, customers, and advocates simultaneously. It’s a pathway that fosters community engagement, broadens the investor base, and enhances brand visibility. In addition, Reg CF caps the amount a startup can raise in a 12-month period at $5 million, ensuring a level of protection for new investors while allowing startups to validate their business model.

The rise of equity crowdfunding is underscored by compelling statistics that demonstrate its growing acceptance and success among startups. According to statistics published by Yahoo Finance, equity crowdfunding doubled from Q4 2022 to Q1 2023. The Q4 2022 data released shows Reg CF raising more than $80 million. In addition, an article published by Fundera showed that funds raised through crowdfunding jumped by more than 33 percent from 2022 to 2023. While there are numerous crowdfunding platforms out there, the top platform generated close to $172.8 million from more than 140,000 investors.

These numbers clearly show that equity crowdfunding is growing in popularity. Therefore thousands of investors looking to back companies, and it presents an attractive option for startups looking to raise more capital.

The process of securing venture capital is highly competitive, requiring startups to have a compelling business model, a strong team, and a clear path to significant growth. VCs are looking for the potential for high returns, which means they often take a substantial stake in the company. This infusion of capital can propel rapid growth, but it also means founders may have to cede a significant portion of their company and sometimes control over business decisions.

Equity Crowdfunding vs. Venture Capital

Several key differences appear when comparing equity crowdfunding and venture capital. Venture capital typically involves larger sums of money and requires giving up a more substantial stake in the company, often with specific expectations regarding control and decision-making.

Equity crowdfunding, however, allows for a broader base of investors to contribute smaller amounts of capital, potentially reducing the need to relinquish large portions of equity or control.

Feature Equity Crowdfunding Venture Capital
Investment Size Generally smaller amounts from a wide investor base Large sums from a select group of investors
Equity Required Lower (investors are willing to pay a higher share price); allows for a wider distribution of shares Higher (VCs require a low share price); often requires giving up a larger percentage of your company
Investor Profile Broad, including non-professional investors Professional, experienced investors or firms
Involvement in Operations Typically minimal High; often involves board representation
Timeline for Funding Can be quicker, depending on campaign success Longer, due to due diligence processes
Access to Additional Resources Limited compared to VC Extensive, including networks and expertise
Regulatory Requirements Subject to Reg CF limits and disclosures Less regulated, but involves complex negotiations; Reg D offering applies

Pros and Cons of Equity Crowdfunding

Equity crowdfunding provides access to a wide pool of investors, potentially increasing the startup’s visibility and customer base. This mode of funding is also more inclusive, allowing startups to raise capital without having to fit the stringent criteria often required by venture capitalists. However, it has the potential for dilution of ownership if not managed carefully with a cap on the amount that can be raised. This might limit growth potential for startups with larger capital needs.

Pros:

  • Broader Access to Capital: Opens up funding to a wider audience, not limited to traditional investors.
  • Market Validation and Community Building: Allows startups to gauge market interest and build a community of supporters and customers through your crowdfunding campaign.
  • Increased Visibility: Campaigns can double as marketing, increasing brand awareness.
  • Flexibility: Offers startups more control over the amount of equity they offer.

Cons:

  • More Investor Relations: With more investors, comes more support required to help them.  Colonial Stock specializes in Crowdfunding Transfer Agent Services to provide such support.
  • Funding Cap: Reg CF limits the amount that can be raised to $5mm, potentially restricting funding.
  • Regulatory Hurdles: Requires navigating SEC regulations and compliance requirements, but the process isn’t that bad according to Colonial. Request Information on your Reg CF Offering.

Pros and Cons of Venture Capital Funding

Venture capital funding is renowned for the significant resources it can bring to a startup, not just in terms of capital but also strategic guidance and networks. The mentorship from experienced investors can be invaluable, and the large sums of money can fuel rapid growth. However, this comes with the cost of potentially losing a significant portion of equity and control.

Pros:

  • Large Amounts of Capital: Enables significant growth and scaling.
  • Mentorship and Expertise: Access to the investor’s knowledge, network, and resources.
  • Credibility: Association with known VCs can enhance a startup’s market position.
  • Strategic Assistance: Beyond capital, VCs often provide operational, strategic, and networking support.

Cons:

  • Equity and Control Loss: Founders often have to give up a significant portion of their company.
  • High Expectations: Pressure to perform and deliver rapid growth can be intense.
  • Selective Process: Very competitive, with a focus on high-growth potential businesses.
  • Risk: VCs have been known to take controlling stakes including moving founders out.

Why Equity Crowdfunding Wins

In the end, equity crowdfunding’s advantages extend beyond the capital raised, fostering a community of investors who are genuinely interested in the startup’s success. Equity crowdfunding embodies the future of startup financing, bridging the gap between innovative ideas and the capital necessary to bring them to life. Its rise signals a shift towards more equitable, transparent, and accessible funding mechanisms, heralding a new era of entrepreneurship fueled not by the few but by the many.

Growth Hacker is the new VP Marketing – The rise of the Growth Hacker

Macro Tech Titan on February 27, 2024

From AndrewChen.com:

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The rise of the Growth Hacker
The new job title of “Growth Hacker” is integrating itself into Silicon Valley’s culture, emphasizing that coding and technical chops are now an essential part of being a great marketer. Growth hackers are a hybrid of marketer and coder, one who looks at the traditional question of “How do I get customers for my product?” and answers with A/B tests, landing pages, viral factor, email deliverability, and Open Graph. On top of this, they layer the discipline of direct marketing, with its emphasis on quantitative measurement, scenario modeling via spreadsheets, and a lot of database queries. If a startup is pre-product/market fit, growth hackers can make sure virality is embedded at the core of a product. After product/market fit, they can help run up the score on what’s already working.

This isn’t just a single role – the entire marketing team is being disrupted. Rather than a VP of Marketing with a bunch of non-technical marketers reporting to them, instead growth hackers are engineers leading teams of engineers. The process of integrating and optimizing your product to a big platform requires a blurring of lines between marketing, product, and engineering, so that they work together to make the product market itself. Projects like email deliverability, page-load times, and Facebook sign-in are no longer technical or design decisions – instead they are offensive weapons to win in the market.

The stakes are huge because of “superplatforms” giving access to 100M+ consumers
These skills are invaluable and can change the trajectory of a new product. For the first time ever, it’s possible for new products to go from zero to 10s of millions users in just a few years. Great examples include Pinterest, Zynga, Groupon, Instagram, Dropbox. New products with incredible traction emerge every week. These products, with millions of users, are built on top of new, open platforms that in turn have hundreds of millions of users – Facebook and Apple in particular. Whereas the web in 1995 consisted of a mere 16 million users on dialup, today over 2 billion people access the internet. On top of these unprecedented numbers, consumers use super-viral communication platforms that rapidly speed up the proliferation of new products – not only is the market bigger, but it moves faster too.

Before this era, the discipline of marketing relied on the only communication channels that could reach 10s of millions of people – newspaper, TV, conferences, and channels like retail stores. To talk to these communication channels, you used people – advertising agencies, PR, keynote speeches, and business development. Today, the traditional communication channels are fragmented and passe. The fastest way to spread your product is by distributing it on a platform using APIs, not MBAs. Business development is now API-centric, not people-centric.

Whereas PR and press used to be the drivers of customer acquisition, instead it’s now a lagging indicator that your Facebook integration is working. The role of the VP of Marketing, long thought to be a non-technical role, is rapidly fading and in its place, a new breed of marketer/coder hybrids have emerged.

Airbnb, a case study
Let’s use case of Airbnb to illustrate this mindset. First, recall The Law of Shitty Clickthroughs:

Over time, all marketing strategies result in shitty clickthrough rates.

The converse of this law is that if you are first-to-market, or just as well, first-to-marketing-channel, you can get strong clickthrough and conversion rates because of novelty and lack of competition. This presents a compelling opportunity for a growth team that knows what they are doing – they can do a reasonably difficult integration into a big platform and expect to achieve an advantage early on.

Airbnb does just this, with a remarkable Craigslist integration. They’ve picked a platform with 10s of millions of users where relatively few automated tools exist, and have created a great experience to share your Airbnb listing. It’s integrated simply and deeply into the product, and is one of the most impressive ad-hoc integrations I’ve seen in years. Certainly a traditional marketer would not have come up with this, or known it was even possible – instead it’d take a marketing-minded engineer to dissect the product and build an integration this smooth.

Here’s how it works at a UI level, and then we’ll dissect the technology bits:

(This screenshots are courtesy of Luke Bornheimer and his wonderful answer on Quora)

Looks simple, right? The impressive part is that this is done with no public Craigslist API! It turns out, you have to look closely and carefully at Craigslist in order to accomplish an integration like this. Note that it’s 100X easier for me to reverse engineer something that’s already working versus coming up with the reference implementation – and for this reason, I’m super impressed with this integration.

Reverse-engineering “Post to Craigslist”
The first thing you have to do is to look at how Craigslist allows users to post to the site. Without an API, you have to write a script that can scrape Craigslist and interact with its forms, to pre-fill all the information you want.

The first thing you can notice from playing around with Craigslist is that when you go to post something, you get a unique URL where all your information is saved. So if you go to https://post.craigslist.org you’ll get redirected to a different URL that looks like https://post.craigslist.org/k/HLjRsQyQ4RGu6gFwMi3iXg/StmM3?s=type. It turns out that this URL is unique, and all information that goes into this listing is associated to this URL and not to your Craigslist cookie. This is different than the way that most sites do it, where a bunch of information is saved in a cookie and/or server-side and then pulled out. This unique way of associating your Craigslist data and the URL means that you can build a bot that visits Craigslist, gets a unique URL, fills in the listing info, and then passes the URL to the user to take the final step of publishing. That becomes the foundation for the integration.

At the same time, the bot needs to know information to deal with all the forms – beyond filling out the Craigslist category, which is simple, you also need to know which geographical region to select. For that, you’d have to visit every Craigslist in every market they serve, and scrape the names and codes for every region. Luckily, you can start with the links in the Craiglist sidepanel – there’s 100s of different versions of Craigslist, it turns out.

If you dig around a little bit you find that certain geographical markets are more detailed than others. In some, like the SF Bay Area, there’s subareas (south bay, peninsula, etc.) and neighborhoods (bernal, pacific heights) whereas in other markets there’s only subareas, or there’s just the market. So you’d have to incorporate all of that into your interface.

Then there’s the problem of the listing itself – by default, Craigslist works by giving you an anonymous email address which you use to communicate to potential customers. If you want to drive them to your site, you’d have to notice that you can turn off showing an email, and just provide the “Contact me here” link instead. Or, you could potentially fill a special email address like listing-29372@domain.com that automatically directs inquiries to the right person, which can be done using services like Mailgun or Sendgrid.

Finally, you’ll want the listing to look good – it turns out Craigslist only supports a limited amount of HTML, so you’ll need to work to make your listings work well within those constraints.

Completing the integration is only the beginning – once it’s up, you’d have to optimize it. What’s the completion % once sometime starts sharing their listing out to Craigslist? How can you change the flow, the call to action, the steps in the form, to increase this %? And similarly, when people land from Craigslist, how do you make sure they are likely to complete a transaction? Do they need special messaging?

Tracking all of this requires additional work with click-tracking with unique URLs, 1×1 GIFs on the Craigslist listing, and many more details.

Long story short, this kind of integration is not trivial. There’s many little details to notice, and I wouldn’t be surprised if the initial integration took some very smart people a lot of time to perfect.

No traditional marketer would have figured this out
Let’s be honest, a traditional marketer would not even be close to imagining the integration above – there’s too many technical details needed for it to happen. As a result, it could only have come out of the mind of an engineer tasked with the problem of acquiring more users from Craigslist. Who knows how much value Airbnb is getting from this integration, but in my book, it’s damn impressive. It taps into a low-competition, huge-volume marketing channel, and builds a marketing function deeply into the product. Best of all, it’s a win-win for everyone involved – both the people renting out their places by tapping into pre-built demand, and for renters, who see much nicer listings with better photos and descriptions.

This is just a case study, but with this type of integration, a new product is able to compete not just on features, but on distribution strategy as well. In this way, two identical products can have 100X different outcomes, just based on how well they integrate into Craigslist/Twitter/Facebook. It’s an amazing time, and a new breed of creative, technical marketers are emerging. Watch this trend.

So to summarize:

  • For the first time ever, superplatforms like Facebook and Apple uniquely provide access to 10s of millions of customers
  • The discipline of marketing is shifting from people-centric to API-centric activities
  • Growth hackers embody the hybrid between marketer and coder needed to thrive in the age of platforms
  • Airbnb has an amazing Craigslist integration

Good luck, growth hackers!

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Healthtech 2024: Voices in My Head…

Macro Tech Titan on February 19, 2024

From Michael Greely – On the Flying Bridge

What is going on? The stock market just hit an all-time high and yet nearly everywhere one looks, there are flashing warning signs. A review of the 2023 investment activity suggests there will be continued challenges in the capital markets. Clearly, the bulls look to the $8.8 trillion in money market funds and conclude that as interest rates continue to fall much of that capital will rotate back into risk assets. Today, U.S. household net worth is over $152 trillion. But it still feels so schizophrenic.

Data: FactSet. Chart: Axios Visuals

But first some of the troubling indicators not to be ignored, to say nothing of the numerous global hot spots now. The World Bank recently concluded that the global economy just suffered its worst 5-year stretch over the last three decades, and now forecasts only 2.4% economic growth in 2024. The analysis concludes that the 24 lowest income earning countries are at “crisis levels,” which will acutely exacerbate global immigration issues. The “low/middle” income countries have economic activity that is at least 5% below pre-pandemic levels.

The Federal Reserve incurred a 2023 operating loss of $114.3 billion, its largest in its 109-year history. Moody’s noted that global bond defaults spiked to a trailing twelve-month average of 4.8%, which does not even start to account for the $117 billion of U.S. commercial real estate debt that must be refinanced in 2024 – perhaps the greatest near-term potential systemic contagion. U.S. office vacancy rate just touched 19.6%, the highest level since the late 1960s when Moody’s started to track these data.

The London Stock Exchange concluded that the global M&A activity of $2.9 trillion of 2023 transaction volume was the first time in ten years that activity fell below $3.0 trillion. This level was 17% below 2022 (6% decline in the U.S.), with financial sponsor activity down by nearly 30%.

Not surprisingly, these conditions directly impacted investment activity in the private equity and venture capital sectors in 2023, which was markedly down across the board. Notwithstanding that there is an estimated $2.6 trillion in dry powder in private funds according to S&P Global Market Intelligence, a fundamental issue was the lack of exits which was less than 7.6% of total assets under management in 2023, the lowest level yet.

Source: Blackrock 2024 Private Markets Outlook.

The venture capital investment activity in 2023 declined sharply to $170.6 billion in 15,766 companies (average round size of $10.8 million), as compared to $242.2 billion in 17,592 (average round size of $13.8 million) in 2021, underscoring the significant retrenchment. Notwithstanding that, 2023 still looks to be the third highest year on record and clearly appears to be putting the industry back on long-term historical trend. Notably, though, approximately 10% of the 2023 investment was in just two AI companies (OpenAI, Anthropic); an estimated 33% of all venture capital investment last year was in AI companies. Additionally, Pitchbook estimated that the number of active venture firms (through 3Q23) declined by 38%, suggesting that there is continued consolidation of both companies that receive venture capital and of the firms themselves.

Source: Pitchbook/National Venture Capital Association.

Obviously, geopolitical issues materially influence investor sentiment in 2023. According to a recent analysis by the Financial Times, globally the backlog of all defense industry companies amounted to $777.6 billion in 2022, which has only significantly increased given issues in the Middle East and is nearly 3x the $248.4 billion of venture capital invested globally. A very sad commentary.

Pitchbook estimates that there are now 54k venture-backed U.S. companies with over 4k having raised their first round of capital in 2023. While there were declines across all stages, the early-stage category (23% of total) dropped significantly and is now below pre-pandemic levels. The average round size dropped from $20.0 million to $15.4 million and average pre-money valuations fell from $122.4 million to $82.0 million from 2022 to 2023, respectively. Average late-stage pre-money valuations only dropped from $258.3 million in 2022 to $240.7 million last year.

Two things make the venture capital industry go round: massive success stories and limited losses, which there will always be in this risky corner of the private capital markets. The overall exit activity was, quite frankly, dismal. There was $61.5 billion of exits across 1,129 transactions, which is the lowest level since 2010 and nowhere near the $796.8 billion in 2021. The sharp rise in interest rates over the last two years dramatically curtailed the number of new unicorns according to an interesting longitudinal study by Cowboy Ventures and led to a spike in bankruptcies of private capital backed companies. According to CB Insights, globally there are now 1,224 unicorns valued at just under $3.8 trillion; approximately 720 of which are based in the U.S.

Source: Cowboy Ventures.

There is consistently a lag between public and private market valuations, and while much of the exit activity is labeled “terms not disclosed,” there is heightened anxiety that 2024 will see more pain revealed as venture-backed companies simply run out of money. There is also a shadow level of investment activity that goes unreported as investor syndicates provide modest levels of support (1-3 quarters) to bridge to an exit. Arguably, 4Q23 was littered with many such financings that may have only delayed the inevitable. Research by S&P Global Market Intelligence showed a spike in bankruptcy filings in 2023 to 104 of privately financed portfolio companies which was nearly 3x the 2022 level and the greatest volume ever recorded.

Source: S&P Global Market Intelligence

Not surprisingly then, the level of initial public offerings over the last two years has been uninspiring, and largely accounts for how backed up the system is now. According to the same S&P Global Market Intelligence report, there were 370 IPOs launched globally in 4Q23 (only 26 in the U.S.) which was markedly down from the 921 in the same quarter two years ago. For the year, there were 1,429 IPOs globally.

Source: S&P Global Market Intelligence

These crosscurrents net out to possibly troubling signs for entrepreneurs as 2024 starts to unfold. Notwithstanding falling interest rates, the lack of exit liquidity has made fundraising harder for venture capital firms. In total, there were 474 funds which raised $66.9 billion in 2023, which were both down from the 1,340 funds and $172.8 billion in 2022 (which was essentially the same activity in 2021). Given the extraordinary level of investment activity in 2021 – 2022, the pace of expected follow-on rounds starting in mid-2023 likely has moved the venture capital industry into a position of being “undersupplied.” This has been exacerbated by the pull-back of cross-over non-traditional investors in venture capital deals, many of which drove the frothy large late-stage rounds of the past few years.

Source: Pitchbook.

Given this transition period, an interesting debate has taken hold about the optimal size of venture funds, which is somewhat determined by expected exit valuations for successful investments. Over the last ten years of Pitchbook data, the average exit valuation across nearly 14k reported transactions was approximately $150 million, while a recent analysis by Sante Ventures concluded that most exited venture-backed portfolio companies are at valuations below $400 million. Last year the average exit valuation was $54 million, while the highwater mark of $400 million was in 2021.

A review of 40 years’ worth of Pitchbook returns data concluded that outsized returns (greater than 2.5x of paid-in capital) tend to accrue to mid-sized funds, and yet the industry continues to be an arms race to raise ever larger funds, further concentrating the number of investors in larger firms. Successful funds tend to correlate with greater ownership stakes in the underlying portfolio companies, and that while companies that raise large “mega rounds” (greater than $100 million) tend to have higher likelihood for an IPO, in times when that path is closed, generating venture returns can be quite challenging. Nearly half of all venture capital commitments through 3Q23 were to funds greater than $500 million in size.

Source: Pitchbook.

The digital health sector was not insulated from the downdraft in activity in 2023. According to Rock Health, overall investment activity was $10.7 billion in 492 companies, down from $15.3 billion and 577 companies in 2022 and nearly one-third of the $29.2 billion in 2021. And yet, 2023 was well ahead of the ten-year trendline and represented a relatively robust level of activity given the environment.

More troubling has been the reduction in funding for healthcare technology unicorns, given the imperative to be at least cash flow positive, if not generating free cash flow and self-funding. According to Pitchbook, over the past three years $18.1 billion has been invested in such companies, but only $1.2 billion of that amount was in 2023. Pitchbook tallies 70 venture-backed active healthcare technology unicorns which have raised $31 billion in aggregate and are currently valued at $173 billion, representing a pipeline of possible IPO candidates when that market re-opens.

In this “Efficiency Phase” of this financing cycle, when the healthcare technology sector is likely to consolidate around emerging winners that have developed products that drive near-term hard ROIs, the financing dynamics are very complicated. Rock Health reported that 44% of rounds in 2023 were “unlabeled,” suggesting a significant level of defensive insider bridge financing. M&A activity declined by 23% in 2023 from 2022 with 146 announced transactions, while there were literally zero IPOs in the sector (and only one in the past 24 months).

More broadly, Refinitiv reported that there was $140 billion of private equity investments in the healthcare sector over the past five years, although Pitchbook determined that private equity activity in 2023 declined by 60%. There was also a record number of “large” bankruptcies last year in healthcare, up 5x from 2022, according to BankruptcyData.com.

Notwithstanding continued funding headwinds this year in the healthcare technology sector, the needs have never been as evident or acute. The Institute for Health Metrics and Evaluation’s Global Burden of Disease study released recently determined that the proportion of life that is characterized as being “in good health” declined from 85.8% to 83.6% over the last 30 years, likely equating to one year lost. Healthcare technology is the great democratizing force to bring appropriate and timely care to all.

Source: James Bailey (2019 data).

Interestingly, a review of healthcare spending as a percent of GDP shows an extraordinary variance by state. Certain states, such as West Virginia, spend nearly 25% of its GDP on healthcare services, and therefore, could be important geographies that should realize the greatest benefits through concerted investment in healthcare technologies to reduce costs, lower barriers to care, and presumably improve outcomes and address issues of equity.

Obviously, government policies also matter. The Kaiser Family Foundation projects that between 8 – 24 million people will lose Medicaid coverage this year, which would likely upend many of these state’s budgets.

Given severe downward pressure on healthcare companies due to labor issues, pressure on reimbursements and payments, and financing environment, the recent investments in technology are expected to drive fundamental improvements in operating cost structures. Greater automation is expected to reduce operating complexity over time.

The recent advancements in AI capabilities, including improvements that mimic human reasoning, cognition, and task completion, have created compelling investment opportunities. These advances are manifest in the physical world through intelligent hardware platforms for novel devices such as robots that address problems outside the digital world. New AI-powered image generators will provide photos, charts, and video content seamlessly into clinical and administrative workflows.

Technology advances today are occurring more rapidly than at any point in history. Whenever there have been such dramatic transitions in technology platform shifts, existing enterprises become more efficient and competitive, but these shifts have also introduced new capabilities and product offerings previously unimaginable.

Source: Silicon Valley Bank.

While the prospects for investment returns in the healthcare technology sector in the short term are confusing, the overall Leerink Healthtech index is currently trading at 3.1x 2024 revenues with an overall market capitalization of $111 billion. The Digital Health subsector is trading at 3.4x forward revenues, representing nearly 70% of the overall valuation, and is trading at a heady 19.9x forward EBITDA multiple.  According to the Wall Street Journal tracker of leading indices in 2023, cocoa was on top of the leader board with a 61.4% return. Next up was the S&P500 Information Technology index at 56.4%, while the Argentine peso was dead last at (78.1)%.

This year may be tricky for Argentinian digital health companies looking to go public…

Checkout Venture Capital Cross for Disruptive Paradigm Shift deals

Keys to Fundraising Success – 3 things that investors look for

Macro Tech Titan on February 17, 2024

We asked investors what are the most important things you look for in a founder/startup, and these 3 things kept coming to the top of the list:

  • Is this business scalable?  It works for a certain group of people, but can the business be increased by 1000% or 10,000% and the same economics will work?
  • Does this technology or business model fundamentally change the industry it’s in?  Some refer to this as a Blue Ocean, or creating new markets.
  • Does the business plan incorporate for problems they may face down the road like large competitors, existing Monopolies, regulatory/legal challenges, etc.?

Of course, there are many factors that are looked at including the team, background, market sentiment, and many others.

Open an account at Venture Capital Cross and checkout disruptive early stage startups like Sensill, who has a patented Real Time Diagnostics Point of Care system saving money and saving lives.