Pulse of Fintech Q2 2016. Robotics startups market map. Guest post on the value of CVC.
I like my VCs wealthy

Hi there,

We love graphs at CB Insights. 

We unfortunately don't love this graph.

We also love...

Reports full of graphs. We just released our 92-page Q2 2016 Pulse of Fintech Report with KPMG. The analysis covers the latest trends in venture-backed fintech companies globally.

Check out a few highlights scattered below.

Blasphemy startup doesn't have exit strategy

"What's your exit strategy?"

We occasionally get this question from members of our team or from folks we're interviewing. Or from randoms who think it's a question that makes them sound smart.

The cold hard reality is we don't have an exit strategy

For fellow founders/investors, I'd love to hear your thoughts on this topic especially if you think I'm wrong.

Focusing on the exit always makes me think of this guy btw.

How low can you go

Funding to VC-backed fintech companies dropped 49% on a quarterly basis in Q2’16, while deal activity fell 12% from Q1’16’s total.

Too bot to handle

We identified over 80 robotics startups that have raised equity funding rounds since January 2013. A majority of the startups on the map below have VC backing and the map excludes drones and driverless cars.

Wealthier VCs are good for Northwest Arkansas?

In yesterday's Termsheet newsletter by Dan Primack (see The Blurb below), Dan discussed carried interest and the plans by US presidential candidates to raise investment taxes on gains by VC, PE, and hedge fund investors.

First, let me say that I really have no opinion on this subject. Selfishly speaking, wealthy VC, PE, and hedge fund investors are probably good for our business, but I'm not convinced this has any material impact either way.

Back to the story.

As you'd expect, The National Venture Capital Association
— which is the lobbying group for VCs — is against raising taxes on their members.

That makes total sense. They should argue on behalf of their constituents.

However, I do think the arguments that either side makes in this debate should pass a basic smell test and align with the data, when available.

One of the arguments by the NVCA is that "
It’s already hard for an entrepreneur in Northwest Arkansas, for example, to find venture investment. Why would we want to make it even harder?”

This is where the NVCA argument is a bit specious/spurious. 

Here's why.

In 2016, there have been 2 VC deals in Arkansas (not including angel deals
just institutional VC). One was a growth equity round and the other was done by a corporate VC.

The point being that VCs aren't beating down the door to invest in Northwest Arkansas today and this is with what some consider favorable tax treatment. Drawing any sort of causality between carried interest and investment in underserved areas is a great talking point, but it is misdirection.

Here is more data. Since 2010, VC deals in the US have actually gotten more concentrated in the 3 main VC hubs (CA, NY, and MA).

Sorry Arkansas.

Deals with the devil?

At our recent Future of Fintech conference, Fred Wilson of USV criticized corporate venture capital investment and shared his beliefs that corporations should just buy companies.

In this guest post, Kumar Shah (@kumarshah), global head of M&A and strategy at Micromax, takes an opposing stance and dives into why corporations may or may not want to acquire a business outright, and instead, be a minority investor.

Speaking of corporates

Corporate participation in VC-backed fintech deals rose to the 5-quarter high and surpassed the 30% mark in Q2’16 to hit 32% compared to 23% in Q2’15.

The Industry Standard

CB Insights data is the most trusted by those in the industry and the media. A few recent hits.

Business Insider. Tina Wadhwa (@twad84) interviewed CB Insights CEO and co-founder Anand Sanwal for this widely shared article on the future of Wall Street.

Tech City News. Yessi Bello Perez (yessi_kbello) wrote one of 10+ articles covering Wednesday’s release of the Pulse of Fintech report by CB Insights and KPMG.

Wall Street Journal. Dan Gallagher (@djtgallagher) uses CB Insights funding data in this column on trends in cybersecurity investing.

CNBC. Harriet Taylor (@Harri8t) reports on Intel’s new VR headset, citing CB Insights data showing increased funding to AR and VR startups.

Have a great rest of the week. 

I love you.


P.S. It's almost time for our CVC Briefing. Which side are you on? Make a data-driven decision.

Geographic Spotlight
Silicon Valley doesn't have a monopoly on innovation. Here's a look at startups, emerging industries, and deals elsewhere in the US and the world.

Portland, Oregon is home to Puppet Labs, an IT automation startup with a number of notable investors including Cisco Investments, Google Ventures, and Kleiner Perkins Caufield and Byers. The City of Roses is also known for companies including Simple, an online banking startup acquired by BBVA and Cascade Microtech, a semiconductor test equipment manufacturer acquired by FormFactor this past June. There were over 20 deals to VC-backed companies in Portland in 2016 year-to-date. Here is a look at the 5 largest.
  • Vacasa, a rental management company, raised a $35M Series A.
  • Puppet Labs secured a $22M Line of Credit.
  • Cedexis, provider of cloud performance monitoring and optimization, raised a $22M Series B.
  • AbSci, a company focused on protein production technologies, raised a $5.1M Series A.
  • ID Experts, developers of cybersecurity products and services, raised a $5M Series A.

The Pulse of Fintech Report, Q2 2016

KPMG and CB Insights' Q2 2016 fintech report highlights the latest trends in venture-backed fintech companies globally. Get the report.
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Robot startups working in factories, homes, and hospitals

Smart money VCs have been active in funding notable robotics startups in the last few years. See the market map.
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A corporate venture capitalists speaks up for the value of CVC

A rebuttal to critics of corporate venture investing, from the global head of M&A and strategy at India's Micromax. See this guest post.
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The Blurb

A curated mix of articles on private companies, venture capital, emerging industries, and innovation.

The 2% change. Brad Feld (@bfeld) says if you want to improve your business, in addition to all other things you are doing, focus on changing things by 2%.
Feld Thoughts

Bots in the wild. Tim Devane (@tdevane) digs into the emergence of bots and why major tech companies and startups have decided to release these products now.
Startup Traction

Crumbling infrastructure. Albert Wenger (@albertwenger) on the Long Island Railroad's poor infrastructure and how we should be spending to fix our bridges, tunnels, roads, tracks, and airports, especially for an autonomous vehicle-filled future.

This is your life in Silicon Valley. Sunil Rajaraman (@subes01) provides a satirical perspective on what life is like in Silicon Valley.

Debt is the tiger that will eat your company. Ray Zinn (@ray_zinn_) on the subject of raising debt.

2016 vs 2006. From smartphones to social networking to transportation, and more, Loic Le Meur (@loic) digs into the differences in technology between today and 10 years ago.
LinkedIn Pulse

The new case against Clinton's and Trump's War on Carried Interest. Dan Primack (@danprimack) details the arguments by the NVCA against raising taxes on investment profits earned by VC, PE and hedge fund investors.
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