Gm. They don't call it adventure capital for nothing.

FRESH POWDER

Looking at three funds that recently topped up their coffers.

VC 

Venture Capital Hits A Dry Spell

At the surface, Q3 appeared to be the end of this recent golden age of venture capital. How else can you interpret a 53% year-over-year and 33% quarter-over-quarter decrease? 

So, does this mean new startups are screwed?

Not quite.

Dry Powder

Even though VCs didn’t throw nearly as much money around as they have in previous quarters, they are still stocking their coffers at record rates.

VCs have raised $151 billion so far in 2022, more than they have in any prior year. The result is that VCs currently have ~$290 billion in “dry powder”, or uncommitted funds, that is available to spend.

In other words, there is still plenty of money to go around. 

Causes for Concern

However, just because VCs have money in the bank doesn’t mean that startups are in the clear. There are still some concerning signs that can make raising money more challenging than it has been in the past:

• The economy looks like it’s barreling downwards. In tough times, investors become more cautious. It is likely that going forward, VCs will prioritize boosting their winners and selecting new investments much more thoroughly. 

• A tough economy and rising interest rates might lead LPs to consider parking their money elsewhere.

Some believe that VCs have become overly focused on hitting home runs. Unfortunately, as most VCs picture home runs the same way, this is not great for startups doing things differently or founded by people who don’t fit the prototype.

Fortunately, Launch House is running a sprint called Reimagining Venture from December 5th to December 9th. I'm planning on sneaking my way in.

STARTUPS

Searching for Moats 

"Very few to no one is Silicon Valley has a moat - not even Facebook," said Sam Altman, CEO of OpenAI and former President of Y Combinator. 

I heard about moats a few months ago for the first time since reading about castles in 2nd grade. It's a popular tech term that basically means a company's unique advantage that keeps away competition.

Altman said this quote when asked about Jasper AI's moat, the AI writing startup that recently raised $100 million. He then clarified that there are "very few technology moats right now" and "there are a lot of other kind of moats". For the sake of

How can tech companies create moats?

AI is booming and becoming more accessible to everyone.

"Still marveling at the incredibly short time-gap between 'advanced ai creation and training is an unassailable moat' and 'ai has now been made open source and algos aren't a moat,'" wrote VC Rohit Krishnan. "Once the algos are open and data moat is left unlocked, not entirely sure what's the competitive edge is gonna be; beyond ability to pay training costs and general software edge of design and usability."

Fancy AI is no longer the moat.  So what is?

It has nothing to do with community or product quality.

It's all about:

1. A 🔥 Instagram

2. Motivational posters in the hallway

3. Kim Kardashian is your lead investor

4. You have bring-your-dog-day to work everyday

5. A shark-filled moat around the office to prevent corporate espionage

QUICK HITS

Seed Round

Stat: 1,000: the number of languages that Google’s new AI language model speaks. 

Story we're watching: PepsiCo, Nestle, Coca-Cola, and other major brands are way off their plastic sustainability goals. We’re not surprised, just disappointed.

Rabbit hole: The ‘Viral’ Secure Programming Language That’s Taking Over Tech (Wired)

WHAT ELSE IS GOING ON

• Don’t look up, a potentially “planet-killing” asteroid has been found in the Sun’s glare. 

• Winter is coming. So are Game of Thrones NFTs.

• Meta India head Ajit Mohan has jumped ship to Snap. Snap is all about AR while Meta is putting an emphasis on VR.

• Much to the dismay of finance bros, the Fed has raised interest rates by another 75bps. 

GUESSTIMATE

How many drones will fly above NYC tonight to form a giant flying advertisement for Candy Crush?

FUNDRAISING FRIDAY

Liquid 2 Venture’s Michael Ma is sharing a fundraising tip every day in November. Considering the man has raised hundreds of millions of dollars, this is a series worth paying attention to.

LAYOFFS TRACKER

OpenDoor: 550 people (30%)

Lyft: ~700 people (13%)

Stripe: 1,120 people (14%)

FOUNDERS CORNER

The best resources we came across this week that will help you become a better founder, builder, or investor.

😵 Some advice from founders on what not to do. 

👩🏼‍💻 A great thread sharing 6 beginner programming projects that will get you started with blockchain coding.

GUESSTIMATE ANSWER

500, and countless people (🙋) resuming their Candy Crush addictions.