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FRESH POWDER

Looking at three funds that recently topped up their coffers.

GAMING

Ready Player a16z

No one tell a16z we’re in a bear market. The iconic VC firm has kept the gas pedal firmly pressed against the floor, announcing the launch of a new $600 million fund exclusively dedicated to gaming startups on Wednesday. Called Games Fund One, the more than half-a-billion in capital is earmarked for three main areas related to gaming:

• Game studios: like Epic Games

• Consumer applications: like Discord

• Gaming infrastructure providers: like AWS

VC firms say game on

Despite the broader fundraising environment cooling considerably in recent weeks, some firms are acting like teens who just discovered GTA for the first time—in total, funds have committed nearly $3 billion towards Web3 or metaverse gaming projects since mid-April.

• It’s not just mega funds: Joining a16z’s $600 million fund is VC firm White Star Capital’s new $200 million DeFi and gaming fund, as well as Framework Ventures’ $200 million blockchain gaming fund.

It’s not just web3 gaming either. TikTok is also diving full force into games according to a report from Reuters yesterday. It indicates that the company has already begun testing web-based HTML5 games as well as working on LIVE mobile gaming features to offer to creators while livestreaming.

Reality check

Despite the surge of optimism and buzz a16z’s announcement created in both the gaming and venture spaces, things still aren’t looking too pretty. Public gaming companies Unity and Roblox are both trading 75-80% below their all time highs, while private sector investors are preaching a “hunker down and preserve cash” mindset.

Bottom line: Andreessen’s new $600 million fund, led by Andrew Chen, Jon Lai, and James Gwertzman, is a further bet on the firm’s belief that a gaming framework or layer will be required in order to reach a “minimum viable participation” in crypto.

TOGETHER WITH YOUNG MONEY

Stop reading boring newsletters

"Like Tim Urban and Morgan Housel had a baby." That's how one of Jack Raines' readers described his finance blog, Young Money.

Every Monday and Thursday, Jack uses stories, data, and his own drawings to craft the most interesting articles that you'll read all week.

From the economics of March Madness, to meme stock hysteria, to the story of how he lost $150k in a day, nothing is off limits.

If you are tired of the same boring finance articles, and you want to read interesting content that actually has personality, you should check out Young Money!

FINTECH

Pure Klarnage

Klarna, the most valuable startup in Europe, needs cash…and is willing to cut its valuation to get it.

The Sweden-based buy now, pay later company is aiming to raise up to $1 billion in a deal that could value it in the $30 billion range, per the WSJ. That would represent around a 30% drop from its previous round.

If that sounds familiar…

It’s because Instacart took a similar haircut earlier this year. Once the third most valuable startup in the world, it reduced its valuation roughly 40%, in a down round in March.

It turns out Instacart was just ahead of the curve. Klarna also benefited from the same pandemic fueled growth as Instacart and is now facing similar post-pandemic slowdowns.

Zoom out: Private and public confidence in BNPL companies seems to be waning. The share price of Affirm, a Klarna competitor, is down around 75% this year giving it a valuation of just $7.2 billion.

Zoom out even further: Klarna’s biggest backer is none other than Softbank. It marks the fourth SoftBank-backed company we’ve written about in the last month to either announce large layoffs or a reduction in valuation, joining Reef, Cameo, and Picsart. SoftBank, hard times indeed.

QUICK HITS

Seed Round

Stat: Every once in a while you see a stat that reminds you just how big tech companies are. Case and point, Uber Eats hit its 5 billionth order yesterday according to CEO Dara Khosrowshahi. It’s another reminder that Uber's food delivery business was bigger than ride-hailing in 2021, and that people are hungry (and lazy) af.

Story we’re watching: Long relegated to rumor mill, Apple’s AR/VR headset might be here before we know it. A prototype of the device was shown to the board of directors in their latest meeting while Apple has also ramped up development of rOS, its reality operating system, in recent weeks.

Rabbit hole: The coming food catastrophe (The Economist)

WHAT ELSE IS GOING ON

• Lucid Motors is opening its first overseas factory, picking Saudi Arabia for a plant expected to produce 150,000 cars per year.

• A group of bipartisan senators introduced a new bill to break up Google and Facebook ads.

• The Senate approved a $40 billion economic and military aid package for Ukraine.

• The US smartphone market grew by 4% in Q1 with Apple shipping 19.9 million iPhones, more than 50% of the total market.

NEWS FROM THE HOUSE

We started with Launch House, our school for founders.

Then we added Hack House, our school for engineers.

Now we're opening Venture House, our school for investors.

If you're an investor who wants to live in a beautiful house, meet incredible people, and have the most impactful two weeks of your life, come on through.

GUESSTIMATE

Let’s talk TikTok growth.

1. What was TikTok’s monthly active users as of March 2020?

2. What was TikTok’s monthly active users as of March 2022, two years later?

FUNDRAISING FRIDAY

A good framework to simplify your thinking around startup pitches.

FOUNDERS CORNER

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

🪦 The original RIP Good Times presentation from Sequoia Capital circa 2008

💬 Y Combinator’s message to founders sharing items to consider when making plans to navigate the downturn

🤠 A guide to making your startup look bigger than it is

FRIDAY MEMERY

GUESSTIMATE ANSWER

TikTok had 583 million MAUs as of March 2020 and boasted over 1.3 billion in March 2022. That’s 123% growth.

17% of all humans alive today are monthly active users of TikTok.