Distilling Venture Capital Bill Griesinger

UNICORN MANIA, The Real Facts About Post-Money Valuation
Post-Money Valuation; The Facts
It is absolutely NOT the market capitalization or market value of a tech unicorn company; PM Valuation completely ignores all the prices paid, preferences, and rights granted, for ALL prior rounds – a major flaw and a farce; Thus, a completely distorted picture of value is created by actually assuming that all of these past preferred rounds of equity, plus common, are all magically worth the same price as the round just completed.  This is insanity; To make matters worse, The derivation of the PM Valuation is cloaked in secrecy – it´s a black box - you don´t get to see the calculation! Remember, from the Stanford Study, ALL 135 Unicorn companies evaluated were overvalued using the PM Valuation AND, 65 lose their Unicorn status!   This is a ‘Houston-we-have-a-problem’ moment.  If these statistics aren’t an indicator that something is terribly wrong with the PM Valuation...well…then you are in Unicorn land.  
A Unicorn Index Fund is a Sham
Given the above facts, the concept of a Unicorn Index, then, is a sham based on this faulty method of valuation.  The indexes, in fact, do not have visibility into the requisite information and data actually needed to return a market value or market capitalization (i.e., financial statements).  That´s why they use the inappropriate and discredited PM Valuation and then try to sell it to you as some rigorous and proprietary methodology.  Complete BS.
Since these index funds have very limited information in these private companies (again, no fin. statements), they are trying to triangulate a valuation from incomplete information and back-of-the-envelope approach.  It turns out, based on the research, the PM Valuation is a very bad proxy for determining value.  It cannot even be considered a derivative of value.  It’s far worse.  At a minimum, a derivative security actually derives its underlying value from another asset or group of assets PM Valuation is far riskier and worse than a derivative because there are well-documented, glaring flaws in the methodology;  that all prior rounds with different economics are suddenly worth the same as the last round.  It’s messed up and it’s improper, as the Study indicates. In fact, let me let you in on a key piece of information, a key fact:  I’ve known about the concept of PM valuation for more than 20 years, during my time as a venture debt lender.  The PM valuation was never intended to be used for this purpose (trying to determine a market value for private companies). EXPLAIN:  In 90% to 95% of all the deals, loans we did for VC-backed tech companies, they typically had to raise an additional round or two of capital before we were paid out on the loan.  When they raised a new round, the Loan & Sec. Agr. required full reporting.  And, Many times company mgt and investors would tell us the PM valuation after this round was X. We knew how it was calculated and always knew this was not the real market value for the company, b/c of all the terms and conditions of prior rounds of capital.  It was always considered a rough, back of the envelope way to look at the company as a very rough approximation of perhaps its future potential value – but in no way did it represent its market value.  
The idea that index funds, the financial press, and the analytics companies have been trying, for years now, to use this as a representation of value is insane and it’s fraudulent.
 
Btw, Why would anyone invest in an index fund that can´t provide investors with a true picture of value?  Any index fund should be required, and investors should demand, full disclosure of the valuation methodology.  One would think disclosing your valuation methodology would be a strength, a positive, to show investors you do have rigor in your analysis and determination of value.  Transparency should be an asset.  Instead, these so-calle

Tech Unicorn Valuations are Fake
Introduction
Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech landscape.  And provide you with information you can use. It is your podcast for Fintech, DeFi, Blockchain and smart contracts, digital banking and all the frontier Web 3 technologies changing the financial landscape globally.  
Hello everyone – it´s been a couple of months since my last podcast episode – I took some time off...It´s great to be back with you again.
After some thought, consideration and a couple defining events, and an announcement by Pitchbook, one of the so called data analytics firms in the VC space, I decided it was imperative that I do an episode in my Unicorn Mania series.  I´ll fill you in on the PB announcement I am referring to in a moment – it´s insane!
Before we jump into the episode though, I wanted to pay recognition and acknowledgement to a wonderful Brazilian singer and artist, Gal Costa.  My intro music and exit music is Aquarela do Brasil by Gal Costa.  Gal Costa passed away on Nov. 9, 2021.  A makpr talent in Brazil, I thoroughly enjoyed her music.  She will be missed. 
 
So, let´s jump into this edition of Unicorn Mania:
If you´ve followed this podcast in the past, you are aware that in the UnicornMania series I highlight the largely fake, deceptive valuations of VC-backed private technology companies – Which are Fondly called Unicorns...Isn´t that cute?  
For background, I refer you to my first episode in the UnicornMania series, March of 2020.  Episodes 5 and 6 also deal with this twisted freak show perpetrated by VCs, the tech & financial press and others that engage in all of this Unicorn nonsense.  I encourage you to go back to Episode 1 for insights and valuable background information as to why I categorically state and prove that tech Unicorns, a VC-backed tech company allegedly with a $1B or more valuation, are indeed mostly fake…
Let´s start off with some levity and have a little fun, shall we, at the expense of Sil. Valley VCs?  I read this a couple years ago in a CrunchBase piece;  
There´s an old joke about a new bar in Sil. Valley.  On opening day, 6,000 people showed up.  No one buys a drink.  The business is declared a roaring success!   [This joke will hopefully make perfect sense by the time we finish this episode.  Only in SV culture would the above be considered a success!  In Sil. Valley, comedy often becomes reality
 
To briefly review, let´s start with some basics I will get into in this episode:
So, as I just mentioned, the definition of this tech unicorn we hear so much about is:   A private VC-backed tech company with an alleged valuation of $1B or more;  I say allegedly b/c  these valuations are largely fake;  I´ll demonstrate that with conclusive evidence in just a moment; VCs and others arrive at this distorted value using a completely improper, simplistic method known as the Post Money Valuation – In a moment, I´ll walk through how the Post-Money Valuation is calculated and explain why it is a completely erroneous notion of value; On what basis do I call it fakery and deception?  Largely b/c it has been conclusively proven beyond a doubt based on the research;  The body of evidence comes from a Stanford Univ. GSB study called, ``Squaring VC Valuations with Reality.``   The results were originally revealed at a Silicon Valley Open Doors conf. in 2016 and then officially published in April 2017.  It´s been updated since, as late as Dec. 2019.  It also has been published in peer-reviewed journals like The Journal of Financial Economics in 2020. There are links to both the 2016 video and to the research report in the description of this video Links: S

Introduction
Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger; Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  It is your podcast for Fintech, Decentralized Finance, Blockchain and Smart Contracts, Digital Banking and all the frontier technologies that are changing the financial landscape globally.  Episode Introduction:
Welcome back everyone.  We have a fantastic program for you today.  I am excited about today´s conversation because I have the pleasure of welcoming to the podcast Jonathan Hung; Jonathan is a successful and accomplished angel investor based in Los Angeles.  He is considered one of the most active angel investors in Southern California.  In addition, he serves as Co-Managing Partner at Unicorn Venture Partners and Senior Venture Partner and Head of Due Diligence at Expert Dojo.  We´ll get into that and a lot more.  Jonathan, thank you for making the time to be on the podcast today;  
So, before we dig into the meat of your work as an angel investor and venture partner, we typically begin by having you provide your background and details about your journey, more broadly, that led you into technology and angel investing…  
In addition to providing venture capital funding and advisory support, Jonathan also provides business mentorship based on his experience running U.S. and China offices as the President of United Overseas Textile Corporation.  Jonathan was also a Managing Member for his family office fund, J Heart Ventures, which made investments in start-up companies such as Gyft, ChowNow, Miso Robotics, Clover Health, Bitmain, etc.    
He also leverages various degrees from the University of Southern California, London School of Economics, Massachusetts Institute of Technology, and The Wharton School at the University of Pennsylvania.
Topic Areas Covered with Jonathan
Your investing history in So. Cal and types of sectors, companies you look for; Jonathan and his team target investments in US companies that have global market potential with a focus on long-term growth expansion to East Asian markets. I´d like to highlight some of the Blog topics you cover on your website with respect to: Covered liquidity runway (cash) and monthly cash burn rate Gross Margins Monthly Recurring Revenue Operating Income/Net Income Web 3.0 and its role in future of startups; touching on blockchain, smart contracts, DeFi etc.  10 key metrics you look for in evaluating prospective investment Alternative funding strategies SPACs and SPVs;  Distinguish between the two.  Also, particularly since SPACs were all the rage in 2020-2021 but as a sector haven´t done well as public companies Your views on Leadership and Successful team building Other areas you would like to cover;  
Closing Remarks:
Jonathan, thank you very much for joining me today on the program…
 
Jonathan, how can those who are interested in learning more about you and your practice in So. California get in touch?
 
Contact Information
Website:  jonathanhung.com Social Media (if applicable):   Or, Linkedin: Jonathan Hung  
Thank you for joining me for this edition of DVC.  I hope you found today’s discussion with Jonathan Hung interesting and it gave you some additional insights into the state of angel investing in So. California and beyond.  
 
Stay tuned for my next Episode of DVC…thank you.

Introduction
Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger; Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  This is your podcast for Fintech, Decentralized Finance, Blockchain and Smart Contracts, Digital Banking and all the frontier technologies that are changing the financial landscape globally. Episode Introduction:
Welcome back everyone.  We have a fantastic program for you today.  Today, I have the privilege welcoming back to the podcast Sturgeon Capital, when we did an interview early part of 2021 Sturgeon Capital is a London-based investment firm with a very interesting, and successful, I might add, geographic strategy; Sturgeon was established in 2016 to specifically to tap into vast opportunities its team has identified in Central Asia;  So, think of Kazakhstan, Uzbekistan, and in adjacent regions such as Bangladesh, Egypt, Turkey;  We´re going to get into all of that and a lot more.  To help me do that I have the pleasure of welcoming Alex Branton, a Partner at Sturgeon.  Alex, thank you very much for making the time to be on the program today. Before we get into the meat of what Sturgeon Capital is doing, I find it useful for listeners if you could provide your background, and your journey, more broadly, that led to the founding of Sturgeon;  Alex Branton Bio:  Over a decade of investment industry experience with a blend of direct investment experience and fundraising expertise. Studied, lived and worked in emerging markets (most significantly China and Central Asia) on and off for 15 years. Whilst maintaining a vital role on the investment team, spends significant time working with companies on their fundraising and strategic partnerships. Before Sturgeon, part of a 4-person team, that helped build a tech-focused asset manager called Columbus Point with the co-founder of Cantillon in the capacity of head of business development, raising approximately $200m, building the operational infrastructure and working with the investment team. Prior to this, was an Associate Investment Director at Cambridge Associates working in the emerging markets team, advising on direct co-investment deals, economic consulting, financial modelling, and portfolio advisory and discretionary management.  Alex holds a BA in Industrial Economics from the University of Nottingham (during which time he also spent time studying finance at Hong Kong University) and an MSc in Development (specialism in Development Economics) from the London School of Economics. He is also a chartered alternative investment analyst (CAIA) and is fluent in Mandarin Chinese having studied in a post-graduate in Shanghai and has taken R programming courses at UCL.
History of Sturgeon, why founded with this vision for frontier markets in Central Asia?  What is a “frontier market” according to Sturgeon?  Your website indicates “we reject traditional definitions of ‘frontier markets’ – expand on this…  Sturgeon invests at an early stage (Seed and A round) in technology across huge untapped geographies ~$275m AuM across our venture fund and inaugural growth equity mandate Raising our second early-stage VC Fund Sturgeon Opportunities II ($50m) The TAMs in our addressable markets are so big you don´t need an Excel spreadsheet. Our companies target massive addressable markets that are highly fragmented or otherwise dominated by bad (or often non-existent) incumbents that are not capable of technological innovation.  We don’t speculate on “frontier technologies”, rather we focus on tried and tested business models in ``frontier`` markets. You are now raising capital for the Sturgeon Emerging Oppor. Fund II.  Target of $50MM 80% of the portfolio will be comprised of companies from emerging tech capitals in Pakistan, Bangladesh, Egypt & Central Asia representing well over 500 million people. When including adjac

Introduction
Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger, Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  This is your podcast for Fintech, Decentralized Finance, Blockchain and Smart Contracts, Digital Banking and all the frontier technologies that are changing the financial landscape globally.  
Episode Introduction:
Welcome back everyone.  I am really excited about today´s conversation because we`re going to chat with a very innovative investment firm, known as Fuse Capital, based in Rio de Janeiro, that is changing the Inv. Fund Model for investing in early-stage and growth stage technology companies with an interesting approach, and has also created a new fund that provides dedicated exposure to DeFi (Decentralized Finance) for institutional investors.  We´re going to get into all of that and more… To help me do that, I have the pleasure of welcoming to the program, João Zecchin, Founder at Fuse Capital.   João, thank you very much for making the time to be on the podcast today…  
So, before we dig into the meat of all the innovative structures Fuse Capital is offering to its investors and the market, I usually find it useful for our listeners to understand a bit about your background and your journey, more broadly, that ultimately set the stage for founding of Fuse Capital.  Tell us a bit about your journey that led you into technology, investing in tech companies…    
Topic Areas Covered 
Talk about the origins of Fuse Capital and then the how you arrived at the strategy that led to Fuse Capital I Fund – 1st hybrid fund, offering not only equity to early stage companies but a venture debt product, as well.  This a unique approach to someone like me who spent 20 years+ in the venture debt space. Can you give some examples of venture debt deals you´ve done?  I understand most or all of the debt deals you´ve done are not portfolio companies where you have an existing equity investment, correct? Mix in the Fund - When one looks at Fuse Capital I Fund, what is the % of Fund assets are made up of Venture Debt vs Equity? What´s the typical structure of a venture debt deal?  Term Loan, advance based on multiple of MRR? Return profile for venture debt deals?  Provides current income to investors thru monthly P&I pmts.? Risk management and portfolio management processes for the debt deals? Target sectors, target geographies for venture debt deals?  For debt deals, talk about that deal process and how you credit underwrite and diligence deals  
Let´s talk about the newly created fund, The Wasabi Fund, which provides exposure to DeFi for Inst. Investors;  When was the Fund launched?  Thinking/Strategy that led to the offering? Tell us how you define DeFi and what does exposure to DeFi mean or entail?  Mechanics, details of how the fund is structured and works… You don´t actually provide exposure directly to stable coins themselves, right? Main Strategies Offered;  Liquidity staking, Lending, Futures, Leverage; Anticipated yields – Examples (20% - 40%) Risk mitigation features and strategies? I had a question about one of your Regulatory Risk mitigation strategies:   Underweight allocation to centralized stable coins;  Is this referring to USDT, USDC?  Given the some of the negative blowups recently (e.g., Terra-Luna; UST debacle), how do you assess and diligence what projects to include in terms of DeFi projects and protocols?   Because this blow-up has broken trust in the sector – even though there are many solid projects that are decentralized… The DeFi Fund is structured such that it does not necessarily include direct exposure to the underlying stable coins of projects, is that correct?  
 
Closing Remarks
What is a good way for those seeking additional information about Fuse Capital to get in touch?  Website – www.fuse.ca

Introduction
Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger, Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  This is your podcast for Fintech, Decentralized Finance, Blockchain and Smart Contracts, Digital Banking and all the frontier technologies that are changing the financial landscape globally.    
We will start here -
Episode Introduction:
Welcome back everyone.  I am really amped and excited about today´s conversation because I have the pleasure of welcoming to the program Slater Victoroff, Founder and CTO of Indico. Indico is the leading machine learning, and AI platform that has developed technology to unlock the value of unstructured data, about 85% of all data, providing enterprises with the ability to automate heavily time-consuming tasks and derive value from unstructured docs like emails, images, texts and more. The Indico Platform uses AI and ML technology to automate the intake and understanding of unstructured documents, emails, images, videos, audio files, and much more, giving structure to this unstructured data. As a result, enterprises get much more value from their existing structured data only software and technologies — including RPA, CRM, ERP, Analytics, and more.  
We´re going to get into that and more…Slater, thank you for making the time to be on the show today…  
Before we dig into the meat of what Indico is really all about, I thought it would be useful if you could tell us a bit about your background and about your journey, more broadly, that ultimately set the stage for founding of Indico…  
 
 
Topic Areas Covered with Slater Victoroff 
 
Talk about your training, background and work in SW and computer engineering that led to the development of the technology and Indico Talk about the technology development from SW engineering standpoint to achieve this breakthrough related to being able to analyze, automate unstructured data.  In the past (2016), you previously stated that Indico is `` like a co-pilot in some ways`` indicating ``We´re not automating away the person but taking the grunt work out of processes, allowing them to do much more what they enjoy doing, which is critical thinking.``   Expand upon what you mean by that.  
Let´s talk about some of the actual use-case applications of the technology.  You serve major, marquis customers in the Insurance, Financial Services, Real Estate, Legal, Marketing, Retail, and other huge verticals.  Discuss some client use cases.  MetLife, etc. Why have you succeeded where others have failed?  How has Indico been able to beat out juggernauts such as IBM, Google, AWS, that spend billions on projects?  
I wanted to talk for a moment about your martial arts training and background.  In the past you indicated that Entreprenuership and martial arts training have parallels.  What do you mean by that? At the end of 2020 Indico closed a $22M Series B round.  You´ve raised about $34M in total.  How do you view or see the need regarding additional capital?  
 
 
Closing Remarks
 
Slater, what is a good way for those seeking additional information about Indico to get in touch?  Website – www.indicodata.ai Other contact methods?  
 
Thank you for joining me for this edition of DVC.  I hope you found our discussion today with Slater Victoroff and Indico interesting and it gave you new insights and things to think about regarding machine learning, AI and its application to unstructured data.  I look forward to joining you on my next edition of DVC.  Thank You…