DVC Weekly Roundup: Crytpo Punks Score a Win

Happy Friday, DVC! The SEC approved of Ethereum ETFs this week, as a sign the SEC’s softening its stance on crypto. Unlike Bitcoin, clearly labeled a “commodity,” the SEC has kept Ether in a gray area about whether it’s a security. Now, it seems they’ve decided ETH isn’t a security after all. This shift weakens their stance against other cryptocurrencies. So, why the sudden change of heart?

The rumors are that the pivot has everything to do with politics and not policy. First, there is bi-partisan support in Congress to approve a regulatory framework for Crypto separate from the Howey Test. And perhaps, more importantly, the likely GOP candidate Donald Trump announced that he’s accepting crypto donations.

We’re paying close attention here because it is our opinion that clear crypto regulations from Congress or the SEC will revolutionize startup investing in the next decade. We’ll have more discussion on this topic in the coming months.

Weekly Poll:

Vote for New Deals:

Help select DVC's future deals! Please view the options, upvote your favorites, and suggest your own!

New companies suggested this week:

• TriAgenics

Start Engine Q1’24 Financials

Our friend and DVC community member Kevin Fulmer of Crowdscale did an excellent job of breaking down Start Engine’s Q1 financials earlier this week. A couple of observations that caught our attention:

• Revenue nearly doubled from $5.2 to $9.8 million YOY;

• A reduction of 45% in listings with the “stated” purpose of helping fewer companies increase their odds of success;

• StartEngine’s Owner’s Bonus was rebranded to, ahem, “Venture Club.” But the bigger story is that this is their highest area of revenue growth;

• They’re using the Seedrs acquisition to shield tax liability, which has the affect of accelerating cash flow. More cash means they can invest more in their product offerings.

Our take: Start Engine is unquestionably a leader in the burgeoning community funding space, but they still have a lot to achieve to justify the $1.32 billion pre-money valuation from last fall.

If anyone in the community wants to share what they're reading, an event they're attending, or a summary of an event, please let us know at [email protected]. We’ll include it in the newsletter.

Updates from deals DVC previously analyzed:

Really Good Boxed Wine announced the hiring of Amy Troutmiller as the new CEO. Full Update

Sensate announced a “get to profitablity” funding round which is now live on Wefunder. Many in DVC invested in their previous round in 2022 and the valuation hasn’t moved, which is a bit disconcerting given they generated $5.3 Million in revenue last year.

Pirouette, the DVC deal featured earlier this week, just announced they received a $97K NIH (National Institute of Health) award to expand the scope of their Phase I. Full Update

DVC Mind Map #3

To shape the future of DVC's market approach for the benefit of our members, we’re exploring every potential strategy and channel in an open forum. Last week’s pitch was:

Accepting that RegCF regulations allows for the democratization of venture, what’s holding retail investors back is that they want what VCs and Angels have: curated deal flow and a say in the deal terms.

DVC Community member and esteemed Professor of Entrepreneurship and Angel Investor Sonu Mirchandani disagreed (summarized):

• RegCF provides access for making "donations" (per its guidelines), not curated investments.

• The industry uses $$$ as a proxy for skills, but anyone can open an account and invest. Until investors acquire the necessary skills, expecting curated deal flow and influence over deal terms is unrealistic.

Sonu's insights are absolutely on point (for both accredited and non-accredited investors we might add). At Doriot, education and skill acquisition underline everything we do, but the process of education will take time. It’s a marathon, not a sprint for sure.

Building on Sonu’s comments, here’s the next pitch:

By the way, if you’re ready to join those in the Top 20% of venture skills, we’re launching our 3rd QAI Cohort on July 8. Ping us at [email protected] if you’re interested in a “sizable” community discount.

Thanks for reading & participating! Have a great weekend and see you for a new deal next week!

Sincerely,

Team Doriot