Week Eight: Election Bull Run
Holy guacamole, markets are pumping!
Housekeeping
Welcome to the eighth edition of Venture Vantage. We’ll be exploring topics related to tech and the venture ecosystem.
Congratulations to all who celebrate post-election market day. I have personally been thriving today—not because I give a shit about politics, but because my portfolio is so up.
Feedback on the news focus last week seemed very positive. So we’ll roll with it. Trying to keep it even more brief this week.
As always, please hit me back with feedback and comments—I’m constantly seeking ways to make this newsletter a more valuable read.
Diving right in and keeping things brief:
News, Deals, and Pretty Things
Bitcoin’s record high
Context:
Bitcoin hit a record high last night, hitting $75,384.69.
Prior to that, the record high was $73,797.68 on March 14th of this year.
On the campaign trail, Trump positioned himself as pro-crypto, promising deregulation, tax benefits, and pro-crypto policies.
As election night unfolded and Trump’s victory became more apparent (you could watch the likelihood of victory grow via Polymarket/Kalshi), the price of crypto grew as well.
Bitcoin wasn’t the only cryptocurrency to see gains; Ether, Solana, XRP, and even memecoins also saw gains.
Vantage:
As concerns over the U.S. deficit and inflation are growing, investors view crypto as an inflation hedge.
The implementation of pro-crypto policies by Trump could give the blockchain and crypto startups & venture funds the lifeline they so desperately need.
Crypto and blockchain funds really slowed and saw poor performance following the pandemic. If the momentum of this bull run continues, it may undo some of the damage that was done to their TVPI recent years.
Funny story actually, 2 days ago a16z pledged $23 million to a pro-crypto PAC called Fairshake, who has spent more than $140 million lobbying.
Stocks and the dollar take off
Context:
The election also triggered a surge in public markets, not just crypto.
Sectors that could benefit from deregulation, tax cuts, and traditional energy saw the biggest rise this morning. Sectors aligned with Democratic policies, such as clean energy, took hits.
Treasury yields rose, and the dollar also strengthened.
Taking a step back from the market: high tariffs on Mexico and China could add to inflation fears, while Trump’s potential policies may widen the budget deficit.
Vantage:
This could mean more IPOs in the near term, opening up some liquidity for funds that need it quite desperately.
This early market fluctuation may mean looming trouble for green tech startups, though. My guess is that green tech innovation will continue, but it could add an IPO obstacle for some of these mid-stage startups looking for liquidity in the coming years.
T-Mobile hires OpenAI
Context:
T-Mobile is partnering with OpenAI to develop an advanced customer service chatbot. The new chatbot will use ChatGPT to remember customer-specific data and handle most customer questions without a human.
The deal is valued at about $100 million over three years, making it one of OpenAI’s largest enterprise contracts to date.
The chatbot is expected to launch next year.
Vantage:
This is proof that there are actually enterprise contracts out there big enough to stand out, giving B2B SaaS startups something to shoot for.
Deals this large could, however, make it more challenging for the little guys (early stage co’s) to compete with the big players in the space.
This, in my mind, will create a bunch of cottage industries around OpenAI as startups learn it’s challenging to compete with them, and there’s better money in supporting them (energy, data centers, etc.).
I hate to say I was right, but I did mention customer service tools in the White Hot section a few weeks back ;)
AWS’ nuclear power deal falls through
Context:
AWS planned to buy 1 gigawatt of nuclear power from Talen Energy its Pennsylvania data centers.
AI operations in their Pennsylvania data center consume an incredible amount of power, like with most other AI facilities. This is what prompted Microsoft to plan a re-open Three Mile Island back in September.
The Federal Energy Regulatory Commission (FERC) rejected the proposal due to concerns over grid stability and customer impact. FERC’s split decision puts the AWS project on hold, leaving next steps for the project uncertain (and even unlikely).
Vantage:
I think this is going to mark a massive shift in more early stage venture funds allocating to infrastructure deals. We’re seeing the existing infrastructure we have currently fail us.
AI NewCo’s may face a lot more scrutiny and diligence from venture funds as a result of this. They will be scrutinized for how they plan to wrestle with the uncertainty of AI computing costs, or how they plan to manage energy sources themselves.
This might even put the ecosystem at risk of regulation—the government may decide to do something crazy like issue “carbon credits” but for energy grid usage. I think this would be unlikely under Trump, but unless energy supply increases, the demand will have to be forcefully decreased.
Deals that caught my eye
Here’s the latest and greatest:
Physical Intelligence raised a $400M Series A to integrate general-purpose AI with robotics and physical devices. The round received funding from Jeff Bezos, Thrive Capital, Lux Capital, OpenAI, Redpoint Ventures, and Bond.
Transaera raised a $8M seed round to create better and more efficient air conditioning units. Yay, energy efficiency!
Workgrounds raised a $2.6M pre-seed round to automate the hotel booking and management process that companies have to go through for corporate travel. The round was backed by Ocean Ventures, Hannah Grey, Volo Ventures, and deftly.vc.
Oura acquired Sparta Science for an unknown amount. This marks their third acquisition in two years. Oura acquired Sparta so they can enhance their B2B Teams offering.
Rapid Fire
Context: AT&T and Voltpost are partnering to turn street lights in Michigan and Metro Detroit into internet-connected EV charging stations, with future plans for NYC and Chicago. | Vantage: There is so much potential for startups to partner with governments to find innovative ways to improve legacy infrastructure.
Context: Reddit’s market cap of $21.5B now makes it more valuable than Snap, which has 4x more users and 4x more revenue. Snap’s stock is down to $12 from its IPO of $17. | Vantage: The mismatch of market cap highlights a broader issue that extends into the world of venture: valuations are often not tied to any specific metric.
Context: Casper, the mattress company, is being acquired by Carpenter, one of the largest foam manufacturers in the world. Carpenter is planning to treat Casper like a typical private equity play, getting them profitable. | Vantage: Startups need to be careful about going public—it has gone very poorly for many in recent years. Examples of poor performers are Oscar Health (down 49%), Sweetgreen (down 23%), Snap (down 56%), Allbirds (down 97%), and SmileDirectClub (down 100%).
White Hot
Human Health:
Supplements that help optimize key bodily functions, especially those that people track. Think of a pill that increases your HRV, your VO2 Max (mine is 58, btw), or helps you optimize sleep stages.
A platform, app, or device that corrects errors in physical movement in real-time. Whether it’s bad form while bench pressing, bad posture, or poor running form, we all need some coaching, and instant feedback would be game-changing.
Future of Work:
A platform that enables employees to effectively co-manage tasks. Tools like Todoist, Asana, and Monday are not helpful for “dividing and conquering” with big singular tasks. Instead, they manage projects, and require the end user to break up the project into tasks, and each task into subtasks.
Our posture is terrible. I thankfully don’t work from my laptop, but I watch people in my office who do: they look like the Hunchback of Notre Dame while working. Hardware products that help us work in natural positions would be a game changer.
Infrastructure:
Following the theme of today’s news: energy. I’ll keep it brief at that.
Water monitoring systems for large real estate projects. Whether it’s per-tenant usage tracking or leak monitoring, water waste can account for up to 45% of total water usage in residential and 30% in commercial developments.
Some cool stuff on my radar
Jeni’s Ice Cream is offering free shipping for a limited time. It’s good stuff, worth trying if you haven’t already.
Arc Cases have been on the rise recently, and rightfully so. I’m a big fan of the “feel your phone” movement, and this makes it possible to keep it protected while doing so.
The Mudra Band looks super interesting, although I haven’t had a chance to check it out yet. The device basically makes gesture control of everyday devices super easy, which could be a productivity game changer.
Since we’re being fat this week, I’ll also throw in that Magnolia Bakery now has frozen banana pudding. This is extremely dangerous for me, and puts me at risk of looking like the blueberry girl from Willy Wonka.
If you have what is commonly referred to as “HV Money,” then the new 30th Anniversary A. Lange & Sohne Lange I watches may be for you. The platinum dial and onyx face is my favorite, in case anyone wants to get me a Christmas gift. They’re only making 300 of each reference, too.
Continued Reads
This week’s continued read is a book by the founders of Axios called Smart Brevity. This has been a game-changer for how I write and think. A snippet:
“Delete, delete, delete. What words, sentences or paragraphs can you eliminate before sending? Every word or sentence you can shave saves the other person time. Less is more—and a gift.”
Read it here.
Closing
Thanks for taking time out of your Wednesday to read. Please, don’t start putting up your Christmas lights too early—wait until after Thanksgiving, not after Halloween.
As always, you can find me on X and LinkedIn, and I’d love to hear from you via email. Whether it’s talking startups or just shooting the shit, I’m always happy to connect.
Onto the next!
//Eli