Pod Insights Equity Podcast Three quarters of record-breaking funding for female founders is a win About this episode Equity, a podcast about the business of startups where we unpack the numbers and nuance behind the headlines. And have fun!
This week our very own Mary Ann was off -- we send her our best, as she is a living saint -- so Natasha and Alex and Grace and Chris got together to compile our news roundup. And oh boy was there a lot to corral.
Up top this week, news from Indiegogo that the crowdfunding service is tightening up who gets to post projects on its platform. We view this as a general good, and one that could prove helpful to the long-term viability of crowdfunding.
From the funding round rodeo, we riffed on the musical and potentially exciting Mictic (which raised $2.5 million), female-health focused illumigyn and what it might do for care access (it raised $33 million), and Martie, which wants to prevent food waste and perhaps provide low-cost foodstuffs to folks in need ($3 million in fresh capital).
FEMALE FOUNDERS
VSC
And then we chatted for a minute on alternative investing. Namely what Aqua is building, and why Alex is writing columns on NFTs.
Hugs and love from the team, we will chat with you bright and early Monday morning!
Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products.
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Transcript 0:10 Speaker 00 Hello and welcome back to Equity, a podcast about the business of startups where we unpack the numbers and nuance behind the headlines. My name is Alex and I'm joined today by my colleague in arms, Natasha Moscarenas. Natasha, hello, how are you? And why is it too cold in this world?
0:24 Speaker 01 It is too cold in this world, but it's Diwali. So there is lights all over my apartment and I am so happy to finally be celebrating a holiday.
0:33 Speaker 00 Look, any excuse to light candles is a jam with me because I'm an enormous fan of scented candles. I like raspberry scented candles. I like rose scented candles, evergreen scent, just basically bring it on. I'm big on it. But briefly, before we jump into the tech stuff, for folks who don't know, tell us what Diwali is.
0:49 Speaker 01 Yeah, a lot of people know it as the festival of lights. I think the part of it that's really inspiring is it's a celebration of triumphing darkness with light. So it's a lot of joy. India goes hard for it, but in the US, marketing efforts have become super mainstream. Like Costco is selling Luddo boxes, which is just like sweets. And it's kind of crazy to see how far we've come since I grew up and, you know, it was a very small celebration in the corner of our neighborhood.
1:15 Speaker 00 No, I'm super hyped. This is one of the best parts of living in America, frankly, is just like, because there's so many folks here from so many places and some different cultures, like we get to kind of have a sampling of everything. And I'm into it. Let's talk about some tech. Today on the show, we're going to riff on changes over at Indiegogo about how they vet projects. Good news there. We're going to talk about funding rounds from Mike Tick, Illumogen and Marty. And each one of those is hard to pronounce and spell, so we will help you with that when we get there. I don't, I didn't realize how we picked the ones that are impossible to say. We're going to talk about some research that Natasha and I did about female founders and some good news in the venture capital market. Nice to see. We're going to talk about VSC Ventures and why more PR agencies are not trying to get equity in startups that they help promote. And then finally, we're going to talk about
1:57 Speaker 00 Aqua and NFTs. But to kick things off, Indiegogo is shaking up its platform, probably for the better, is my read.
2:03 Speaker 01 Definitely. Indie Go Go, for people who don't know, is a place where people have put a lot of crowdfunding campaigns. You can go put a project up and ask your community to throw money in. And hopefully, one day, you get a product at the end of it. They are switching from being an open platform to a closed platform. So basically, they'll be manually reviewing every campaign before it goes live and are going to be working more with entrepreneurs to make sure they have a solid plan and can bring product to the market. My first read was definitely like, this wasn't already the status quo?
2:32 Speaker 00 Yeah. It's like, you know the highway near the cliff? We're gonna put some guardrails up. And you're like, word, but how long have people been driving there? Now Natasha, this is not like Patreon, which is distinct. So for people who might be confusing Patreon and Indie Go Go, what's the real difference?
2:46 Speaker 01 I would say Patreon is more like you're subscribing for a set of content and you're joining a community. I think Indie Go Go is a lot more like, can you help me bootstrap this board game that I want to create one day? It's a little bit more physical goods is the way I look at it and like one offs versus like person you're getting behind. Is that kind of similar with what you think?
3:06 Speaker 00 Yeah, absolutely. I mean, if I'm going to try to support a Raspberry Pi accessory, it's going to be on Indie Go Go. If I'm going to support the niche heavy metal band from the Finland forest, it's probably going to be on Patreon. So that's kind of the breakdown there. I'll just go ahead and say that Indie Go Go has been around since 2008, so it's 13 years old at this point. It's kind of an established player, you know, to me, one of the pioneers of the crowdfunding model. And so it's good to see this evolution. They're essentially going to say like, look, can you produce the thing you're claiming you're going to build? I don't think most people that have failed in building crowdfunding projects have been malicious. I think they probably got a little bit overly ambitious, which is a standard fine thing. But Indie Go Go wants to protect its brand and also its users because it wants them to keep coming back and backing projects. And so cleaning things up a little bit does make good sense to me.
3:50 Speaker 01 Yeah, the only asterisk I'll throw there is with something like moderation. As a platform, your incentives are you want more people to join the platform. You want more campaigns to be on the platform. So it'll be interesting to see Indie Go Go choose when to moderate and when to let people run wild. Like that line seems like a Net positive, but I definitely feel like in action. There's a reason why it took them so long to become a closed platform.
4:16 Speaker 00 For sure. I mean, because they want as many projects, raising as much money as they can on the platform. But in good news, they're going to work with GoFundMe to build this crowdfunding trust alliance. And so like both of the major players that I could name offhand that work in this space are kind of like going into this together. And instead of this being like collusion and bad, it sounds like the industry trying to clean up itself itself. Versus waiting for the government to come in and be like, y'all have been very bad children. And we're going to do this for you, like we've seen with pretty much every other part of technology. Now that I think about it, so pro activism, yay, it's good to see.
4:50 Speaker 01 Yeah, no, totally. Well, let's switch gears to, I think, one of the more experimental rounds in a long time. And it's hardware based, like what? So it's called MicTic.
4:59 Speaker 00 There we go.
5:00 Speaker 01 And it wants to help you, I'm going to just quote Hyatt's amazing headline. It just raised 2.5 million to get you shredding, scratching and strumming.
5:08 Speaker 00 Yeah.
5:09 Speaker 01 Alex, tell us what this startup is all about.
5:11 Speaker 00 If you're worried about shredding, scratching and strumming, don't worry. This is about music. MicTic is a band that you put around your wrist. As far as I can tell, it costs, I think $119, according to its website. And it tracks your motion and converts that into music. And in their little hype video, they show a person playing piano on one hand, but air piano. And then the, the MicTic or MicTic can kind of tell where your hand is and create piano sounds based on where your hand would be on a keyboard. They showed another video of someone using their hand to strum a cello, again, an air cello.
5:44 Speaker 01 Yeah.
5:44 Speaker 00 And so what they've done is built a piece of hardware that turns you, the end user, into a multi instrumentalist. And to me, as someone who grew up playing music and someone who occasionally plinks on the piano in his house poorly. This is awesome because one thing that's bad about music is the on-ramp to accessibility in terms of playing music. Most people listen to music, right? But I mean, to actually play it is pretty tough. And it's not very interactive. Music tends to be a little bit static. It's like podcasting. You kind of sit and you listen. I'm curious though Natasha, to how well this works in the real world versus in the hype video.
6:16 Speaker 01 Totally. I mean, I do recommend everyone who's interested in the startup to watch the video. Cause I think that's where it clicked for both of us.
6:23 Speaker 00 Yeah.
6:23 Speaker 01 But I, yeah, I feel like my big question was like, it doesn't feel like the kind of company you'd use to learn how to play piano. And it doesn't feel like the kind of company you turn to if you're an expert and like love the craft so much that you have a piano in your house. So it feels like the middle. And I don't know who the middle is other than DJs, maybe who are like, I want that track, but I don't know. That was my big one.
6:44 Speaker 00 I can definitely see DJs playing with this. I can see people that make electronic music in general, maybe use it as a way to introduce new sounds or new effects to what they're doing. And there is a market for that for sure. I mean, like the, the music peripheral market is quite large and the price points relatively low, which almost makes me worried. I'm like, why doesn't it cost more?
7:02 Speaker 01 Yeah, it doesn't. So it gives me like AR VR vibes without the price of AR and VR. I viewed the price as definitely like a point of accessibility because I used to play cello very poorly in high school and that it was expensive as hell, everything about it. So I feel like something like $119 is actually super cheap for an instrument-esque thing.
7:25 Speaker 00 Of course you're a cello player. That makes so, that makes so much sense. If you've never been in a symphony or orchestra or concert band, you don't know what I'm talking about. But Natasha certainly wasn't going to be like a clarinet player or like a bassoon player, right? Yeah.
7:38 Speaker 01 Were you in band or orchestra?
7:40 Speaker 00 Oh yeah. I played trumpet.
7:42 Speaker 01 Okay. Okay. That also lives up with you.
7:44 Speaker 00 I'm a little shouty, a little annoying.
7:48 Speaker 01 Our instruments knew, they knew our personalities before we did.
7:51 Speaker 00 It's so true. I mean, like people don't realize, like people are like, I'm an ENTJ. I'm cancer, whatever. Or like, you know, the star signs. The real barometer of personality is what instrument you play. Every trombone player is goofy. Every first violin is good at Excel. You know, it's just this is the way it goes. Um, anyways, I'll just say the AR point's very good. To me, this is the AR of audio. It's a way to interact with a format in a new way that uses the digital world to make it accessible. And I think that's cool. Two and a half million. Let's see where they go. Frankly, I might buy one just to play with it. Uh, we should move on. Let's talk about, I'm just guessing this is a Lumigen.
8:31 Speaker 01 Yeah, it feels like a good way to pronounce it. Lumigen raised 33 million. It's, you know, yet another company that's wants to provide women with accessible and affordable medical care, which we love on the podcast.
8:42 Speaker 00 We do.
8:42 Speaker 01 This startup has built another hardware device, actually. So they created a gynecological imaging platform that will do preventative screenings, evaluations and treatment and also help you diagnose things like cervical cancer. I feel like it was really exciting to see innovation go this way because it also feels like something we'd already have. And I feel like that in healthcare is like usually where innovation is. It's like, oh, we probably have this.
9:06 Speaker 00 And going back to the name thing, it's called the Gynoscope system, which is a little bit on the nose, I think. I might have named it something slightly less gyn, but you know, hey, it's very descriptive. Company is going to use the money to support R and D. They're going to be expanding to a number of markets around the world, including South Korea, the US, UAE, and so forth. I don't know the price point on the particular device. I don't know if we're going to be able to get these out to parts of the world where medical care is a little bit scarce, but the idea of having kind of an all-inclusive device that is focused on women's health is super great. And one thing that I was encouraged by was the fact that in our story, talking about this, the hardware isn't just something that full doctors can use. It's not just even nurses. It's also like physicians assistants and so forth. So it could theoretically open up the aperture for people who can provide
9:51 Speaker 00 critical care to women relatively broad. And I think that's tremendous and good and speaks to, you know, closing the healthcare gap around the world. And, you know, frankly, in many cultures, you may not have a male doctor with a female patient. And so this might open up more women the chance to take care of other women and just provide a more equitable health environment in general. And so I'm excited by, if it ends up though, Natasha, being an expensive device for developed markets, I'll be a little bummed because
10:16 Speaker 01 Yeah.
10:16 Speaker 00 gosh, I want it to be out there.
10:19 Speaker 01 Yeah. I mean, part of me is hopeful because one of its benefits is that it has this HIPAA compliance solution that will automatically upload and securely store images to the cloud so it can be remotely viewed. And the remote and cloud aspects of it feel obviously easier to scale than the physical aspect of it. So I'm hoping it can at least provide access to expert opinions, if not access like the whole way around. I don't know. It's a low bar, but it's also something that I feel like we're so far from right now. Like going to the OB-GYN is such a shitty process and I'm a very privileged person. So I can't imagine what that standard of care looks like across all different income levels and all different geographies.
11:02 Speaker 00 I think it just doesn't exist.
11:03 Speaker 01 Yeah.
11:04 Speaker 00 For a lot of folks. And that's the terrifying thing because health is a pretty holistic thing and you need to take a look at all parts of your body as you grow older in age and just deal with life. As a data point for folks to, who might not understand how much of a need there is for this kind of device, in the US, there is one OB-GYN for every 3,000 women over the age of 15.
11:22 Speaker 01 Ooh.
11:23 Speaker 00 And that's in the US.
11:24 Speaker 01 It feels like it.
11:26 Speaker 00 Yeah, try. What's worse, getting a therapist or an OBGYN?
11:31 Speaker 01 That's wow.
11:32 Speaker 00 Let's play the access game or the lack of access game. It's terrible, but I mean, if that's in the US, one of the most developed countries in the world, a place that spends more money on healthcare per capita than anyone else because of our inefficient system. Imagine how much more of a need there is in markets where there's less development and so forth. So shout out to Illumigen. I hope the $33 million goes a long way. And I hope like the Gates Foundation drops like 100 on them. That way they can just like buy a bunch of devices and ship them out to the world. So that would be good.
11:58 Speaker 01 Yeah, we haven't like called out Gates in a while. So if you're listening to this, Bill, do your thing.
12:03 Speaker 00 Yeah, Melinda, or you.
12:06 Speaker 01 Yeah, or you, one of you.
12:08 Speaker 00 Anyone who has a name Bezos or close to it or used to be known with a Bezos also good. Basically, if you've got more money than us, get to work. That's the threshold.
12:16 Speaker 01 Perfect.
12:18 Speaker 00 Natasha, let's talk about the third round this morning, which is Marty, which has raised $3 million. And the idea here is to keep food out of the landfill, amazingly enough, and provide a way to offer low cost goods to folks that are maybe close to their expiration date or just otherwise less attractive for consumers.
12:34 Speaker 01 So if you guys remember Imperfect Foods, it's a startup that's raised a ton of funding and it basically buys up ugly or imperfect produce from grocery stores that grocery stores will know consumers won't buy and then resells them for a lower price or within kind of a bundle. And Marty's trying to do a similar thing, but with shelf stable foods. So they have products that come in categories like breakfasts, bake shop, condiments and pastas, like over 400 SKUs. So a lot of it's about accessibility of shelf stable grocery store items that would have otherwise been thrown away. So mixing sustainability with affordability.
13:07 Speaker 00 Marty has raised $3 million for this and I love the idea. First of all, I think Imperfect Foods was way ahead of the curve because yeah, there's no such thing as an ugly tomato or an unattractive green pepper. Let's be nice to the vegetables that keep us alive. That's ridiculous. So they've shown though, that the market is inefficient in a way and that consumers will not make the best choices. And so this as a way to keep food out of the landfill and on plates and tables is key. And just going back to the point about accessibility and Natasha, hunger is still a problem in America for a lot of folks. No subscription, no membership required. You can just go to the website and buy stuff. I love that. Just thinking about once again, accessibility, that's going to help folks get on the platform and get some staples. So gosh, I just. I kind of love it.
13:46 Speaker 01 Yeah. Another thoughtful dynamic within this company is that they have a call in number in Spanish and English for people who are not comfortable placing online orders.
13:54 Speaker 00 Oh, I didn't know that.
13:55 Speaker 01 Yeah, I just feel like that and the lack of needing a subscription or too much friction before you enter the website can probably go so far. And as a business, you probably want as much data and stickiness as you can. So for the fact that they're choosing to give that up in order for more people to go at this stage at least is like spot on.
14:13 Speaker 00 Let's hope they keep that up. The new funding will go to hiring, buyer relationships, and marketing. So we'll see how far that takes them. Of course, $3 million is a 1997 Series A, which means that it's a 2021 pre- pre- pre-seed round. So if this goes well, expect to hear them back on this show soon enough. But let's put that aside and go up several levels to go from the individual round to trends in venture capital itself. Natasha, you and I got to co-write this week, which was a lot of good fun. You had me along for the ride on the PC we're putting together, looking into data on female founders in the US market, to be clear. The data is encouraging, I'd say.
14:47 Speaker 01 It is. So new pitch book data came out that is telling us that the gender gap in startup fundraising is beginning to close. There's still a lot more work to be done. Let's start off addressing that on the top, but I'll go through some top line numbers and we can unpack after. So female founded companies raised 40.4 billion across 2,661 deals through the first three quarters of 2021, almost doubling the entire year of 2019's total, which was 23.7 billion and 2011 was 3.6 billion. The reason this is a big deal is because last year, as you wrote, funding really dropped in the beginning of the pandemic. And that was really frustrating to see because a lot of barriers and boundaries
15:28 Speaker 01 had been shut down visually because we all were at home and Zoom investing, but funding dropped. So the comeback is even more exciting.
15:37 Speaker 00 Just throwing in a little caveat to that, funding dropped for female founded companies last year. So even though we saw as 2020 kind of went along in the venture capital world, left its two-week moribund state at the early pandemic era and into this kind of like roller coaster ending. Even though more money happened, women raised less. And so we saw in 2020, female founded startups actually saw their deal count drop by 2% and the number of dollars raised fall by three. This was a disappointment because you would think in the era of Zoom investing, when you can go out there and find anyone, anywhere, not just the three, I don't know, Stanford graduates that fell off the back of the turnip truck in Soma, that people would invest more diversely and they didn't. And actually, Natasha, if you go back in time to what Charles Hudson told us, I think he said that he was worried about the pandemic leading to investors becoming more conservative,
16:22 Speaker 00 if I recall correctly, and then leading to less diverse investments. Well, dead on, but the good news is this year that has flipped and we're seeing female founded companies just really do well. And we can't show you this chart because this is an audio show. But if, obviously you're listening to this, hi, sorry. I realize you don't have a video stream. If you, if you look at the quarterly results of female founded startups in the U.S. and how much money they've raised over time, since essentially Q, kind of Q1 of 2020, there's been a nice upward slope. And then it has gone bonkers this year. So the acceleration is great. And Q3 was the single best quarter in the U.S. I think ever for fundraising for female founded companies. It beat Q2, which was the preceding all time record, which beat Q1, the preceding all time record.
17:07 Speaker 00 So successive highs leading to record results and a more diverse founder pool.
17:12 Speaker 01 Yeah. And I mean, I think the other really exciting, but maybe quieter metric that we don't talk about too much on the show is how exit value is a really interesting indicator of success of this cohort. So exit value of female founded startups based in the U.S. has reached 58.8 billion, which is up 144% from 2020 totals. Reminder, we still have a quarter left of this year. So that is really exciting that we don't even have the data yet. And the larger domestic venture markets exit totals have risen only 102% of, over the same time. So that kind of contrast to me says so many things. 2021 is on pace to be the 11th straight year that female founded companies exited faster than the broader market. So not only are female founders raising money and more of them are,
17:55 Speaker 01 it's they're proving like through their exits, what a good deal that is.
18:00 Speaker 00 Yeah. The other stat here, so exit value up 140%. The market up 102. 223 domestic female founded startups have exited this year, which is 12% more than 2020. The overall market has only seen 3% more exits. So it's more exits for more dollars. You would think that VCs would see this and would do some arbitrage and get to work. And frankly, the last couple of quarters, we've seen that it's going to be fascinating to see what Q4 shows us. Every quarter that goes by, I'm like, surely this is the top. And then I'm wrong consistently. So I will make no predictions, but I think it's going to be great to see a full year result pushed back against the relatively disappointing numbers we've seen since at least you and I have been covering this for the last three, four years.
18:41 Speaker 01 Yeah, definitely. I mean, I want to give a shout out to the advancements that have been made on the venture side in terms of like new GPs and emerging fund managers. We don't talk about new funds too much on the show anymore. Few highlights I would say over the past year that maybe played a role in the progress we saw in the numbers. So Terry Burns became GV's youngest partner and the first black woman to ever hold the role. Female Founders Fund closed its third fund, Forerunner closed a growth stage fund and Variant with Li Jin, who joined as a GP, recently closed a $110 million fund. So there is like some massive, massive money that is being handled by this cohort of investors.
19:17 Speaker 00 Wait, Legion Creator Economy Legion?
19:20 Speaker 01 Yeah, yeah, yeah.
19:20 Speaker 00 She raised $110?
19:22 Speaker 01 She had her own fund atelier, but she joined within another fund and that one has raised 110 million.
19:28 Speaker 00 I feel like I knew three of those four facts and I missed one in the middle. And then this filled in the gap for me. Okay. Well, shout out Legion. That's, that's great. And like you could easily compile panels now of all women investors in a particular startup.
19:40 Speaker 01 And it won't be about women. And that's the really exciting part. I will say like, there was this tweet that I saw that is kind of haunting me about like how much room we still have to grow. So Arlen Hamilton, who is probably the best known black venture capitalist, if not one of the best known venture capitalists, tweeted that like a major fund that was syndicating a round contacted her and asked if she would introduce them to Mark Cuban. She did. Mark passed and then she offered Backstage Capital to join the round. The major fund ghosted and, and she basically made this point of like, this is why wealth sits in the hands of the same people recycled. And it's like not, it doesn't just help to have these people be in decision-making seats. You need to invest in them from all sides. Just felt like a good reminder of like, these people may be in very visible roles,
20:25 Speaker 01 but they are still, you know, not getting access at the same way as a Mark Cuban.
20:29 Speaker 00 Well, I mean, Mark Cuban has been loud and in front of things for a long time. But yeah, no, it's a very good point overall. But I will say, if you want to push back against that exact thing, what you should do is have more diverse investors. And I think that we're seeing that progress in that direction. Obviously, as you said, a lot more work to do with both female founders and female investors. But after being saddened by all of this for so long, it feels almost strange to be kind of encouraged. So I'm gonna let myself enjoy that emotion. And then, well, you know, the world should get back to work tomorrow, but at least we can take a little high five moment and, and enjoy that. Okay, now let's go ahead and move to a specific VC fund. And this is one that I am fascinated by. So I'm going to, do I have this right? A PR firm has made a venture capital fund, is that correct?
21:13 Speaker 01 Yeah, exactly. Public relations fund, firm, I guess, public relations.
21:18 Speaker 00 Why not? It's a fun firm.
21:21 Speaker 01 So, so, so VSC, which has helped the likes of ClearBank, now Clearco, Poshmark, Tonal, get PR. I've worked with them, I'm sure you have too, Alex. They have raised a $7 million fund for climate tech startups. They plan to raise a $20 million fund overall. And this is the first time I've ever seen a PR firm get into investing in their clients. What did you think when you saw the news? Because I wrote about it, I want to just hear your thoughts first.
21:48 Speaker 00 What I just did was very rudely stopped paying attention, went to my inbox and just searched for VSC. And the answer is yes, turns out I do know them. Turns out they've, they've sent me a few emails. My first thought is, I love it. Because if you're going to do a lot of the work, or at least a chunk of the work of helping a startup establish its brand and build its kind of mind share and grow market share and really just develop as a company. Why do you only want a fee for your labor? Everyone wants ownership. And so why not tie in some capital from an external fund? And then you have a little bit of the upside, you have a tighter relationship. I mean, people always talk about aligned incentives. And then people always complain about how their PR firms incentives aren't aligned with theirs.
22:32 Speaker 00 Well, good, here's, here's some stuff, align those incentives. Like, let's just put the chips in the same direction, right? 7 million isn't the world's biggest fund. This, that sounds like a trial number to me, like raise some capital from some folks we know, see how this goes. But the PR firm, if VSC is good at picking the right clients and they're discerning enough to make the right selections, why not write a check as well? To me, this, now that I've heard this, I'm shocked we haven't seen more of this already, if that makes sense.
22:58 Speaker 01 Yeah, that's, that's the thing that's getting me is like, it both feels warranted because we talk about media and VC so much, but it also feels unprecedented because we don't see PR firms try and turn their clients into portfolio companies. I had two theories of why we haven't seen PR companies do this before. One was like, okay, does it create internal tension between the companies that you choose to invest in and the companies you choose not to invest in? But they're all within your, kind of your same world of you need to help them all tell their stories, right? Like, will one get better treatment? Probably the one that you get that you're invested in. And for now, VSC has basically said, like, we're choosing to only invest in climate startups. So there's a very clear boundary and they're hoping that that will, you know, just create clarity. I'm sure they will never say like, the quality of service would change. It may just be deeper in different ways.
23:43 Speaker 00 Yeah, interesting. I mean, I, I wonder if they would be similar amounts of signal risk or signaling risk from a PR firm. Because signaling risk is like, let's say, Famous Fund X backs a company in their Series A and then opts to do nothing in their Series B. The signal is that the smart money is being like, eh, hard pass.
24:02 Speaker 00 And in the old days, you wouldn't want to see the same fund lead consecutive rounds because it would imply that they couldn't find a new lead investor. Of course, nowadays, you want to co-lead successive rounds to double down on ownership. Things have changed. But I don't think people are going to be looking to VSC with their smallest $7 million fund as the signal to follow. But I do think if this becomes more common, to your point, yes, that could be a key risk. But media and startups in general, super closely aligned. Now, to close off today, we're going to talk about,
24:31 Speaker 00 we're going to talk about NFTs again, but it's not my fault. It's actually Aqua's fault, Natasha, because they are opening the world of alternative investments in a different direction and we're going to start there.
24:40 Speaker 01 So this week I spoke to Aqua. Their whole pitch is that people are interested in alternative assets. Sure, NFTs, we talked about fractional shares of physical art. Even people who own like fine wine are technically owning an alternative asset. And the co-founder Rohan Marwahha basically said that he thinks savvy investors don't need to just put things into like cartoon apes, but what about putting something into a little bit more stable, still experimental, private equity funds?
25:05 Speaker 00 We love private equity here at Equity. Do you want to know why? Do you want to know why?
25:09 Speaker 01 Why, Alex?
25:10 Speaker 00 Because we're owned by private equity. That's why we love it. There's no gun to my head. I'm not saying that under duress. Blink twice, alright, keep going.
25:17 Speaker 01 No, part of me actually thought like, I was like, why is this so interesting to me? Right? Like, why is private equity actually making me excited? And I think it's because Aqua's whole belief is like, we can get modern investors who are interested in alternative investing into like a more stable, but still exciting part of investing. And that feels like where most people are going. Not everyone is doling out thousands and thousands of dollars to buy these really expensive NFTs. They're buying smaller shares. You know, usually PE funds only accepted investments of like 250K to 10 million. And now you can, with a minimum of 10K, investors have access to funds, you know, that have a pretty stable kind of return cycle.
25:55 Speaker 00 Anything we can do to use technology to broaden access to investments and financial tools that were previously only for the super wealthy is great. If you've ever had no money, the bank treats you like, you know, gum underneath their shoe, and then you have some money and then they're nicer to you. And if you have more money, they're like, haha, Alex, come in. And if that, if that dynamic has ever pissed you off, technology can help kind of flatten things more quickly, which I'm excited about. But Natasha, did you just say expensive NFTs cost thousands of dollars?
26:25 Speaker 01 I did. This is my biggest issue with them.
26:27 Speaker 00 Is the issue that you're off by a factor of a thousand? Because they cost millions of dollars.
26:31 Speaker 01 Okay, fair. That's so true. I mean, I feel like that is like what we're overwhelmed by, like on Twitter, that's what pops off. But you wrote a really good piece this week about low-cost NFTs. I haven't seen one, so where, where are these?
26:43 Speaker 00 Well, the, I've made two NFTs and they're both low-cost because no one else wants them. NFTs are neat, I think. I think it's cool to see innovation and people playing around with technology, having a good time, enjoying themselves. What I don't like as much are the endless, we are gonna make it, they're not gonna make it, kind of like tribalism from the crypto kiddos. Calm down.
27:01 Speaker 01 I know.
27:02 Speaker 00 It's a JPEG.
27:03 Speaker 01 I think it's actually like a unintentional slash intentional tactic to overwhelm people from ever trying to understand crypto.
27:10 Speaker 00 Which is so backwards, because if you're a crypto believer, you should be really rolling out the carpet and being patient. But there's no one in my life who is less patient with me than, than people who are big into crypto and disagree with me about a thing. And yes, I am subtweeting Bitcoin maximalists there entirely. NFTs are cool because they're a neat way to think about art and music and so forth in a digital context. I'm always here for that. But my issue is I do not want to spend $3 million on a crypto punk or a bored ape. Yacht Club or not, you know, just no interest. And that's because I have no, no use for it. There's no utals that come to from that purchase for me. But what I do like are things like Axie Infinity, which is a game. And you can buy a little Axie, which is a little creature. Think of it like a Pokemon essentially, and each one is unique. Ha ha.
27:55 Speaker 00 And that way, there's kind of an NFT attached to each one and you can play with them. They can do little battles. It's kind of cool. It's like if you could get a Pikachu, but it was a special Pikachu. And it was the only one of that Pikachu. Maybe it's got like, I don't know, hot pink skin instead of yellow fur, whatever. Yeah. And there's a general kind of like price growth as your Axie has better stats, which is kind of cool.
28:17 Speaker 01 Okay.
28:18 Speaker 00 And, and you can buy one for like 50 bucks, a hundred bucks. And like, so that to me is neat because the, the barrier to entry then is the cost of a triple A video game, which is fine because I, I buy and play games. And so to me, like, when I wrote, bring on the low cost NFTs, it's like, let's make this more accessible to more folks. And that's kind of the Aqua tie in, which is like, how can we take something that is currently esoteric and reserved for only the wealthy and bring it to the folks?
28:40 Speaker 01 And I think that is what we hoped NFTs would always be, right? Or alternative asset investing is like, not this status symbol, but more like something that mixes the happiness and joy of a game with ownership with potential financial upside. I think like that is a lot more exciting to me.
28:58 Speaker 00 Yeah, but why the financial upside? Why, why, why, why, why? I think that is one of the most, that is a key perversion of the crypto landscape is that everything has to be a way to generate outside returns because you didn't buy Bitcoin in 2013. Like I just, why, why can't crypto be about cool technology and fun usability and not speculation?
29:15 Speaker 01 I think part of me, I think is like, because crypto is popping off in a time of a bubble. I am really curious if we fast forward X amount of years, will people be interested in low cost NFTs and private equity investing? Will they go back to putting most of their money in the S and P 500?
29:30 Speaker 00 Yeah, no, I don't disagree with that. I think we're still seeing the evolution of early crypto success stories and business models. I mean, Coinbase has run a subscription product to some degree that does away with trading fees, essentially giving up transactional revenue for SaaS revenues. So we're still figuring out even what the consumer business model for these companies is going to look like long term. But I will say like FTX sponsoring the world all at once seems to me a great way to take money from someone else and set it on fire. And so I'm very curious to see if stories about like, you know, FTX sponsors stadium and so forth. I wonder if those will age well, just given the kind of the competition in the crypto space and also the fact that the technology itself should allow for more decentralized exchanges, which you would think would undercut
30:11 Speaker 00 centralized exchanges over time. But I'll just let's wrap with this. If you don't invest in private equity because you're not rich or not incredibly wealthy, you now have options. And we hope to see that kind of access extend to other asset classes, even the more esoteric and the more strange and the more new that are out there. But we're, I'm being told by the producers over time. So we got to go. But to close off, our own Mary Ann is off dealing with some family stuff. And we just want to say that we absolutely love her and that we send our best to her and her family. And we think that she is just the absolute best. And we will have her back as soon as she is. And until then, Natasha and I will be, I guess, running as a duo on the Friday shows.
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