Chaos at Twitter, Banksy in Ukraine, and more abnormalities at FTX, the fallen crypto exchange

We'd be lost without our veterans; thank you for your service. (Also, see the bottom of this issue for an event coming up in February that is hosted by and also caters to veterans in the startup and venture world.)

With the national holiday, our interns were not in school today so we have a slightly shorter issue, BUT we did squeeze in a conversation with longtime VC and crypto investor David Pakman for this week's episode of StrictlyVC Download. Pakman, who spent more than a 14 years at Venrock, joined the crypto investment firm CoinFund last year, and we had a lot to talk about, from CoinFund's investment in FTX,  to whether it makes sense for creators to, after a point, relinquish their NFT royalties. 

We wrote up part of the chat (below) for TechCrunch but you might want to listen to the longer conversation here. Pakman was great at explaining a lot of what's gone on this week, how much it matters to the broader crypto ecosystem, and what to expect in the coming weeks and months.

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That's that for now. The cryptocurrency platform FTX filed for bankruptcy protection today, and its founder, Sam Bankman-Fried, resigned as CEO. FTX and roughly 160 affiliates said they had more than 100,000 creditors and tens of billions of dollars in assets and liabilities. It is the largest crypto-related bankruptcy ever, and will likely wipe out billions of equity value and maroon the crypto and cash deposits belonging to a legion of customers. Indeed, reports the WSJ, FTX, an industry titan just last week, now faces investigations or asset freezes from regulators and prosecutors around the world. 

Perhaps the first sign of trouble was FTX's agreement to sponsor the Miami Heat’s arena. A number of stadiums and arenas have signed naming-rights agreements with companies that later fell off a cliff including Enron, which signed a 30-year deal with the Houston Astros and imploded two years later when its accounting fraud came to light.

Adding insult to injury, more than $600 million in crypto disappeared from FTX’s wallets late today, says CoinDesk, with little clear explanation as to why. FTX reportedly stated in its official Telegram channel that it had been hacked, instructing users not to install any new upgrades and to delete all FTX apps. “FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don't go on FTX site as it might download Trojans,” wrote an account administrator in the FTX Support Telegram chat. More here.

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If you want to better understand exactly how big a deal it is that the cryptocurrency exchange FTX just imploded, you could do worse than talk with David Pakman, an entrepreneur turned venture capitalist. After logging 14 years with the investment firm Venrock, Pakman -- who led Venrock's investment in the digital collectibles company Dapper Labs and even mined bitcoin at his own home years back -- leaned into his passion for digital assets and last year joined the now seven-year-old crypto venture firm CoinFund.

His timing was either very good or very bad, depending on your view of the market. Indeed, in part because CoinFund was an early investor in the collapsing cryptocurrency exchange FTX, we asked Pakman to jump on the phone with us today to talk about this very wild week, one that began with high-flying FTX on the ropes, and which ended with bankruptcy filings and the resignation of FTX founder, Sam Bankman-Fried, as CEO. Excerpts of that conversation follow, edited lightly for length and clarity.

The last time we talked, almost two years ago, the NFT wave was just getting underway. Now, we're talking on a day where one of the biggest cryptocurrency exchanges in the world just declared bankruptcy. Actually, it's declaring bankruptcy for 130 additional affiliated companies. What do you make of this development?

I think it's absolutely terrible on a bunch of levels. First, it was an entirely avoidable tragedy. This failure of the company was brought on by a bunch of flawed human decision-making, not by a failing business. The core business is doing great. In fact, it's highly profitable and growing, even in a bear market. It's not like it was running out of capital or a victim of the macro environment. But its leadership, with almost no oversight apparently, made a bunch of terrible decisions and did things really wrong. So the tragedy is how avoidable it was, and how many victims there are, including employees and shareholders and the hundreds or even thousands of customers who will be affected [by this bankruptcy].

There's also the reputational harm to the entire crypto industry, which already suffers from questions like, 'Isn't this a scammy place with scammy people?' This sort of Enron-esque meltdown of one of the most highly valued and arguably most successful companies in the space is just really bad, and it will take a long time to dig out of it. But there are also positives.

Positives?

More here.

Amagi, a 14-year-old New York and Bengaluru startup whose platform allows its media clients to create content that can be monetized and distributed via broadcast TV and streaming TV platforms, raised a $100 million Series F round at a $1.4 billion, up from its Series E valuation of $1 billion in March. The lead was General Atlantic. The round included about $20 million in secondary buybacks. Amagi has raised a total of $349.7 million. TechCrunch has more here.

Near, a 10-year-old Singapore startup that provides insights to help marketing and operations teams to understand consumers’ online and offline behaviors, affinities, and attributes, raised a $100 million round led by Blue Torch Capital. The company has raised a total of $234 million. More here.

Brightside, a five-year-old San Francisco startup that provides a platform for employees and their families to address personal finance questions with the aim of improving worker productivity, raised a $33 million Series B round led by Obvious Ventures, with participation from Andreessen Horowitz, Trinity Ventures, Clocktower Technology Ventures, and Chestnut Street Ventures. The company has raised a total of $72.2 million. Business Insider has more here.

Coefficient, a two-year-old startup based in Mountain View, Ca., that makes a Google Sheets add-on that integrates with CRMs, SQL databases, and other SaaS tools to allow business users to import and manipulate data within spreadsheets, raised an $18 million Series A round led by Battery Ventures, with Foundation Capital and S28 Capital also taking part. The company has raised a total of $24.7 million. More here.

Tellus, a six-year-old startup based in Cupertino, Ca., that claims it can offer people yields of 3.85% to 4.5% on their savings balances by using the money to fund certain U.S. single-family-home loans, raised $16 million in seed funding. Andreessen Horowitz was the deal lead; other investors included All-Stars Investments, Alumni Ventures, Decent Capital, Vectr Ventures, West Arrow, and Westwood Ventures. The company has raised a total of $26 million. TechCrunch has more here.

Anything World, a four-year-old London startup that uses machine learning to develop interactive 3D experiences for games and other media, raised a $7.5 million round led by Acrew Capital, Alumni Ventures, and Warner Music Group, with additional investment from NGC Ventures, Supernode Ventures, GameTech Ventures, and GFR Fund. The company has raised a total of $9.7 million. VentureBeat has more here.

CloudTruth, a three-year-old Boston-based platform company that helps enterprise development teams manage their cloud configurations, raised a $2.4 million round led by UBMB, with additional participation from existing investors Glasswing Ventures, York IE, and Stage 1 Ventures. The company has raised a total of $7.7 million. SiliconANGLE has more here.

Directus, an 18-year-old Brooklyn startup that claims its no-code app allows any company to visualize its data, no matter the underlying SQL database, using a platform that is open-source, scalable, and extensible without needing to adjust or change anything about the data beneath, raised a $7 million Series A. The deal lead was True Ventures, with Handshake Ventures also chipping in. The company has raised a total of $8 million. SiliconANGLE has more here.

Electric Era, a three-year-old Seattle startup that aims to install a network of fast-charging EV stations at or near convenience stores, raised a $4 million round from Blackhorn Ventures, Proeza Ventures, Liquid 2 Ventures, and previous investor Remus Capital. The company has raised a total of $8 million. TechCrunch has more here.

Recess, a six-year-old startup based in Venice, Ca., an experiential marketing platform connecting brands with events and venues, raised a $5 million Series A round co-led by Data Point Capital and Spring Mountain Capital. The company has raised a total of $11.4 million. BevNET has more here.

Rule of 40 for SaaS companies is a useful metric for private equity investors and strategic buyers to measure the performance of SaaS companies. Allied Advisers’ report shows that companies which exceed Rule of 40 trade at significant premium valuations compared to companies that do not even in this downturn. In this market downturn for public and private companies, the Rule of 40 is a good metric for founders, management and investors to keep in mind as they build their companies for optimal valuations.

Juul Labs has secured a cash infusion from some of its early investors to stave off bankruptcy, though it plans to lay off about a third of its global staff, or 400 employees, to shave its operating budget. The WSJ has more here.

Convicted Theranos founder Elizabeth Holmes said she deserves to spend 18 months in home confinement, not prison, asking the judge who will sentence her next week to look beyond the “mocked and vilified” caricature of her and to instead see her as a human being. Bloomberg has more here.

Blake Masters, the COO of Thiel Capital turned Arizona Senate candidate, has officially lost his bid to incumbent Senator Mark Kelly. CNBC has more here.

FTX's venture backers who lost the most.

Two weeks of chaos; inside Elon Musk's takeover of Twitter. (It's a verifiable mess on the platform, too, with users creating havoc by impersonating brands.)

Banksy has appeared to confirm that he is in Ukraine after unveiling his latest artwork on Instagram.

Zucc Jet.

Hand-painted lampshades.

A Palm Beach developer is putting four homes, including one on a private island, up for sale for a combined $353 million in one of South Florida’s ritziest enclaves.

Join hundreds of military veteran entrepreneurs, venture capitalists, and early-stage operators at the Military Veteran Startup Conference hosted by Context Ventures on Feb 2nd & 3rd, 2023 in San Francisco. Military veterans make fantastic founders and investors - come build your network at the densest gathering of military veteran talent in the early-stage ecosystem. The event is open to everyone: military veterans, veteran spouses, and civilians. Learn more and register here.