It has been a week since cryptocurrency exchange FTX filed for Chapter 11 protection, sending shockwaves through the industry. The bankruptcy included FTX, quantitative trading firm Alameda Research, and about 130 affiliated companies. More than a million creditors are expected to be affected and the sector is preparing for the next blowout.

FTX’s collapse has produced many questions, including whether (recently) former CEO Sam Bankman-Fried will go to jail, where Alameda boss Caroline Ellison is currently being held, as well as which jurisdiction will oversee the bankruptcy: New York or the base of FTX in the Bahamas.

But perhaps the biggest lingering question is, because the VCs didn’t ask more questions?

FTX has raised approximately $2 billion in funding from some of the best known venture capital firms such as Tiger Global Management, SoftBank and Sequoia Capital.

The way FTX raised funds is concerning. Whenever FTX tried to raise money, Bankman-Fried would send out a spreadsheet to prospective investors showing items such as income, profit and loss, daily users and expenses for FTX, according to an executive who received the documents. Fortune two sets of spreadsheets were sent under the condition that we could review but not publish the original documents, dated December 2021 and June 2022.

I spent almost two days going through the FTX documents, which were very disorganized and complicated. Spreadsheets are a far cry from audited financial data; rather, they appear to be homemade Excel files, which are sometimes confusing and have inaccurate labels. The documents do not provide a clear account of how FTX valued its various tokens or liabilities when calculating figures such as “net earnings.” Yet Bankman-Fried was able to use documents like these to raise nearly $2 billion from some of the savviest investors around.

What the docs show is staggering growth and rising costs. (The figures used in the spreadsheets are estimates and appear to be annualized.) FTX revenue increased 6,600% in two years before leveling off this year. Average daily volume has shown a similar trend, skyrocketing more than 11,000% between 2019 and Q4 2021.

Data for Alameda is in the June spreadsheet. One page shows the daily volume for the market maker on FTX for each day of May and June of this year. FTX doesn’t publish Alameda’s financials, but we wonder what information investors have been asking to see. (For its part, Singaporean investment fund Temasek released a statement saying it carried out eight months of due diligence on FTX before investing. This included reviewing audited financials that showed the company was profitable, before to take a share of less than 1% which he now says is useless.)

But whatever investors saw, there was a clear lack of oversight. None of FTX’s big backers received board seats. We have some idea why this happened. An executive, who declined to invest in FTX because the valuations didn’t make sense, pointed out how the exchange has revved up. FTX often did not include a lead investor, meaning investors received very small shares. “You don’t get a board seat for the 2%,” the executive said.

FTX, when it was warm, had little trouble attracting investors. It secured a $32 billion valuation in January, its third year of existence. Some executives said it was greed and FOMO that drove companies to FTX investments. It also undoubtedly had everything to do with the charisma of Bankman-Fried, whose bushy hair, calculated dowdy looks, youth and brilliance seemed to have disarmed Silicon Valley. Even after the implosion, few hesitated to say anything negative.

“Sam is really a down to earth guy,” said a second executive.

“He’s one of the good ones,” said another person before the bankruptcy.

Read my full story here.

Luisa Beltran
Chirping: @LuisaRBeltran
E-mail: [email protected]
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Jackson Fordyce curated the offers section of today’s newsletter.


Symenda behavioral engagement technology company based in Calgary, Canada has raised $42 million in funding. Inovia Capital he led the round and was joined by investors including Impression Initiatives, Mistral Venture Partners, BDC Capital’s Women in Technology Fund, Plaza InitiativesAnd edc.

Locate the AIa Burlingame, California-based video intelligence firm has raised $40 million in Series B funding. Scale business partners he led the round and was joined by investors including Redpoint Venture, Bessemer Business Partners, StepStone group, Venture MVPAnd Hypergrowth Partners.

ContinuumTMa Los Gatos, California-based metal recycling and supply company has raised $36 million led by Ara Partner.

1st financial servicea fintech and education company headquartered in Bethesda, Md. for residential home service contractors, raised $20 million in series B funding co-led by S2G Ventures.

Daylighta New York-based banking app for the LGBTQ+ community, has raised $15 million in funds. Anthemis group he led the round and was joined by investors including CMFG Ventures, Kapor Capital, Citi Ventures, Gaingelsand other.

Thirda Los Angeles-based contract intelligence platform, has raised $16 million in Series A funding. Aligning businesses he led the round and was joined by investors including TYH Ventures, Engage businesses, Human capitaland angel investors Ryan Breslow And Daniel Sak.

BoomPopa San Francisco-based event and out-of-office event company, raised $14 million. ACME Capital And Atomic invested round.

Torigen pharmaceuticalsa Farmington, Connecticut-based organic animal health products company has raised $13 million in Series A1 funding. Werth Family Investment Associates And Connecticut Innovations he co-led the round and they were joined by investors including Emerald Development managers, Gaingels, Kema fund, University of Notre Dame, SoGal Ventures, UCONN Innovation Fund, Capital of IronwoodAnd Capital advantage.

Virtualitya San Francisco-based Web3 browsing platform, has raised $8 million in seed funding. Blockchange Ventures he led the round and was joined by investors including Polygon Initiatives, F7 Enterprises, Micron Venture, Oceanic ventures, Neythri futures fundand other.

Sensiblea San Francisco-based company that turns structured documents into data has raised $6.5 million in seed funding. Craft businesses he led the round and was joined by investors including Engineering capital And Clock tower technology enterprises.

Pashousesa Jakarta, Indonesia-based real estate and tech fintech has raised $5 million in pre-series B funding from QED Investors.

Anode laboratoriesan Austin-based Web3 energy systems developer has raised $4.2 million in funding. Lerer Hippeau And lattice he co-led the round and they were joined by investors including Vayner Fund, CoinShareAnd Digital currency group.

Sematican open source continuous machine learning platform based in San Francisco, has raised $3 million in seed funding. Racing capital he led the round and was joined by investors including Y Combiner, Sum Capital, Capital of Leonis, Pioneer Fundand other angels.

Tacticala Morrisville, NC-based VC portfolio planning and forecasting software company has raised $1.5 million in seed funding co-led by Mac Venture Capital And 4DX Venture.


Industries of all Statesa Capital of blue sage portfolio company, acquired all assets of dB engineering, a Mansfield, Texas-based manufacturer of thermal, sound, and vibration isolation components. Financial terms were not disclosed.

Group of forged solutionsa Arlington Capital Partners portfolio company, acquired Steel Industries, a Redford, Michigan-based manufacturer of open die forgings and rolled rings for the aerospace and defense, space and industrial markets. Financial terms were not disclosed.

Middle capital acquired Six aces, a security equipment solutions provider headquartered in Andrews, SC. Financial terms were not disclosed.

Wealth Improvement Group acquired BTR capital management, a registered investment advisor based in Oakland. Financial terms were not disclosed.


– ​​Zhenjiu, a Chinese liquor company, is considering a Hong Kong initial public offering as early as next year, according to Bloomberg. The company could raise $300 to $400 million.

Morning Star partneran oil and gas exploration and production company headquartered in Fort Worth, Texas has filed for an initial public offering.


Digital virgina mobile payment solutions company based in Lyon, France, plans to go public through a merger with Objective Acquisitions Corp., a SPAC. A deal would value the company at $513 million, including debt.


Climate adaptive infrastructurea San Francisco-based investment firm, has raised more than $825 million for a fund focused on the clean energy, water and urban infrastructure sectors.

Schneider Electrican energy management and automation company based in Paris, France has invested $500 million in a second fund for its corporate entertainment, SE Ventures.

Venture indexa venture capital firm based in London, New York and San Francisco has raised $300 million for a fund focused on early stage investments.


Initialized capitala San Francisco-based venture capital firm, promoted Zoe Perrett to the principal.

Pritzker private capitala Chicago-based investment firm, promoted Michael Nelson to the managing partner e David Gau to the operations manager.

Vidavo Venturesa San Francisco-based venture capital firm, hired Luke DiGrassi as a business partner.

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