Before the implosion of cryptocurrency exchange FTX this week, founder and CEO Sam Bankman-Fried had his hands in everything, with his entities investing in the issuer’s range of stablecoin Circle at investment firms like SkyBridge Capital. Now that SBF’s business is rapidly crumbling, what happens to those investments? And are VC companies trying to grab equity?
My colleague Leo Schwartz and I have delved into SBF’s investment network, which includes FTX itself, its quant trading firm Alameda Research, and the risk arm of FTX FTX Ventures, whose $ 2 billion fund is funded. by the SBF itself as the only LP. Check out this jaw-dropping chart below:
Crunchbase data, which is not complete, puts the number of companies in the portfolio for Alameda Research at 184 investments, FTX Ventures at 48 investments and FTX at 21 investments. FTX and FTX US also made acquisitions, including the assets of distressed lender Voyager Digital in a September deal for $ 1.4 billion. And it turns out that SBF entities have also invested in some VC funds themselveslike information reported Thursday, including channeling hundreds of millions into Sequoia Capital, Multicoin Capital and Paradigm.
Meanwhile, as Leo and I reported: FTX Ventures was actively investing prior to the recent FTX woes. Amy Wu, who heads the company’s $ 2 billion fund, said Fortune last week he had distributed “almost” half of that amount from the beginning of the year. Bankman-Fried was the fund’s sole limited partner, or investor, and Wu described his relationship with the fund as “essentially his family office.“
As for what happens to those companies the FTX empire was investing in? Things are not going well, industry players told us.
Gautam Chhugani, chief executive of Bernstein’s global digital assets, said that FTX is in a situation where it needs liquidity immediately, meaning it should likely offload capital with estimated discounts of 30% to 50%.
Companies that raised smaller amounts from FTX said they would not be affected. A spokesperson for Yuga Labs, creator of Bored Ape Yacht Club NFT, who received funds from FTX Ventures in Marchdirect Fortune to a tweet showing a leaked Discord chat message from Yuga Labs co-founder Greg Solano, where he wrote, “FTX was a small investor as part of our seed round, but of course we got that check a long time ago. It doesn’t affect our operations.” .
Other recipients may not be so lucky. One such company, which received funding from the FTX umbrella and spoke with Fortune on condition of anonymity, he said he received offers from multiple investors to buy the equity at the last round price or higher. The source added that initially taking money from the FTX sphere was an obvious move: “They were literally the best team around.”
Companies at different stages are likely to see different results, said someone familiar with companies under the SBF umbrella. Fortune. Early stage or seed companies may be able to find buyers for the same price, but ecosystem companies with tokens and later stage companies will likely see their shares sold at a discount.
Some VCs are biding their time and keeping an eye on the situation in terms of grabbing some of that equity. David Pakman, managing partner of the cryptocurrency-focused CoinFund company, told me via email that “Like everyone else, we are looking into this.”
Others, like Michael Anderson, the co-founder of the cryptocurrency-focused VC firm Framework Ventures, told my colleague Leo that he is not buying anything directly from FTX holdings, but has already been contacted by third party brokers offering tokens. and rights tokens. As more of those resources are released, however, Framework would consider it, but that “Catching falling knives is definitely not in our investment mandate,” Anderson said. You can read our full story here.
As with everything this week, there are still a lot of unknowns. And I also wonder what happened, or will happen, to that roughly $ 1 billion leftover set aside for FTX Ventures. Since SBF is the only LP, I guess the money would have been used to try and dent the financial hole FTX is in. But FTX Ventures did not respond when I asked what will happen to the fund.
Correction: In yesterday’s Term Sheet, I accidentally wrote that Arca’s venture fund is a $ 34 billion fund, not millions. It is $ 34 million and has been updated. Sorry for the mistake.
Jackson Fordyce edited the offers section of today’s newsletter.
– Kytea San Francisco-based rental car delivery company raised $ 60 million in Series B funding. InterAlpen partner led the round and was joined by investors including Valor Equity Partner, Anthemis, Venture city, Hearst Ventures, DN Capital, 1984 Businesses, FJ LabsAnd Urban Innovation Fund.
– Coefficienta data connectivity and spreadsheet automation company based in Mountain View, California, raised $ 18 million in Series A funding. Battery adventures led the round and was joined by investors including Foundation capital And S28 Capital.
– Tell usa savings platform based in Cupertino, California, powered by the real estate sector, raised $ 16 million in initial funding. Andreessen Horowitz led the round and was joined by investors including All-Star Investments, Alumni Ventures, Decent capital, Vectr Ventures, Western arrow, Westwood Venturesand other angels.
– The cablea New York-based news and data platform focused on China and global supply chains, raised $ 14 million in Series A funding led by Capital Sequoia.
– Expert, a New York-based wealth management platform, raised $ 11 million in Series A-1 funding. by Cal Berkeley The Home Fund led the round and was joined by investors including Business index, Thrive CapitalAnd Brewer Lane Ventures.
– Directan open source software company headquartered in Brooklyn, New York, raised $ 7 million in Series A funding. Real businesses led the tour and was joined by Handshake adventures.
– Withdrawala marketing platform based in Venice, California that connects brands with events and venues raised $ 5 million in Series A funding led by Capital of the data point And Capital of the spring mountain.
– It was electrica Seattle-based climate tech startup raised $ 4 million in funding. Black Horn Initiatives, Proeza Ventures, Liquid 2 VenturesAnd Remo Capital invested in the round.
– Altus Capital Partners acquired Leading X-ray Solutions, a manufacturer of non-destructive inspection and control systems based in Suwanee, Georgia. Financial terms were not disclosed.
– Capital of Blue Ridge construction acquired Production of artistic pavers, a paver manufacturer based in North Miami Beach, Florida. Financial terms were not disclosed.
– Supply of Munchthe heating, ventilation and air conditioning division of Marconisupported by Capital Genstaracquired Bell Simons, an HVAC distributor based in Hartford, Connecticut. Financial terms were not disclosed.
– Rotunda Capital Partners acquired a majority stake USA waterproofinga Schaumburg, Illinois-based provider of basement waterproofing and foundation repair services.
– CBRE Group acquired Full spectrum groupa maintenance and repair service provider based in Laguna Hills, California, for laboratory resources, from Pfingsten. Financial terms were not disclosed.
– EmployBridge acquired Bluecrewa Chicago-based W-2 workforce-as-a-service platform, from IAC. Financial terms were not disclosed.
– Printed devicesa TruArc partner portfolio company, acquired GlobalMeda medical tubing and extrusion manufacturer based in Trenton, Canada, e Schauenburg Truplastfrom Schauenburg tube technology. Financial terms were not disclosed.
– MBS highway acquired ListReport, a real estate data insight and marketing platform based in Orange, California. Financial terms were not disclosed.
– Commercial service acquired North border, a sales solutions company based in Port Orange, Florida, for commercial mechanical contractors. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
– Brighton Park Capital Managementan investment firm based in Greenwich, Connecticut, raised $ 1.8 billion for a fund focused on growing software, healthcare and technology services companies.
– LRV Healtha Boston-based venture capital firm, hired Josh Flum as a managing partner. Previously, he was with CVS Health.