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BFD Expert Voices - Private Credit

BFD Expert Voices

Taylor Greene has spent the better part of the last decade investing at firms like Lerer Hippeau Ventures and Collaborative Fund and is now setting out on his own with a $50 million solo fund called Twelve Below, Ryan reports. 

Why it matters: Greene is part of a trend of ‘solo capitalists’ — independent investors who have raised LP money to invest in startups without the typical constraints of a traditional venture partnership.

The pace and size of investments that individuals are making have accelerated, even in just the past two years. 

According to Pitchbook, the number of deals attributed to individuals rose from about 5,000 in 2020 to 6,300 last year. 

And the amount those individuals invested in aggregate rose from $61 billion to $109 billion in the same time period. 

Details: Twelve Below is looking to invest in startups at the earliest stages. Its typical check size will range from $500,000 to $2 million for startups raising pre-seed or seed rounds of $1-$5 million.

During his time at LHV and Collab Fund, Greene was an investor in companies like DTC footwear brand Allbirds, interactive fitness startup Mirror, 401k for SMB provider Guideline, and teen neobank Step.

It should come as no surprise, then, that Twelve Below will be looking for consumer-facing startups in the fintech and health tech sectors. And it will be betting big on the New York startup ecosystem in particular.

Greene tells Ryan he wants to be a part of the post-COVID resurgence of New York tech, which will "maybe even have a chance to give Silicon Valley a run for its money over the next decade."

He has made a few investments already from his debut fund: Accrue Savings, a "save now, buy later" fintech; OttoPay, an automated bill pay startup; and Dutch, which provides telemedicine for pets.

The big picture:  LPs are clearly getting comfortable with the idea of backing single-person funds after years of watching them with caution.

That's mostly due to returns seen by investors like Shana Fisher, Raymond Tonsing, Elad Gil, Lachy Groom, and Oren Zeev, who have paved the way for the solo GP movement.

At the earliest stages, Greene says this shift has also "created an opportunity for smaller firms to step up and serve the role that the first generation of seed funds served back in 2013."

1 big thing: Rise of the solo capitalist

Illustration of the Statue of Liberty holding cash instead of a torch.

Trust Machines, a company seeking to build apps on top of the bitcoin blockchain, said it raised $150 million in funding.

Why it matters: Bitcoin is known as crypto's gold, but that enviable status is also one reason for criticism. While newer entrants like Ethereum and Solana allow users to build NFTs and other projects on top, Bitcoin is largely just a store of value. Giving the O.G. blockchain more utility could raise its worth even further.

In 2021, bitcoin fell to fifth among the largest crypto developer ecosystems, per Electric Capital. 

However, Trust Machines CEO Muneeb Ali tells Lucinda that most discover crypto via bitcoin, which even now remains the largest cryptocurrency by market cap, at $712 billion. Not to mention, the Bitcoin blockchain is considered the most secure.

Ali saw a possibility in turbocharging Bitcoin by adding smart contract functionality to the blockchain. He created Stacks, an open-sourced network that effectively did that.

Trust Machines in turn plans to build say NFTs, DAOs, yield-bearing products, or even mint stablecoins, on top of Stacks, which sits on top of Bitcoin.

Investors include Breyer Capital, Digital Currency Group, GoldenTree, Hivemind, and Union Square Ventures.

The bottom line: In the world of crypto, Bitcoin is the O.G. — but it is also the old dog. Some are now pouring millions into teaching it new tricks.

2. The BFD: Making bitcoin more valuable

Illustration of a bitcoin surrounded by hundred dollar bills.

Crypto trading is making its way slowly in Congress, per MarketWatch.

According to the data from 2iQ Research, seven lawmakers disclosed crypto transactions for 2021, a relatively small figure compared to the estimated $355 million in stock trades made that year.

Vocal crypto proponent Cynthia Lummis (R-Wy.) made the largest buy — an estimated $75,000 of bitcoin that year.

Mark Green (R.-Tenn.) made the most trades, buying some $72,000 in crypto and selling another $56,000. He was also perhaps the most adventurous, trading ethereum classic, dogecoin, chainlink, and more, per MarketWatch.

Why it matters: This all comes as crypto is facing multiple potential rules and regulations in Washington, D.C. — raising concerns over conflicts of interest in the sector at a time when stock trading is only just getting a close look.

3. The congressional crypto traders

Illustration of the US Capitol building against a backdrop of pixelated coins.

A $10 million gold cube dropped into New York City this week, making a home in the dirty ice-slurry of the city's iconic Central Park. The artist behind the "Castello Cube," as it's called, doesn't plan to sell it but instead hopes to use the piece to push related NFTs and a new digital currency dubbed Castello Coin. 

"It's a shitcoin marketing stunt," one user blasted on Twitter. And that is perhaps all you need to know about the current state of the market — neatly wrapped into a shiny, pointless golden box that everyone is trying to make sense of.

Embedded payments have gained traction — but what does that mean for the future? Financial institutions lost brand equity in the financial crisis, and consumers seem happy to trust retail brands with their money. Will finance, as a result, become less centralized?

PayPal posted 4.5 million illegitimate accounts (Forbes)

The company offered $10 incentives to open new accounts in 2021, but found many had been created by bot farms. In short: Fraud is still a large-scale issue for the fintech players.

Africa’s largest cryptocurrency exchange is looking to enter the U.S. (Bloomberg)

Luno, owned by Digital Currency Group, is looking into U.S. regulations to potentially rollout stateside over the course of the year.

4. Credit score

Illustration of positive and negative trend lines coming out of center point.

• Advent International is considering a $1b investment in listed Indian lender Yes Bank, per the Economic Times. http://axios.link/bLWF 

• ACME Capital raised over $300m for its fourth early-stage VC fund and adjacent opportunity fund. It also promoted Alex Fayette and Aike Ho to partners. www.acme.vc 

• Cart.com, an Austin-based e-commerce company, raised $240m in equity and debt. Legacy Knight Capital Partners led. http://axios.link/qRQ8

• Tribal, a San Francisco-based B2B payments and financing platform for emerging markets,  raised $60m in Series B funding. SoftBank Latin America Fund led and other investors included Coinbase Ventures, BECO Capital, QED Investors, and Rising Tide. http://axios.link/JBqW

• Jar, an India-based fintech, raised $32 million in Series A funding. Tiger Global led and was joined by Rocketship.vc, Stonks, Force Ventures, and Arkam Ventures. http://axios.link/BAAv

5. Deals of the day

• Ashneer Grover, co-founder and managing director of Indian fintech BharatPe, is asking directors for the removal of CEO Suhail Sameer from the board. http://axios.link/IWKx 

6. It's personnel

7. Memes and mumbles

Hello Fintech Deal readers, and happy Friday. We did it! We made it through another week!

Situational awareness: Some 33% of Americans said they'd be more likely to go on a date with someone who mentioned crypto assets in their dating profile, according to a recent survey by social investing startup eToro. 

Our question: What percent became... less interested?

Tell your fintech friends, family, crypto pals, and others about this newsletter. They can sign up here. 

February 04, 2022

1 big thing: Rise of the solo capitalist