Daily Musings

Evening all

news tickers have been volatile the last years. I imagined little would shock me. Yet a planet of the apes scenario struck a core with me. 43 monkeys escaped a research lab in South Carolina. Perhaps a revolt to local election results. So far: They have supposedly been peaceful.

As I hope that stiffer US tariffs under the new government regime will not cause banana supply to run dry, I share my musings.

Cheers
Philip

Today’s Stories

Venture Capital

• Lisbon based GP - Bynd Venture Capital - held first closing for its EUR 40m fund in May looking to call final closing shortly. This third vintage is investing in pre-seed and seed deals. 40 deals in total. An equal 50/50 split between the stages with some capital set aside for potential follow on round. Specifically the firm is looking to boost AI, software and consumer goods ventures rooted in Spain and Portugal

• Cendana Capital launched vintage six: Target of USD 350m

• Healthier Capital launched its first fund with a target of USD 200m

• Ecommerce Fintech Parker raised USD 20m in Series B with Peter Thiel’s Valar Venture in the lead. Y Combinator participated. Total equity funding now standing @ USD 58m with another USD 120m in debt (having only emerged from stealth about 1.5 years ago). The NY-based company provides financing solutions to cover inventory and expenses based on the merchant client’s revenue and cash balance. Durations up to 90 days - averaging around 60 days outstanding on its credits. Limits for the financing provided are up to USD 10m.

Macro

• As the topic continues to be a prominent guest of my news feed, I will continue to cover it: Yields. 10Ys up to 440bps last week. Mid-term markets are looking beyond near-term loosening. All eyes on inflation and growth. Two noteworthy considerations:

  • Junk paper is trading tightly with corporate grade credit. Spreads just 300bps. If base rates persist at higher rates around 400bps to 500bps, despite rate cuts, I wonder how much longer companies can serve interest payments. Best wishes to those with high operating leverage.

  • In terms of valuation the implication is rather clear: Higher cost of capital eats into free cash flows - plus the discount rate increases. Pressure x2 on DCF implied valuation.

M&A 

• Its back on the menu. GPs and bankers alike have been eagerly waiting. Markets are anticipating a boom in M&A. GS is expecting a rise of 20% in the M&A markets for the coming year. While I feel with the analysts that just started on the desks, I am keen to see how pent up consolidations will play out. Markets are eyeing Capital One, Discover, Frontier, Spirit, Kroger and Tapestry. All shares up. Trump is expected to sack FTC Chair Lina Khan and the DOJs antitrust chief Jonathan Kanter.

Chart Art

Crypto

• While SaaS valuations have not shown significant signs of shifting to the recent election results, crypto is having its “Leeroy Jenkins” moment. BTC surges past USD 80k. Some contextual snacks:

  • Trump is planning to turn the US into the “crypto capital of the planet”

  • Market participants are speculating on the Fed becoming a major buyer of cryptocurrencies - specifically BTC

  • The total cryptocurrency market is reported to have topped USD 3tn for the first time in three years. Gains of +25% since Nov. 5

• Some have made a pretty penny in digital gold. Others (Don Wilson @ DRW) should be considered alchemists. FT outlines his history of investing in the currency as early as 2012. Picking the currency up at between USD 10 and USD 12 a piece. If that wasn’t enough, he amassed a treasure chest of 70k BTCs during a US auction of holdings seized from an illegal drug market in 2014. Holdings now worth north of USD 5bn. Echoing the thesis many have already put forward: Wilson is bullish on powering the GPU infrastructure / trading market. Argument: Computing power, not data is becoming the largest commodity in the world.