Daily Musings

Evening all

I recently had a call with a friend in France. In German stereotypical fashion I apologised for being 23 seconds late to the call. She explained to me that in France it is customary to arrive 15 minutes late to events - this is to give everybody the time they need to perhaps mentally prepare for an evening of irresistible French wine and cheese.

Today as the Deutsche Bahn proudly declared to be perfectly on time (meaning 15 minutes later than scheduled) I realised: The French and the German aren’t so different after all. Not at least when it comes to 15 minute grace periods. In hopes the Deutsche Bahn will not only adopt French punctuality but also their taste in baguette and butter I share today’s musings.

Cheers
Philip

Today’s Stories

Paraphrased wisdom by Buffett states that spending less than you earn creates wealth. “Sounds good. Doesn’t work.” is not just a hit quote by former POTUS Donald Trump but also the motto of the US economy. The deficit hits 1.8tn in 2024 per CBO expectations. higher interest costs, social and medical costs (Over the past decade, the average American’s health insurance deductible amount has increased 53%). In part gives rise to the surging long tailed yield curve we have seen. Train of thought: Higher deficit → US borrows more money to cover the burn → laws of supply and demand at work. Less cash (interest just being the “price of money”) + More bonds (lower prices implying higher yields)

Chart Art

CRV letting their LPs know that it will not call more than 50% of capital committed from a 2022 vintage as the number of reasonable late stage opportunities is limited. Some context before digging into the chart art: The SF based VC sits on just shy of USD 1.3bn in dry powder. Checking their vintages I can see three funds that could fit the bill of the mysteriously described one. Considering the latest five vintages have returned a weighted IRR in the ballpark of (10)%, I can fathom why parking capital in frothily valued markets may make sense. LPs are perhaps happy to have liquidity back early and at a 1.0x MoM rather than having time or even pressure to deploy on GP side eat into their returns.

CRVs communication falls right in line with European Start-up funding trends. The funding volume drops in Q3. Most of this is driven by a substantial decline in later stage funding. Early stage funding (USD 4.5bn across 290 deals in Q3) kept a more steady pace. Notable deals include (lots of Bio and HealthTech in the early stages - at least when we try to not look too much at the legal genAI funding rounds):

• Newcleo’s USD 150m Series A

• PanTera’s Series A for USD 110m

• Myricx Bio GBP 90m Series A

• Notpla’s GBP 20m Series A

• Bunch’s USD 15m Series A

While the largest two markets: UK and France have experienced declines (in the UK YoY growth is down 43%) - Germany (despite making headlines by slashing 2024 GDP growth expectations to negative 0.2% from the originally planned 0.3 expansion) has seen growth in start-up funding.