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TBW #54: Éric Larchevêque got us pitching!

TBW #54: Éric Larchevêque got us pitching!

Read all about The Big Whale's 54th Premium newsletter.

Hello Whales and welcome to the little newcomers who have just joined us in the Premium edition! There are already over 1,500 of you reading us every week. Thank you so much 😍

To devour this week

🖊️ Editor's editorial

🗣 Our exclusive news

🔶 Who's going to raise millions?

🚀 Salesforce

Money Time ⌛

Start-ups are a bit like living beings. To live and develop, they need many things, not least oxygen, in other words money 💰. Now, because of the crisis and falling markets, a growing number of them are in danger of running out of air, and fairly quickly...

Of course, not all Web3 companies are affected. As Trendex shows (read our exclusive news below), some still manage to finance themselves, even finance themselves very well 💶 , but they remain the exceptions.

The reality is that money is much scarcer in Web3, and the situation is unlikely to improve in the short term, as the survey we published this morning shows.

Should we give up, though? Not at all, and there have never been so many good projects in the European ecosystem. We'll just have to manage to do more with less, at least for a few months. At least for a few months.

Replay: Eric Larchevêque pitched us! 🔥

To celebrate The Big Whale's first birthday, we organised a special live with Eric Larchevêque (Ledger, Coinhouse, Algoplus), who asked us almost every question about the team, the project, its finances... The video is available here 👀.

Our EXCLUSIVE INFORMATION 🗣

👉 This Web3 start-up that managed to convince Benzema

Andrea Bonapersona can smile. After several months of negotiations, his start-up, Trendex, has secured a golden shareholder in the shape of... Karim Benzema 🇫🇷. According to our information, the most recent Ballon d'Or winner has just invested in the French company, which is in the process of finalising a seed round worth several million euros.

Created in 2021, Trendex, which already counts Rudy Gobert (also an investor at Sorare) among its investors, is a platform for investing in the careers of sportspeople. There are currently just over 150 sportspeople, such as PSG player Renato Sanches, listed on the platform.

Trendex works in two stages. First there is the purchase of tokens: each 'talent' is divided into a limited number of shares (maximum 100,000 tokens) that users can acquire. The value of these tokens will evolve according to the athlete's potential and what users are prepared to invest in them.

Then there is a gaming system where Trendex users can compete against each other with their tokens in weekly tournaments, with winnings at stake, in the form of benefits in kind (meeting the athlete, for example) or cash 💶.

Each player selects 4 athletes from their portfolio and a ranking is drawn up based on performance (sporting, artistic..) and popularity (audience, reputation) of the athletes.

Web3: who can raise millions?

To grow, web3 start-ups need a product, customers and also... money. Especially in the current climate. But funding has never been so hard to come by.

Pierre* has made his presentation dozens of times, canvassed his network and even lowered his financial demands. The answer is always the same: it's impossible to convince investors to invest in his NFT studio.

"We've been trying to raise money since the beginning of the year, but it's been a real nightmare. Either we're being asked to let go of the reins of the company, or the amounts offered are far too low," details the entrepreneur 🇫🇷, who wished to remain anonymous.

Pierre's aim is to raise just under €1 million to keep his start-up, which has five employees, running. "We're talking about a crypto winter, and that's exactly what it is. Investors are very skittish", he laments, pointing out that he has "three or four months" of cash left. "After that, we'll run out of cash", he lets out a little bitterly.

An ecosystem in slow motion

It's no surprise to anyone that the web3 ecosystem has been running in slow motion for the past few months. Like Pierre, hundreds of European entrepreneurs are facing a drop, sometimes very sharp, in their business, with cash flow melting away like snow in the sun. "We've only signed one customer since the start of the year", confides another French entrepreneur, a little dejected.

In this context, and to hold on, you need money!

For crypto companies, there are no 36 solutions.... While the few banks that were willing to lend to the sector have turned off the tap (we're preparing an investigation into this 🧐 ), only investors, notably funds and business angels, could provide fresh money. But here, too, things are stalling 😬.

"There are very clearly fewer deals," confirms David Chreng-Messembourg, founding partner of London-based crypto fund LeadBlock Partners. The same is true of Alven. "We're deploying less money than we did 18 months ago," explains Bartosz Jakubowski, a partner at the Paris-based fund.

The figures speak for themselves: after a totally off-the-charts 2021, with more than $30 billion raised ($6 billion for Europe 🚀 ), and a 2022 that was almost as good ($25 billion), the web3 ecosystem has come back to Earth, and brutally so.

According to the investors we interviewed, volumes in Europe were divided by "at least three or four" in the first quarter of 2023. "Funds have paused," confirms Philippe Rodriguez, co-founder and head of French investment bank Avolta Partners, which publishes a quarterly barometer. The United States is also affected by the phenomenon.

Most funds prefer to focus on their portfolio and help start-ups in which they have already put their money. "If there are opportunities, we will always look. But for the moment, the aim is to consolidate existing lines", insists David Chreng-Messembourg. In other words, those who are not warm with enough cash are likely to be in for a complicated time...

The trend is the same all over Europe, whether in London (read our report on the spot), Paris, Lisbon or Berlin.

"There has been a lot of investment in 2021 and 2022, and now we need to focus on our holdings because things are going to be rocky for some," stresses Jonathan Kuhl, who is one of the co-founders of W3.fund, a Berlin-based web3 fund.

Companies that manage to raise

Not everyone is impacted. Some companies have anticipated the sequence and have already tightened budgets. "There's a real bonus for those who have managed the money well," slips a French business angel.

"Everyone knew that 2021 was a parenthesis. Those who are waking up today are a bit off the mark. With inflation and the crisis, raising funds has become harder and that's a very good thing", tackles another business angel based in Germany.

However, some start-ups are still managing to raise. Some even have no problem doing so, like the leaders in their market: the French unicorn Ledger, for example, which specialises in preserving digital assets, has just completed a €100 million fundraising round.

"At the top end of the market, there's no problem. Companies are finding investors," explains Ivan De Lastours, head of crypto and Web3 investments at Bpifrance.

A sign, however, that even for the biggest players in the market, the situation is not straightforward, Ledger has raised its €100m on the same valuation - €1.3bn - as its previous deal in 2021 😅.

"Valuations are going to be heavily impacted by the context", explains Philippe Rodriguez. "We are reviewing a lot of deals where valuations are significantly lower than they were a year ago," confirms Marguerite de Tavernost, who manages Cathay-Ledger's web3 fund.

"The balance of power has clearly shifted," notes Jonathan Herscovici, co-founder and CEO of StackinSat, a bitcoin buying, selling and custody solution, which is looking to raise around €5 million.

Those that are unable to raise from funds, such as crypto app Swissborg 🇨🇭 , are opting for another solution: raising funds from their community. "It's a good idea", stresses one investor.

Swissborg has thus raised $23 million from 16,660 people who have taken 9.53% of its capital.

"We spoke with funds at the beginning of 2022, but it didn't go through," blows its CEO Cyrus Fazel (read his interview), and we finally decided to rely on those who love us."

Some people are concerned about this kind of practice, however. "These individual investors haven't had access to the same information as conventional funds, which ask to see everything. There, it's less transparent", explains a business angel.

The segment, the team, the product...

When they are not leaders like Ledger or then as "popular" as Swissborg, small companies manage to raise, but only under certain conditions.

👉 The first has to do with the sector they are in. "These days it's no longer enough to say you're in Web3 to find investors," says Julien Bouteloup, founder and boss of the Stake Capital fund. "We need to be in buoyant themes such as scalability solutions, payment or gaming."

Start-ups in these sectors are indeed managing to raise money. "There is a real need for simple products that will accelerate adoption", confirms Luc Jodet, head of the web3 fund at XAnge.

According to our information, Rise, which enables companies to pay their employees and partners in crypto and fiat (euro, dollar...), is about to close a multi-million dollar round of funding.

Idem on the Metafight side. Having closed an initial round at the end of 2022 (€1 million), the MMA (combat sport) NFTs gaming platform is currently working on a Series A.

"Obviously the context isn't perfect, but we have no problem convincing investors because from the start we've been delivering and the team is solid," explains Julia Mahé-Emsallem, co-founder and CEO of Metafight.

👉 The second condition is down to people. "Having a quality team is fundamental, especially at the moment," insists Owen Simonin, who is known both as an influencer (Hasheur), entrepreneur (he runs the investment platform Meria) and investor.

The jack-of-all-trades has put his marbles into dozens of start-ups in recent years. "We look at the history of the project holders, the successes, the failures, and above all whether they have the capacity to execute."

👉 The third concerns the product: the golden 2021-2022 period when investments were made on mere promises is over. "We can no longer raise on pre-product. You really have to show something," notes Grégory Jessner, co-founder of start-up Narval 🇫🇷 , which develops an NFTs portfolio solution for businesses.

According to our information, the start-up is on the verge of raising funds, from several large American investors such as Andreessen Horowitz.

The risk of bogus projects

Should we consider that the others, those who fail to raise, are doomed? "There's going to be some breakage", says one business angel, questioning the proportion and speed of market recovery. "We have to grit our teeth", confides an entrepreneur in the sector.

If the Bear Market is to last, some think that start-ups, which will not have given up, will play their hand by trying to raise funds at all costs, and even launching tokens for some perhaps not so useful....

"We're likely to see some pretty bizarre things happen over the coming months, with operations launched with the sole aim of raising money," prophesies Owen Simonin. We'll have to be very vigilant. The year 2022 was a good lesson in this respect.

* First name changed

Marc Mathieu (Salesforce): "Companies' NFTs projects are becoming much more serious"

The US CRM giant is now enabling businesses to offer Web3 experiences to their customers. We spoke to its head, Marc Mathieu, about it.

The article is available on The Big Whale's website 🐳

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