🍋 VCs Keep Evolving

Together With

Good Morning only to the people that didn't get omicron this past weekend. The new variant continues to wreak havoc across the world, particularly New York, where CityMD lines were longer than Saturday night LAVO lines. Apparently, the number of cases is doubling every 1.5 to 3 days in areas with community transmission according to the WHO. President Biden is expected to give a special speech tomorrow to address the new variant. JPMorgan is getting fined $200M for employees' use of WhatsApp on their personal devices to discuss business matters. BurgerFi, staying true to its name, unveiled a robot called Patty, to deliver food to its customers. Tiger Woods is back on the golf course with his son!

1. Story of the Day: VCs Keep Evolving

The VC world evolves fast. Venture capitalists are increasingly incubating companies or setting up start-up studios than just investing in the hottest start-ups.

VCs have large networks, infrastructure & systems in place for research, and access to abundant capital, which makes them ideal candidates for incubating companies.

Recently successfully incubated companies like Snowflake and Hims are inspiring more VCs to go this route. Snowflake was incubated by Sutter Hill Ventures, whose partner Mike Speiser was Snowflake's first CEO. Snowflake is currently valued at $102 billion while Hims, incubated by Atomic, is valued at $1.3 billion. (see chart below)

The goal of incubation is simple. Get meaningful equity stakes at low prices. The VC equity stakes can get quite sizable too (50-60%) and there is criticism if at that point it's even worth the founder’s time.

Primary Venture Partners, an NYC VC firm, expects its first 3 incubated companies to return the first fund "many times over.”

Short Squeez Takeaway: With markets getting frothier by the day, it’s no surprise that VCs are going down this path. The VC business model relies on outliers to score fund returns so they can afford a few strikes, especially if they cost a lot less than buying companies outright. We expect this trend only to continue and get bigger.

Source: Axios

2. Markets Rundown

US stocks closed lower Friday, booking losses for the week as investors considered the economic impact of the spread of the Coronavirus omicron variant and recent central bank actions.

Movers & Shakers

• (+) Cerner ($CERN) +13% following news of a potential sale to Oracle.

• (+) Fedex ($FDX) +5% after quarterly earnings and revenue results topped expectations and it announced a $5 billion buyback

• (–) Rivian ($RIVN) -10% after reporting its first quarterly results as a public company and cut its 2021 vehicle production target

3. Top Reads

• To the moon? Venture capital trends (CB)

• Stocktwits raises $30 Million at $210 Million Valuation (BB)

• Bowlero goes public, capitalizes on growing market (FoS)

• Podcast advertising gets rough for advertisers (Verge)

• The American addiction to speeding (Slate)

• Green-energy race draws an American underdog to Bolivia’s lithium (NYT)

• First FDA-approved eye drops to replace reading glasses go on sale (NA)

• Hope is a great strategy (PragCap)

• Why is omicron so contagious? (SA)

A Message from Yieldstreet: Invest Beyond the Stock Market

Ever get a little tired of that daily grind? What about having your money work for you?

Yieldstreet offers a diverse marketplace of investment opportunities so you can put your money to work.

• With investments ranging from art to real estate to luxury cars; Yieldstreet investments aims to generate short term cash flow and capital appreciation targeting annual yields of 3-18%.

Join over 300k members on Yieldstreet who have gained access to the investment products historically dominated by the ultra-wealthy.

4. Book of the Day: What Doesn't Kill Us

Our ancestors crossed deserts, mountains, and oceans without even a whisper of what anyone today might consider modern technology. Those feats of endurance now seem impossible in an age where we take comfort for granted. But what if we could regain some of our lost evolutionary strength by simulating the environmental conditions of our ancestors? 

Can we hack our bodies and use the environment to stimulate our inner biology? Helping him in his search for the answers is Dutch fitness guru Wim Hof, whose ability to control his body temperature in extreme cold has sparked a whirlwind of scientific study. 

He chronicles his own transformational journey as he pushes his body and mind to the edge of endurance, a quest that culminates in a record-bending, 28-hour climb to the snowy peak of Mt. Kilimanjaro wearing nothing but a pair of running shorts and sneakers.

An ambitious blend of investigative reporting and participatory journalism, What Doesn’t Kill Us explores the true connection between the mind and the body and reveals the science that allows us to push past our perceived limitations.

“Much of the developing world no longer suffers from diseases of deficiency. Instead, we get the diseases of excess.”

5. Short Squeez Picks

• Join the 50k other investors bout to invest in VC with Sweater Ventures, the first VC fund for the retail investor

• It’s time to stop giving gifts to adults

• Patrick O'Shaughnessy talks the future of markets with Doug Colkitt Podcast

• Big Macs and even bigger flops—American fast-food chains are languishing in Italy

6. Daily Visual: US IPO Performance

Source: Axios

7. Daily Acumen: Quantum Computing

There are certain tasks in which quantum computers can vastly outperform even our best supercomputers due to how they work by using the properties of quantum physics to store data and perform computations.

Classical computers, which include smartphones and laptops, encode information in binary “bits” that can either be 0s or 1s. In a quantum computer, the basic unit of memory is a quantum bit or qubit.

Qubits are made using physical systems, such as the spin of an electron or the orientation of a photon. These systems can be in many different arrangements all at once, a property known as quantum superposition.

For instance, eight bits is enough for a classical computer to represent any number between 0 and 255. But eight qubits is enough for a quantum computer to represent every number between 0 and 255 at the same time. A few hundred entangled qubits would be enough to represent more numbers than there are atoms in the universe.

Quantum computers could enable drastic progression in drug discovery and development, ultimately giving scientists the ability to solve problems that are currently unsolvable. 

Source: New Scientist

8. Crypto Corner

• Ben Gilbert and David Rosenthal talk with Sam Bankman-Fried and Mario Gabriele about the history of FTX Podcast

• A tale of two NFTs: Could Bored Ape Yacht Club flip CryptoPunks?

• The future of blockchain and climate change

• Vodafone auctions world’s first SMS 'Merry Christmas' as NFT for charity

• MicroStrategy CEO outlines potential ways to 'generate yield' from the company's Bitcoin holdings

9. Memes of the Day

Advertise | Wall Street Shop