Victorious VC, Apple Vision Pro, LLMs, and portfolio news
Hi all, welcome to the Q2 digest. The AngelList market has slowed *dramatically*, giving me more time to study the acceleration of the AI sector and figure out my next move.
Fund Planning
I’m exploring strategies for raising a new seed fund focused on emerging markets. It’s a challenging year to raise any VC fund, especially as a first-time manager, so this will be more of a marathon than a sprint.
I’m currently thinking about a $30M fund for African seed stage startups, with a co-GP formerly from Expert Dojo who is moving to Kenya. The working name is Victorious VC. The thesis is: we back early stage teams showing operational excellence, with defensible technology that accelerates emerging markets.
Why Africa now?
Africa is growing to 1.7B people and $6.7T GDP by 2030. It’s a largely unbanked mobile-first population with the fastest growing youth demo, and big white spaces in fintech, e-commerce, and supply chain. Unicorns include OPay, Chipper Cash, Andela, Flutterwave, Fawry, and Jumia.
VC investment in 2022 grew 12% over 2021, from $4.3B to $4.8B. The biggest markets are Nigeria, Kenya, Egypt, and South Africa, and key secondary markets with >$100M 2022 investment or strong startup ecosystems include Ghana, Senegal, Morocco, Tunisia, Uganda and Tanzania.
Smart money came to Africa in 2022:
Tier 1 growth funds made significant Africa investments (Dragoneer with their first in Yoco, and Tiger Global in Sokowatch, Flutterwave and FairMoney).
Juven, a spinoff from Goldman Sachs, announced that it’s "looking to commit up to $50M" in African startups.
Google announced a new $50M 'Africa Investment Fund' targeting African innovation. "Increasingly we are seeing innovation begin in Africa, and then spread throughout the world. This momentum will only increase as 300 million people come online in Africa over the next five years." - Google CEO Sundar Pichar
Amazon.com announces first Africa launches in Nigeria and South Africa coming later in 2023.
Visa launches $1B investment fund for Africa.
Please reach out to me on LinkedIn or by email if you’d like to see a deck. Disclaimer: This is not a solicitation for funding. Only accredited investors may invest in this type of fund.
Apple Vision Pro reaction
Not much that I disliked here! The price point doesn’t bother me, because they made so much custom hardware for this first version, and it isn’t meant to be an accessory to a PC/console, it’s replacing the high-end desktop PC. Clearly won’t be mass market for passive entertainment consumption in this generation, but the price will come down fast. This is a tour de force of systems integration, which is what Apple does better than anybody in the last decade, and a savvy rebrand of the metaverse to “spatial computing”.
What I liked:
the way they’ve adapted Leap Motion style hand motion detection to work together with eye tracking seems very smooth, and it’s a real differentiator
the content partnerships, of course, were strong
the Spatial Audio integration is going to set them apart on interactive experiences (social and gaming) in a way that’s hard to “demo”
What was meh:
3D…the state of glasses-free 3D screens today is already so far advanced and at a lower cost, that there is no way this is going to be the primary solution for 3D movies, or any sort of moat for Apple around “3D”
EyeSight…I get how it seems cool if you read about it or see a picture - this idea of turning “pass-through” mixed AR/VR glasses inside out by showing your eyes/face to the outside world through an external video screen. But upon seeing the demo, I doubt it solves the real-world social problem of XR headsets - it’s firmly in the uncanny valley for me. Personally, I don’t know if that (or outdoor lighting challenges) ever gets solved until we have smart contact lenses.
External tether - this cements that Apple Vision Pro is supposed to be the equivalent of a desktop PC, and assumes you will not move around much while using it. To sell the younger generation, my gut says they at least need to get to a bi-modal “laptop” scenario where you have some amount of tether-free charge on a lightweight battery, even if it’s not as much battery life as a mobile phone. I assume that wireless charging and low power battery tech need to converge first in another 5-10 years to fully eliminate that issue.
LLM update
Nothing has changed my opinion here despite the massive explosion of new services and startups in the LLM space in Q2. Startup valuations remain absurdly high for proprietary base models with chat interfaces, and for apps built on top that interface with core OS functionalities (e.g. companies like Anthropic and Rewind.ai). Most of the value of LLMs will accrue either to Big Tech from bundling it (e.g. Microsoft, Google, Amazon) for search, OS utilities, communications, and cloud infrastructure / dev tools, or to small startups offering heavily tuned models built on open source LLMs for unique verticals. I also expect to see a few winners in what I would call AI Middleware 2.0 - chaining together multiple types of AI with LLMs to enable other consumer and business apps. I expect many of those get acquired by enterprise SaaS leaders rather than make it to IPO.
Portfolio News Highlights in 2023
Pipedream pilot with Wendy’s for underground delivery to curbside mobile order pickup
Lynk in deal with Rogers for satellite SMS service to mobile phones
Droneseed creates parent company Mast Reforestation, acquires CA’s largest tree seed supplier
QuSecure unveils first quantum-secure satellite communications link
Cabinet Health gets a deal on Shark Tank for sustainable OTC medicine
Notable Labs to merge with VBL Therapeutics, a Nasdaq public company
Thanks for reading. If you’re an accredited investor and would like access to invest in the startups that the Gold Dragon Ventures syndicate is backing, you can sign up here: https://angellist.com/s/daniel-gould/31wYR