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January, 2019 Volume 23

Most Wonderful Time of the Year

We love a new year.  It’s so full of hopes and plans and excitement to get started. It is truly the most wonderful time of the year.  Last year was quite good with the close of Fund I and the growth of our portfolio to 12 companies.

What will 2019 bring?  We would like to continue to find and fund great companies who will bring positive change to financial services.   Our XPLR search process using the Cogo Labs data continues to provide companies to research and pursue.  We plan to dig in further to find possible investments.  We see continued deal flow from fellow venture firms.  Sourcing from our broader network is yielding good insight and investments.  Our plan is to remain focused on getting capital into companies in their seed round. Follow on investments picked up in the fourth quarter so we look forward to many more in 2019.  We have been pleased with the thoughtful structures and valuations in these thus far. Finally, we have big plans to move just a 100 yards from our present office but into space to allow for expansion.  All of us have enjoyed our closeness in the current space-but any added interns or growth in staff for our next Fund and we are out of space.

We hope you have an amazing 2019.

—Mark & Dave
 

Envision Interview with Patrick Larsen

Blockchain insights from ZenLedger CEO Patrick Larsen

What does a recession really mean for a VC?

Downturn, what downturn?   We don’t see a slowdown in the core business premise of our portfolio companies nor in the incumbents willingness to work with them…….yet.

What might cause that to change?  We think it would have to be a substantial downturn in business activities with incumbents laying off and digging in for a prolonged drop in activity.  We just don’t see that coming at this stage. We do see the potential for a pull back or significant slowdown in 2019 or 2020.  It is also possible that we get back to growth with a deal with China and a Fed less likely to raise rates. In fact, we feel any slowdown is good!  It takes out our weak competitors in FinTech.  It lowers expectations on valuations in a healthy way.  It makes capital a bit more precious which is good.  It will be better used if considered very valuable. We are already seeing this in the digital assets world.  Bad projects are falling apart which is good.  Good firms are getting funding to get them through crypto winter at better valuations for investors.  Weak competition is going away.  Professional investors are still entering the market and loving the volatility. Our plan is to take as much advantage as we can of these conditions.  Providing insight and staying power to our portfolio companies is a key activity for us in these moments. Being a newer fund with a long time horizon and plenty of capital should provide an advantage at these moments of change.  It should allow us to intelligently invest. —The Vestigo Team

Vestigo at Davos

We are pleased to report that Vestigo Advisory Board members Mira Wilczek and John Werner, Vestigo GP Dave Blundin, Vestigo Founder Ian Sheridan and Vestigo portfolio company FRST CEO Karl Muth will be attending the World Economic Forum at Davos this year.  We look forward to giving you the details on all the action from Switzerland in next month’s issue.

Portfolio Updates

Long Game in Forbes Top Apps

With Long Game cracking 90,000 savings accounts this month, it’s no wonder that our favorite mobile “game” is running up a high score!  Forbes contributer Jennifer Cohen noted it as one of her top apps for success in 2019.  Vestigo is also confident in the success of Long Game’s users and the company itself in 2019.

Crypto Winter’s Silver Lining

Vestigo Portfolio Company ZenLedger enjoyed a big pop in revenue on the back of their successful “tax loss” harvesting campaign.  Vestigo’s approach to crypto has been to find opportunities with low correlation to token/cryptocurrency prices.  While many people in the crypto ecosystem are suffering these days, the idiom “Death and Taxes” is proving out.

Interesting News

Early-Stage Remains Attractive

We started Vestigo with the premise that while the amount of capital in the venture eco-system as a whole was enormous, early-stage (and in our case FinTech) was being overlooked.  It’s gratifying to see our intuition confirmed by this new report from PWC and CB Insights.

Major Acquisition in FinTech

Nearly all consumer facing FinTech startups (including some of our own) have deep integrations with both Plaid, the FinTech startup that enables developers to create financial services applications and Quovo, a startup that aggregates investment data.  This is massive news for our industry.

FinTech Trends and Drivers

This short article touches on most of the things we talk, think and write about at Vestigo every day.  Understanding the relative importance of the overall industry trends when analyzing a particular investment opportunity is one of the exciting challenges of the job!

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