Covered in this issue of our free newsletter: Alternative data. Mega-round participants. Blockchain funding trends.

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CB Insights celebration

Innovation Catch-22

Hi there,

There is now data on everything in the USA by race.

Breaking tradition

After Foursquare’s recent accurate prediction about Chipotle earnings miss — based on the app’s aggregated foot-traffic data — we mapped out startups (and exited companies) working to provide investors and other clients with alternative data.

How good is this lineup?

We’ve added the the Chief Market Intelligence Officer of Point72 Asset Management, the $11B family office of Steven A. Cohen, to our discussion on alternative data at The Future of FinTech Conference.

This discussion being led by Robin Wigglesworth of The Financial Times also features the CEOs of Foursquare and AppAnnie and is going to be really good.

As tickets are basically sold out, you should register for the livestream if you’d like to watch the conference online. The livestream is free for the first 1000 registrants.

The struggle is real

Someone please help out Paul Graham, the founder of Y Combinator.

Mega-round mix

The most active participants in $100M+ rounds into tech companies are a mix of crossover investors, VCs, and others. Looking at the 440+ mega-deals that occurred since 2011, VC participation in mega-rounds has slowed relative to the participation of other investors.

 

Corporate haters gonna hate

Corporate innovation is hard.

Last week, we’d applauded some comments by executives at General Motors in our newsletter as they had candidly acknowledged the changes coming to the auto industry. While it is well known that change is coming to autos, many big company execs publicly pretend that it won’t impact them. And so GM’s comments were refreshing in their honesty.

We also mentioned GM’s investment in Lyft and acquisition of Cruise for a reported $1B+. The response I received from many about these deals was that GM is dumb money and chasing innovation.

And here is the Catch-22.

When corporations don’t do anything, they’re described as risk averse and behind the times. Dinosaurs, luddites, etc.

But perversely, when they do something (as GM is), all the back seat drivers aka haters show up to say what they’re doing is dumb.

Innovation and maintaining relevance is hard especially in companies that are decades or centuries old.

That’s why 99% of corporations just do the theatrics around innovation. You know the ones whose senior management talks about failing fast and disruption and who visit Silicon Valley VCs to “make innovation part of their DNA.”

And talking a big game is easy.

The problem is that corporations often suffer from a knowing vs doing gap.

There is no way to know if what GM is doing is going to work or not but at least they are ”doing.” They are trying things and putting their money where their mouth is.

Instead, most corporations spend inordinate amounts of time trying to “know” which comes down to creating Powerpoint presentations with frameworks about markets, talking to VCs, and “networking.”

They are great at “knowing” but get tripped up on the doing part.

Because doing requires conviction and putting real money towards initiatives or bets. And some of these bets might end up being big or they also could go to zero. And the idea that something goes to zero is risky especially in corporations where failure is more often than not a career limiting maneuver.

I used to lead the innovation efforts at American Express so I have seen this from the other side.

If you are an employee at a big company that is trying to innovate, it’s a lot more fun and interesting to be at a place that is doing and experimenting versus one that prides itself on knowing and acting smart but which doesn’t actually have the courage to actually take risks.

So again, well done to GM for actually doing.

Block it out

We looked at funding trends within the blockchain space. With potential to transform industries ranging from banking to insurance to legal services, startups are proliferating.

The Industry Standard

Bloomberg. Ellen Huet (@ellenhuet) takes a closer look at the creative ways startups are redefining profitability, with CB Insights data on the cooling on-demand market.

 

Financial Times. Blockchain technology is gaining traction with reinsurers, writes Oliver Ralph (@oliver_ralph). He spoke with CB Insights senior analyst Matt Wong (@mlcwong) about the trend.

The Memo. China and India are seeing increasing investment in education technology. Oliver Smith (@OliverSmithEU) uses CB Insights data viz in this analysis.

Techcrunch. From consumers to global shippers, drones are here to stay. Philip McNamara’s (@mcnamara_philip) update on the industry cites CB Insights Frontier Tech data.

Hope your week is going well so far. 

I love you.

Anand

@asanwal

P.S. We’re launching a new auto tech newsletter. It’s gonna cover logistics, autonomous vehicles, the connected car, and more. Sign up.

30+ startups providing alternative data for sophisticated investors

New sources of data mined by startups like Foursquare, Premise, and Orbital Insight are letting investors understand trends before they happen. See the list.

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The investors fueling the mega-round phenomenon

Hedge fund Tiger Global topped the ranks of active investors into tech startup mega-rounds, participating in more than 40 $100M+ deals since 2010. See the data.

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Blockchain startup investment bounces back

After plummeting to the lowest levels of funding since 2013, Q1’16 saw a 385% boom in funding and 21% growth in deal volume. Read about it.

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The Blurb

A curated mix of articles on private companies, venture capital, emerging industries, and innovation.

Know thyself, venture capitalist. Charlie O’Donnell (@ceonyc) says it is difficult to ignore personal feelings of being open or closed to new deals, but staying self-aware can help you manage emotions in the process.

This is Going to be Big

Growth vs. profitability and venture returns. Jeff Bussgang (@bussgang) says with startups, the slow road to success doesn’t typically generate venture returns.

Seeing Both Sides

Forget unicorns. Barry Eggers (@barryeggers) proposes the idea of calling companies with realized outcomes over a billion dollars, narwhals.

Venture Beat

Anyone can back a startup now, but good luck finding the next Uber. Lizette Chapman (@lizette_chapman) writes about the new SEC rules will let “the 99 percent” buy share in private companies, allowing startups to raise as much as $1M this way.

Bloomberg

Angels and seed VCs. Elizabeth Yin (@dunkhippo33) answers a question regarding the difference between angels and seed VCs.

Elizabeth Yin

How Baked by Melissa brought private equity and e-commerce to the cupcake business. Melissa Ben-Ishay, co-founder of Baked by Melissa (@bakedbymelissa), explains how she got fired, started a cupcake business, and grew it into a New York City institution.

Inc.

The death of the department store. Mike Karanikolas writes about the struggle of big box retailers as they are increasingly becoming “outsized” by Amazon and the internet.

LinkedIn Pulse

Do companies have too many employees? Tony Stubblebine (@tonystubblebine) considers bias toward headcount and questions whether companies with many employees result in employees that are underutilized and/or unfulfilled.

Medium