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Rocketship Remakes Early Stage Venture Investing – pymnts.com

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Most investors claim to follow the data, which is good investing practice and even better marketing. Besides, no really successful investor is ever going to claim blind luck or gut instinct as their secret sauce.

But letting the data drive one’s actual investment decision-making is a lot more difficult in practice than it is in theory. After all, there’s a lot of data out there, Sailesh Ramakrishnan, a partner at early-stage global venture capital firm Rocketship Ventures told Karen Webster in a recent conversation.

He said the world is awash with data all day, every day – from mobile apps, social media, ratings sites of all sorts, etc. – a stream that generates a constantly shifting sea of information for any investment firm.

But Ramakrishnan said that information breaks down into three distinct types. “There’s a bunch of day-to-day, changing data that come in, things like newspaper articles, employment history, new executives joining, funding announcements and so on,” he told Webster.

On the other end of the spectrum is the static, mostly historical data about a company. And in between is the slow-changing data – quarterly performance results and the like.

“So there’s a whole continuum of data, and not only do you need different techniques to extract information, you also need different ways of combining these different streams to get an entire image,” Ramakrishnan noted.

And that is what Rocketship’s algorithm-based investment model was constructed to do. It sets multiple models keyed into different time slices against the startup ecosystem and gears the firm’s investments toward early-stage firms in their earliest investment rounds (generally the seed, A and B rounds).

The model aims to accomplish the same goal of every early-stage investor: to get in on the ground floor with the next amazing company and disburse the funds entrepreneurs need.

Following The Data To The Unexpected

Rocketship’s models are varied – some compute data every day, some every few weeks and others every few months.

Ramakrishnan said none of these models are perfect, because perfect models don’t exist. But they’re designed to learn and improve over time, filtering data into better guidance and recommendations as to where the firm should be looking to invest.

That doesn’t mean the model gets to make decisions on its own. Ramakrishnan said one of the most important realities of working with mathematical modeling is that it has its limits. Reality is full of intangibles that matter very much to a company’s success, but they’re hard to present mathematically.

“That is why we have not invested in every company that our algorithms identify,” Ramakrishnan explained. “We as human partners spend a lot of time trying to understand that ‘secret sauce’ that exists within the company, and whether that is a sustainable, resilient element.”

But it does mean that when the data point in a certain direction, the firm knows that’s the place to start looking – even if it’s not what Rocketship expected to see.

A World Of Opportunities

That was the firm’s experience almost immediately upon launching its first fund five years ago. The plan was to do what nearly every Silicon Valley investment firm was doing at the time.

Rocketship intended to start local with all the opportunities in the Valley, then down the road push out into the country at large and eventually the wider world. But when the firm actually started running its algorithmic models, Rocketship quickly found that its plan was, in a word, wrong.

What the data told the company was that its own backyard was the wrong place to play. The broader world was full of amazing companies without much regard to borders – in India, the European Union or Latin America.

Ramakrishnan said Rocketship was founded by career data scientists, all operating under one golden rule: “Never impose one’s strategy in conflict with what the data is saying.”

“Data offered us these kinds of global opportunities and we followed,” he said. “We became a global investor pretty much on day one, and were immediately very different from what most other investors were doing.”

Thriving During The Pandemic

Ramakrishnan pointed out that the world of investing is changing all around us, but in ways that play to Rocketship’s strengths.

In a world where a pandemic has shut down face-to-face meetings, everyone on Earth suddenly has to learn something that Ramakrishnan said his firm has spent the past half-decade working on: investing in firms whose founders you’ve never met in-person.

And he added that the investment landscape is still lively in an awful lot of places. For example, firms that enable cloud-shift, FinTechs that enable lending, firms specializing in employee management and neobanks/digital banks are all areas where opportunity is exploding in response to recently skyrocketing demand.

Democratizing Venture Capital

Perhaps even more interestingly, Ramakrishnan said, is that the investing landscape itself is beginning to change as it becomes more globalized and democratized. The balance of power is shifting in ways he believes will ultimately benefit the best, most innovative companies worldwide, without regard to where they were founded.

Ramakrishnan said the next amazing startup might come from Silicon Valley, but it could just as well come from Vietnam, Nigeria, Chile or Colombia. And those firms will come to market better able to build a track record of results without raising capital – which means by the time they’re talking to potential investors, “the dynamic has changed,” he noted.

The money will always be extremely important, but the data-driven investing world of the future is about more than that, he said.

“Everybody’s asking investors, ‘What can you do for me?’” Ramakrishnan said. “[But] it’s not just about if we have the dollars – it’s because of our backgrounds, our data science, our data.”

“We now have to have those reasons why you should take our money from us versus anybody else who’s offering money to you,” he said. “And I think that dynamic – where there is that recognition of the value investors play over and beyond just the dollars – is [an] essential part of this conversation.”

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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Dogecoin dropped after Elon Musk calls it a ‘hustle’ on ‘SNL’ show

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By Alden Bentley and Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) -The value of dogecoin dropped sharply in early U.S. hours on Sunday, after Tesla chief and cryptocurrency supporter Elon Musk called it a ‘hustle’ during his guest-host spot on the “Saturday Night Live” comedy sketch TV show.

Dogecoin was quoted as low as $0.47 on crypto exchange Binance, down 28% from levels around $0.65 before the show.

The billionaire Tesla Inc chief executive hosted the show at 11:30 p.m. EDT on Saturday (0330 GMT on Sunday).

Cryptocurrency enthusiasts had for days been eager to see what he would say, after his tweets this year turned the once-obscure digital currency into a speculator’s dream.

Asked ‘what is dogecoin’, Musk replied, “It’s the future of currency. It’s an unstoppable financial vehicle that’s going to take over the world.”

When a show cast member Michael Che countered, “So, it’s a hustle?”, Musk replied, “Yeah, it’s a hustle.” And laughed.

Musk is the rare business mogul to have been asked to host the venerable comedy TV show. The timing puts Musk back in the spotlight just as Tesla’s stock is losing steam following last year’s monster rally.

The unconventional CEO has posted numerous comments about cryptocurrencies on Twitter and criticized regular old cash for having negative real interest rates.

“Only a fool wouldn’t look elsewhere,” he said in February.

His cryptic tweets “Doge” and “Dogecoin is the people’s crypto” that month kicked off a rally in dogecoin – created as a parody on the more mainstream bitcoin and ethereum.

On Thursday, Musk tweeted: “Cryptocurrency is promising, but please invest with caution!” with a video clip attached in which he said, “it should be considered speculation at this point. And so, you know, don’t don’t go too far in the crypto speculation …”

But he also said, in the video, that cryptocurrency has a “good chance” of becoming what he called “the future currency of the Earth.”

On crypto data tracker CoinGecko.com, dogecoin has jumped more than 800% over the last month and is now the fourth-largest digital currency, with a market capitalization of $73 billion. It hit a record high Thursday above $0.73.

It has overtaken more widely used cryptocurrencies such as litecoin and tether.

Tesla said in February it bought $1.5 billion worth of bitcoin and would soon accept it as a form of payment for its electric cars, a large stride toward mainstream acceptance that sent bitcoin soaring to a record high of nearly $62,000.

Tesla shares closed 1.3% higher at $672.37 on Friday.

(Reporting by Gertrude Chavez-Dreyfuss and Alden Bentley in New York, and Noel Randewich and Hyunjoo Jin in San Francisco Additional reporting by Joe White and Vidya RanganathanEditing by Matthew Lewis & Simon Cameron-Moore)

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Wealthsimple hits $4 billion valuation on funding from Ryan Reynolds, Drake

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Wealthsimple

(Reuters) -Wealthsimple said on Monday it has raised C$750 million ($610.40 million) in its latest funding round, which more than doubled the Canadian fintech company‘s valuation to C$5 billion.

The latest funding round included participation from celebrities Drake, Michael Fox and Ryan Reynolds, according to the company.

The Toronto-based company that has helped make stock trading, peer-to-peer money transfers and tax filing easily accessible, said it will use the amount raised to further expand its market position, product suite and team.

The latest funding round, led by venture capital firms Meritech and Greylock, also includes investments from iNovia, Sagard, TSV and Redpoint.

The funding consists of C$250 million primary fundraising by Wealthsimple and a C$500 million secondary offering by holding company Power Corp of Canada, its largest shareholder.

Wealthsimple said it has seen rapid growth in the past 14 months as Canadians took an interest in stock trading during the COVID-19 pandemic.

Earlier this year, the company said it plans to grow revenue by adding premium features for its clients.

($1 = 1.2288 Canadian dollars)

(Reporting by Eva Mathews and Tiyashi Datta in Bengaluru; Editing by Shailesh Kuber and Shounak Dasgupta)

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Ethereum breaks past $3,000 to quadruple in value in 2021

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SINGAPORE (Reuters) –Cryptocurrency ether broke past $3,000 on Monday to set a new record high in a dazzling rally that has outshone the bigger bitcoin, as investors bet that ether will be of ever greater use in a decentralised future financial system.

Ether, the token transacted on the ethereum blockchain, rose 3% on the Bitstamp exchange to $3,051.99 by lunchtime in Asia. It is up more than 300% for the year so far, easily outpacing a 95% rise in the more popular bitcoin.

In part, the big rally is a catch-up to late 2020 gains in bitcoin, said James Quinn, managing director at Q9 Capital, a Hong Kong cryptocurrency private wealth manager.

It also reflects improvements to the ethereum blockchain, he said, and a growing shift towards “DeFi”, or decentralised finance, which refers to transactions outside traditional banking for which the ethereum blockchain is a crucial platform.

“At first, the rally was really led by bitcoin because as a lot of the institutional investors came into the space, that would be their natural first port of call,” Quinn said.

“But as the rally has matured over the last six months, you have DeFi and a lot of DeFi is built on ethereum.”

The launch of ether exchange-traded funds in Canada and surging demand for ether wallets to transact non-fungible tokens such as digital art have also pushed up the price.

The ether/bitcoin cross rate has soared more than 100% this year and hit a 2.5-year high on Sunday, pointing to a degree of rotation into the second-biggest cryptocurrency as investors diversify their exposure.

“Surging DeFi volumes continue to push ethereum prices higher as investors gain confidence in crypto and see ethereum as a safe second-place asset,” said Jehan Chu, managing partner at Hong Kong blockchain venture capital firm Kenetic Capital.

Illustrating the momentum for such new transactions, Bloomberg reported last week that the European Investment Bank plans on issuing a digital bond over the Ethereum blockchain, while JP Morgan plans a managed bitcoin fund.

Bitcoin, the world’s biggest crypto asset with more than $1 trillion in market capitalisation, regained the $50,000 mark last week and hovered around $58,000 on Monday, up about 3% but well below its record high at $64,895.22.

The U.S. dollar was broadly steady. [FRX/]

(Reporting by Tom Westbrook and Vidya Ranganathan; Editing by Himani Sarkar & Shri Navaratnam)

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