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Crypto/AI Investor Paul Hsu: ‘Trump Is Safer to Lean Into Crypto Than He Is AI.’
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By Marc Vartabedian, WSJ Pro
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Good day. Not everyone in cryptoland supported Donald Trump for the White House. But the industry, after broadly aligning behind Trump and spending big to get allies into office, has been exuberant since last week’s thumping Republican victory. Bellwether companies such as digital-currency exchange Coinbase Global and bitcoin itself have been on hot streaks which, according to history, could spur more entrepreneurs to enter the sector.
Paul Hsu, founder and chief executive of crypto-focused venture firm Decasonic, who said he mostly stayed out of the political fray this election, spoke with Pro VC on what he thinks the incoming administration and the tide of optimism will mean for crypto investing. But the investor also cautioned that artificial intelligence could be freighted with political blowback for the number of jobs it might eliminate. Decasonic targets early-stage startups at the junction of crypto and AI and has invested about half the $49 million fund it raised in 2022. Responses have been edited for length.
WSJ Pro: What issues or events are on your radar that could most affect crypto investing?
Hsu: We are cautiously optimistic that the election promises will hold post-inauguration given the strength of the crypto voters and related blockchain [political action committee] funding. So I think now a lot of the attention is shifting towards some of the more emerging non-consensus areas. Does [crypto] diversify into other kinds of use cases like tokenization or decentralized physical infrastructure, gaming tokens? That’s where we’re starting to shift our attention towards. Does [the sector] broaden out to more token use cases?
WSJ Pro: Will this new landscape influence the technologies or startups that you might choose to back?
Hsu: We’ve always been consistent with our focus technologies: an intersection of AI and crypto. For this question, it probably impacts more the generalist VC in terms of influencing their technology choices and coming back to invest in Web3 and tokens. You may see them come back into the space for sure.
WSJ Pro: What other dynamics are you observing?
Hsu: AI is scarier than crypto is. To the populous voting block, there’s a counter-force of that that we’re monitoring, too. Trump is safer to lean into crypto than he is AI. A lot of low-income males own crypto versus a lot of low-income non-college-educated blue-collar males are impacted by AI workforce automation.
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And now on to the news...
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Former venture capitalist Mark Farrell lost his bid for mayor of San Francisco. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
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Mixed results. Disillusioned by progressive politics in the world’s technology epicenter, Silicon Valley’s venture capitalists dug into their wallets and spent big this election to pull San Francisco toward the center, with mixed results, WSJ Pro reports.
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VCs notched wins, such as helping to establish a moderate majority on the city’s board of supervisors, which enacts local policies, among other functions.
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They also sank money into losing causes. Venture investors made sizable contributions to the nearly $15 million raised by a former venture capitalist’s mayoral campaign and a ballot measure effort to make the city more efficient, according to political-action committees and city campaign-finance records. Both of those efforts failed.
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9.9 Million
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Tech firms leased 9.9 million square feet of U.S. office space during the third quarter, hitting the highest level in nearly three years.
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Sumeru Equity Invests $330 Million in Roofing Software Provider
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Sumeru Equity Partners is betting on Americans’ continuing need to keep a roof over their heads, WSJ Pro reports. The technology-focused growth investor is making a $330 million majority investment in JobNimbus, a Mainsail Partners-backed software company that caters to residential roofing contractors and other services providers. Founded in 2013 and based in Lehi, Utah, JobNimbus offers software that helps roofing contractors manage a broad range of tasks, such as sales and marketing, project management, logistics coordination, back-office chores and even helping with insurance
claims. The company serves some 6,000 contractors, according to Sumeru Equity co-founder and Managing Director Jason Babcoke.
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VC Firms and Tech Startups Face Growing Pressure for Liquidity. Enter Private Equity.
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The alchemy of the venture capital process, in which investments are catalyzed over a number of years into a successful IPO or a big M&A deal, is under pressure.
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Investors are demanding to extract returns from VC firms and startups even though the IPO market is still in a state of recovery, reflecting lingering economic anxieties and other factors. IPOs in 2024 have outpaced last year, but activity remains below normal levels, the law firm Ropes & Gray said in an October report.
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Those dynamics are driving VCs and more mature startups to create liquidity by selling to private equity, even though the rewards often aren’t nearly as dazzling as in a public offering.
Read the full column.
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People
ARCH Venture Partners promoted Corey Ritter to partner. Prior to joining the firm in 2018, he was an associate at the University of Chicago Innovation Fund.
Secure access management provider Trustle named Gant Redmon as chief executive officer. He was previously CEO of Hopara.
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Writer, a generative AI platform for the enterprise, landed $200 million in Series C funding from investors including Iconiq Growth and Radical Ventures at a $1.9 billion valuation. The company has offices in San Francisco, New York and London.
Firefly Aerospace, a Cedar Park, Texas-headquartered space transportation company, closed a $175 million Series D round led by RPM Ventures at a valuation of more than $2 billion.
ScaleOps, a Tel Aviv-based cloud resource management startup, scored $58 million in Series B funding led by Lightspeed Venture Partners.
LocalStack, a Zurich-headquartered enterprise cloud development startup, raised $25 million in Series A funding led by Notable Capital.
Prokeep, a New Orleans-based customer communication and engagement platform for distributors, secured $25 million in Series A financing led by Dahlia Equity Partners.
Robin AI, a New York-based legal AI startup, collected $25 million in Series B extension funding from investors including Paypal Ventures.
PointFive, a New York-based cloud cost optimization platform, added $20 million in Series A financing led by Salesforce Ventures.
Vecna Robotics, a Waltham, Mass.-based material handling robotics startup, picked up a $14.5 million investment from Tiger Global Management, Drive Capital and others. The company also named Karl Iagnemma to the post of chief executive officer.
Neon, a San Francisco-based provider of tools that help game developers build direct-to-consumer channels, grabbed a $14 million investment from investors including Renegade Partners, Thrive Capital and Andreessen Horowitz’s Speedrun accelerator.
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Volkswagen said it will invest up to $5.8 billion in a joint venture with Rivian Automotive. PHOTO: JUSTIN SULLIVAN/GETTY IMAGES
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