Venture Investors Regain Upper Hand on Startups

"For years, venture-capital investors lavished company founders with money and power as startups soared in value. Now, investments are coming with strings attached.

The broad rout in technology stocks has caused venture capitalists to pull back on their spending of recent years. In the new environment, some investment firms have been able to add stringent conditions to funding rounds.

Such terms were rare for startups for much of tech's decadelong bull run as low interest rates created an easy money-raising environment for founders and investors who flooded the private market in search of returns. Some money managers have begun to raise new funds targeting what are known as structured deals in recent months, a sign that there is more to come.

Tonal Systems Inc., a developer of fitness devices, this year reached a funding deal that allows investors to make two times their investment before other shareholders in the event of a sale or bankruptcy, according to a corporate filing in Delaware. The company declined to comment.

Investors are also making funding conditional on the future performance of companies. In July, investors negotiated a deal to invest in Israeli artificial-intelligence software startup Ayyeka Inc. that gave them a right to lower the price of their shares if the company missed certain financial metrics over time.

The structured deals differ from standard funding rounds, where investors purchase startup shares without clauses that guarantee returns or hinge the investments on financial performance. An Ayyeka spokeswoman said the company suggested the deal's structure to investors and remains extremely confident it would hit its metrics.

Investors say the increasing prevalence of structured deals shows how the power in Silicon Valley has shifted back to them after a record amount of capital flowed into the startup ecosystem over the past decade.

The pandemic supercharged the investment frenzy as interest rates fell, creating a freewheeling fundraising environment where popular founders negotiated funding deals that limited external oversight of their companies, say venture capitalists.

Investors say the most prized startups will still have access to funding with no strings attached, thanks in part to the record amount of capital that has been raised for venture investments.

But some companies with shakier financials that raised at high valuations last year are already struggling to find interested backers, forcing them to offer painful concessions in exchange for new funding, investors say.

The fundraising market for traditional public listings, another source of capital for mature startups, is on track for its worst year since 2009, according to Dealogic.

Matt Murphy, a partner at venture-capital firm Menlo Ventures, said last year his portfolio startups usually turned down investors offering structured deals because of the flush amounts of available capital elsewhere. Now some founders might have no choice but to accept the harsher terms, he said.

"Terms and structure are going to be much more common over the next 12 to 24 months because companies are going to struggle to raise," he said.

The structured deals could help some startups avoid raising new capital at a lower share price, which is often a blow to company morale and a negative signal to future investors, according to venture capitalists.

Fintech startup Klarna Bank AB raised new funding last month at a valuation of $6.7 billion, an 85% discount from its prior funding round. That might be the beginning of a trend of lowering valuations over the next few months, investors say, given that many startups that raised ample amounts of cash in the past year might have fundraising needs down the road in a much different environment.

In a sign of the changing times, investment firms that helped pump up valuations during the pandemic bull market are raising funds dedicated to structured equity deals that guarantee a return for investors.

Coatue Management LLC, one of the most active startup investors last year, is raising a $2 billion fund to invest in structured equity rounds for both public and private companies, according to a May investor presentation viewed by The Wall Street Journal and a person familiar with the matter. At the time, the firm had already raised $1.2 billion in capital for the fund.

In the presentation, the firm listed the scarcity of available capital through private rounds and traditional public listings as one reason why startups might want structured capital. It also said structured rounds historically outperformed standard funding rounds during market crises.

Viking Global Investors LP, which operates private-equity funds that invest in startups, is also looking to raise at least $1 billion for a structured equity fund, according to a person familiar with the matter. Bloomberg News earlier reported the new Coatue and Viking funds.

"Investors are thinking more about downside protection," said Rick Heitzmann, a partner at VC firm FirstMark Capital, referring to clauses that try to guarantee money managers a profitable return even if their bets go sour.

---

Startups Turn

To Debt Markets

Startups are beginning to raise more debt as opposed to selling shares at lower prices.

Venture-backed startups in the U.S. raised almost $15.9 billion in debt in the first seven months of this year, up from around $13.3 billion in the same period of 2021, according to Crunchbase Inc. data.

The increase came as global venture funding declined 18% over the same period, the data show.

Matt Murphy, a partner at venture-capital firm Menlo Ventures, said debt funds struggled to compete against other types of funding last year, though they are already coming back into fashion with startups as a way to raise money.

Even companies that were able to raise money at higher valuations during this year's tech rout are trying different fundraising strategies. Human-resources management startup Personio GmbH raised some convertible debt in June where the investors' loan would turn into shares at a discount to a public listing price, according to people familiar with the matter. Personio also sold equity at an $8.5 billion valuation for the round, up from its last valuation of $6.3 billion.

As a part of the deal, the investors negotiated the right to receive interest that could also be converted into discounted shares, known as a payment-in-kind loan, in part to give investors protection against the crashing market, the people said." [1]

1. Venture Investors Regain Upper Hand on Startups
Berber, Jin. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 10 Aug 2022: B.1.

Maskva sustabdė naftos tiekimą į kai kurias Europos dalis --- Dujotiekio įmonė teigia, kad dėl mokėjimo blokavimo ji sumažino tiekimą Vengrijai, Slovakijai ir Čekijai

  „Rusijos nafta nustojo tekėti dujotiekiu, kuriuo maitinamos Vidurio ir Rytų Europos šalys, o tai sudavė dar vieną smūgį regionui, kovojančiam dėl gyvybiškai svarbaus energijos tiekimo iš Rusijos praradimo.

 

    Vyriausybei priklausanti naftotiekių operatorė „Transneft PJSC“ antradienį pranešė, kad ketvirtadienį buvo sustabdytas naftos eksportas per Ukrainos teritoriją. Ji kaltino Vakarų sankcijų Maskvai sukeltus mokėjimo sunkumus ir nurodė, kad Ukrainos dujotiekio operatorius atsisakė gabenti žaliavą, nes negavo lėšų.

 

    Ukrainos valstybinės energetikos įmonės „Naftogaz NJSC“ ir dujotiekių operatoriaus „Ukrtransnafta“ patronuojančios bendrovės „Naftogaz“ atstovė sakė netrukus paskelbsianti pareiškimą.

 

    Šis žingsnis nutraukia tiekimą per pietinę „Družbos“ dujotiekio, kuriuo nafta tiekiama į Slovakiją, Vengriją ir Čekiją, atšaką ir greičiausiai sustiprins Europos pastangas pirkti žaliavą iš ne Rusijos šaltinių. Šios šalys yra labai priklausomos nuo Rusijos naftos ir gamtinių dujų ir yra vienos labiausiai pažeidžiamų Europos ekonomikų dabar, kai šie tiekimai nutraukiami.

 

    Pasaulinio energijos etalono „Brent“ rūšies naftos kainos pakilo 1,3% iki 97,88 dolerių už barelį, o tai panaikino ankstesnį kainos sumažėjimą. Žaliavos kainos pastarosiomis savaitėmis krito dėl susirūpinimo lėtėjančiu pasaulinio augimu.

 

    Draugystė – sovietmečio „Družbos“ dujotiekio pavadinimas – yra pagrindinė Europos Sąjungos energetikos infrastruktūros dalis. Pastaraisiais metais ji į Europos šalių sankabą gabeno iki milijono barelių naftos per dieną.

 

    Nafta vis dar teka per šiaurinę atšaką į Lenkijos ir Vokietijos naftos perdirbimo gamyklas, antradienį pranešė „Transneft“.

 

    Pažeista pietinė atšaka į Šiaurės Ukrainą patenka iš Baltarusijos ir išeina per Vakarų Ukrainą. Ji skyla, vienas pošakis keliauja per Vengriją, o kitas per Slovakiją ir į Čekiją.

 

    „Transneft“ liepos 22 d. pranešė, kad sumokėjo už Rusijos naftos tranzitą per Ukrainą rugpjūčio mėnesį, tačiau po šešių dienų lėšos buvo grąžintos į jos sąskaitą.

 

    „Transneft“ teigė, kad „Gazprombank JSC“, dujų milžinės „Gazprom PJSC“ padalinys ir „Transneft“ bankininkas, teigė, kad pinigus atgavo dėl liepos 21 d. įsigaliojusių ES sankcijų, dėl kurių Europos bankai turi gauti nacionalinių institucijų leidimą atlikti tarptautinius mokėjimus su Rusija.

 

    „Transneft“ teigė, kad bendradarbiauja su „Ukrtransnafta“, kad išspręstų problemą.

 

    Naftotiekio svarba prisidėjo prie įtampos ES viduje, kai blokas sujungė sankcijas Rusijos naftai po jos invazijos į Ukrainą. Galiausiai ES sutiko uždrausti žalios naftos importą laivais šešiems mėnesiams, bet laikinai netaikyti importo vamzdynais, taip prikalbinusi Vengriją.

 

    ES tebėra priklausoma nuo Rusijos dėl savo naftos.

 

    Pastaraisiais mėnesiais per šiaurinę Družbos atšaką kasdien tekėjo apie 500 000 barelių žalios naftos, o per pietinę atšaką – apie 300 000 barelių, teigia konsultacinės įmonės „Energy Aspects“ įkūrėja Amrita Sen." [1]

1. World News: Moscow Halts Oil Flow to Parts of Europe --- Pipeline firm says block of payment led it to cut supplies to Hungary, Slovakia, Czech Republic
Wallace, Joe. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 10 Aug 2022: A.8.

Moscow Halts Oil Flow to Parts of Europe --- Pipeline firm says block of payment led it to cut supplies to Hungary, Slovakia, Czech Republic

"Russian oil stopped flowing through a pipeline that feeds countries in Central and Eastern Europe, dealing another blow to a region contending with the loss of vital energy supplies from Russia.

Transneft PJSC, the government-owned oil-pipeline operator, said Tuesday that crude exports through Ukrainian territory halted Thursday. It blamed payment difficulties caused by Western sanctions on Moscow, and said Ukraine's pipeline operator declined to carry crude after it didn't receive funds.

A spokeswoman for Naftogaz NJSC, Ukraine's state energy firm and the parent company of pipeline operator Ukrtransnafta, said it would soon issue a statement.

The move severs supplies through the southern branch of the Druzhba pipeline that carries oil to Slovakia, Hungary and the Czech Republic and will likely intensify European efforts to buy crude from non-Russian sources. The countries are heavily reliant on Russian oil and natural gas and among the most exposed economies in Europe now that those supplies are getting shut off.

Prices for Brent crude, the global energy benchmark, rose 1.3% to $97.88 a barrel, reversing earlier losses. Crude prices have dropped in recent weeks on concerns about slowing global growth.

Friendship -- the name of the Soviet-era Druzhba pipeline -- is a core part of the European Union's energy infrastructure. In recent years, it has carried up to a million barrels a day of crude to a clutch of European countries.

Oil is still flowing through the northern branch to refiners in Poland and Germany, Transneft said Tuesday.

The affected southern branch enters northern Ukraine from Belarus and exits through western Ukraine. It splits, with one subbranch traveling through Hungary and the other through Slovakia and into the Czech Republic.

Transneft said on July 22 it paid for the transit of Russian oil through Ukraine in August, but the funds were returned to its account six days later.

Transneft said Gazprombank JSC, a unit of gas giant Gazprom PJSC and Transneft's banker, said the money bounced back because of EU sanctions that came into force on July 21, and which require European banks to obtain permission from national authorities to conduct cross-border payments with Russia.

Transneft said it was working with Ukrtransnafta to resolve the problem.

The pipeline's importance contributed to tension inside the EU when the bloc pieced together sanctions on Russian oil following its invasion of Ukraine. The EU eventually agreed to ban imports of crude oil by ship over six months but to exempt pipeline imports temporarily, winning over holdout Hungary.

The EU remains reliant on Russia for much of its oil.

In recent months, about 500,000 barrels of crude flowed through the northern branch of Druzhba each day and about 300,000 barrels through the southern branch, according to Amrita Sen, co-founder of consulting firm Energy Aspects." [1]

1. World News: Moscow Halts Oil Flow to Parts of Europe --- Pipeline firm says block of payment led it to cut supplies to Hungary, Slovakia, Czech Republic
Wallace, Joe. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 10 Aug 2022: A.8.

What Landsbergis does not understand, attacking "Amnesty"

 Comedian Zelensky makes propaganda videos very simply. According to Amnesty, Zelensky drives his soldiers into civilian quarters and forces them to shoot from there. When the answer comes, defending against that fire, Zelensky is diligently filming random civilian casualties. Those videos are used to ask for Western weapons. According to Lithuanian citizen Ohman, two-thirds of those weapons are sold on the black market and are dispersed in our neighborhood.

 

Ko nesupranta Landsbergis, atakuojantis "Amnesty"

Komikas Zelenskis labai paprastai daro propagandinius filmukus. Pagal "Amnesty" duomenis, Zelenskis suvaro jo kareivius į civilių kvartalus ir verčia juos iš ten šaudyti. Kai, ginantis nuo tos ugnies, ateina atsakymas, Zelenskis stropiai filmuoja atsitiktines civilių aukas. Tie filmukai naudojami Vakarų ginklų išmušinėjimui. Pagal Lietuvos piliečio Ohmano duomenis, du trečdaliai tų ginklų parduodami juodojoje rinkoje ir išsisklaido mūsų kaimynystėje.

Inflation Reduction Act Is Big Win For Serial Green-Home Remodelers in America

 

"Americans looking to make energy-efficient home improvements are poised to receive millions of dollars in tax breaks after a broad spending package was approved by the Senate on Sunday.

The package, dubbed the Inflation Reduction Act of 2022, reshapes tax credits on home improvements. The legislation has a $1,200 annual tax credit for green remodeling, up from what had been a $500 lifetime cap.

The potential tax savings for homeowners thanks to the expanded credit would be an estimated $1.6 billion in 2023 alone, up from an estimated $253 million in 2022 for the old credit, according to Congressional Budget Office estimates.

The 10-year budget estimate is $14.5 billion.

"Taxpayers can budget out different energy-efficient upgrades over a 10-year period. Insulation one year. Windows and doors another year," says Vincent Barnes, senior vice president of policy and research at the nonprofit Alliance to Save Energy in Washington, D.C.

As part of the deal, the old $500 tax credit, which expired at the end of 2021, is reinstated for 2022. The new revamped tax credit would then be effective Jan. 1, 2023, through 2032. There is a higher $2,000 credit limit for heat pumps and biomass stoves.

The home-improvement measure is called a 25C tax credit, so-called after the section of the tax code where it launched in 2006. At that time, it was labeled a "nonbusiness energy property credit."

Now it has been rebranded as an "energy-efficient home-improvement credit."

Mr. Barnes says the prior credit didn't provide much incentive for homeowners to make energy-efficient investments. Roughly 1.2 million taxpayers claimed the credit in 2019, compared with 6.7 million in 2009 and 7.2 million in 2010, when it was temporarily expanded to $1,500 over the two years under the American Recovery and Investment Act of 2009.

The benefit for homeowners isn't just tax savings.

The idea is that by making energy-efficiency improvements to their homes, taxpayers will save on energy costs, lower demand on the grid and reduce carbon emissions, Mr. Barnes says.

The residential sector accounts for 21% of total U.S. energy consumption, according to the U.S. Energy Information Administration.

Some public-finance specialists say that the credits amount to a windfall for taxpayers who would have made energy-efficient home improvements anyway, and the incentive favors middle- and upper-income taxpayers. A 2018 Congressional Research Service paper showed that taxpayers with income of $200,000 and above received on average a credit that is around seven times the average credit received by taxpayers with income of $30,000 and below.

The energy bill provides nearly $9 billion in consumer home-energy rebates geared mostly toward lower-income households that state officials will dole out.

The bill, which will now head to the House for approval, also makes changes to the current tax credit for installing residential solar, small wind or geothermal systems. It postpones reductions to the value of the credit and includes a credit for battery-storage systems. For those projects, taxpayers would be able to snag a 30% credit through year-end 2032, retroactive to Jan. 1, 2022.

Under the expired energy-efficient home-improvement credit reinstated for this year, the tax credit is equal to 10% of what is spent on improvements, up to the $500 lifetime cap.

Under the revamped credit effective Jan. 1, the credit jumps to 30% and the limit changes to $1,200 annually.

This means you could claim a 30% credit on the first $4,000 you spend on energy-efficient home improvements each year.” [1]

 

Are you, Lithuanian real estate owners, disappointed by this American bounty? Don't worry. You will get legal small amount of narcotics each from Lithuanian Conservatives and Liberals. Consolation for you. Also a chance to elect other people to Lithuanian government will be given to you, according to Šimonytė.

 1. Inflation Reduction Act Is Big Win For Serial Green-Home Remodelers
Ebeling, Ashlea. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 09 Aug 2022: A.10.