Last week Anorak held it’s second annual partner meeting. The goal is to bring together our LPs and portfolio companies to learn, connect and support each other. I’m grateful for all those who took time out of their busy schedule to attend and feel inspired by the support shown both during and after the event. What follows are the slides I presented providing a macro perspective on venture and Anorak, along with some color commentary.

Special thanks to these guys for sponsoring both the event and reception!


Learn about our companies, Connect with each other to explore mutual interests and opportunities, Support our companies through advice, contacts, and resources


Special thanks to Ryan Petersen, Flexport CEO who gave an inspired Fireside Chat


Value outpacing deals due in large part to later stage mega-rounds


Previous point visualized


And again…


Since the beginning of the year there has been a material impact to Asia. Previously there was a lot of media coverage on the current administration’s issues, but it only recently started impacting the numbers. Significant decrease in new funds and reductions in startup valuations have delayed capital deployment in the region


Majority of Fortune 500 companies have a CVC arm. Companies are using CVC as extension to business development efforts


Increasing number of funding options available


🤦 What previously was seed, is now pre-seed


Q1 2019 is largest in history. If this continues we’re sure to have the biggest year ever for US exits


Steady pace of deployment for Anorak, about 1.25 deals per month


Investment size adjusted average is $12.5M post money for Anorak


Last year VR/AR accounted for 42% of the portfolio, we’ve diversified and it now comprises 31% overall


One year ago, the Bay Area was home to 58% of Anorak companies. As we’re finding more interesting and cash efficient startups outside the Bay Area that number has dropped to 50%


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Recording and transference of information has historically been a 2D exercise. From cave walls and parchment, to paper and silicon, the X,Y axis has been the primary plane. But advancements in computer vision, driven in part by robotics, XR and autonomous vehicles have resulted in massive amounts of 3D data and require new infrastructure. At Anorak Ventures, we are actively investing in startups addressing this need.

In 1992, a 3D game engine helped the masses appreciate the Z axis for the first time. Wolfenstein 3D was released by id Software and provided a new level of immersion, changing the genre of gaming forever. Creating these experiences were initially left largely to professionals. Unity came around in 2006 and made it easy(er) to be a creator. They provided a familiar UX/UI and create once/deploy anywhere functionality, that resulted in a vibrant user community.

The trend of more accessible tools continues, as does the amount of 3D data we are collecting. Satellites and planes are collecting geo-spatial data from the skies, and autonomous vehicles, from the streets. Companies are building 3D replicas of their products using laser and photogrammetry capture technology to provide new ecommerce experiences. Recent releases of ARKit and ARCore are making it easier then ever to leverage these assets.

Further pushing this trend is the growth of virtual and augmented reality where 3D is a necessity. As we increasingly spend time in the digital world, our digital “stuff” will rival the importance of our physical “stuff”. Non fungible tokens are providing authenticity verification and scarcity, making ownership and value more real. Amazon is the destination for physical goods, but the destination for digital goods is yet to be determined.

I first learned about Sketchfab in 2012 during my time at Autodesk. I was intrigued by 3D marketplaces and spent countless hours doing build/buy/partner analysis on the space. The thesis was that while there was a group of people who love building 3D models from scratch, using tools like Maya and 3DSMax, most people have neither the time nor the skill to do so. Many would rather modify and customize existing items in order to accomplish a task and flex their creative muscle. Enter Sketchfab! Taken directly from their website…

“We started Sketchfab in Paris, France, in early 2012. We were frustrated to see so many creators spending hours on making great 3D models, but ending up sharing boring screenshots as there was no better solution to showcase their work… Our community quickly grew to a mix of artists, designers, architects, hobbyists, engineers, brands, museums, game studios, schools and more. Today, with easier creation tools such as Minecraft or Tilt Brush, and 3D capture coming to our smartphones, everyone is becoming a 3D creator. Our goal is to turn 3D into a mainstream media format.”

Sketchfab now has more then 3,000,000 models on their platform and represents the largest single repository of 3D content on the web. The rate at which users are uploading content is also increasing at a steady clip. Creating an account and uploading models is free and they’ve never allowed advertising on their site. This has resulted in a strong brand, substantial good will, and fostered an active and passionate community now numbering around 2,000,000 people.

Sketchfab was not actively raising at the time I invested, but once Sketchfab’s CEO, Alban Denoyel had enough of my harassing emails, he shared some information with me. The numbers immediately reinforced my thesis on the continual acceleration of 3D content creation. The team works hard to maintain direct export capabilities from every major 3D content creation pipeline, 74 to be exact. This includes CAD software like Revit and Solidworks, game engines like Unity and Minecraft, 3D scanning software like Cappasity and RealSense, as well as modeling applications like Max, Maya, Blender, C4D, Houdini, and Modo.

The company has also made it easy for other platforms to leverage their 3D library with their recently announced SDK. Major players like Apple and Facebook have recently announced partnerships with Sketchfab to enable users to pull items directly from their library into native experiences. Sketchfab is providing the pipes that enable the fluid movement of 3D objects around the web. They’re also working with an increasing number of enterprise clients to provide a robust 3D backend and hands on support.

Just as Youtube made it easy and convenient for creators to upload videos and link to them, Sketchfab is positioning themselves similarly for 3D content and I believe the opportunity is just as big. If this post resonates, and you’re looking for new opportunities, Sketchfab is hiring and would love to hear from you.

 

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On April 6th 2018, we held the first Annual Partner Meeting for Anorak Ventures. We kicked things off with a presentation about the macro climate of venture, followed by an update on the fund. A lot of work went into gathering the information, so I figured I’d share it with anyone interested.

As with all statistics, you can make them say what you like. We tried to hone in on a few trends we believe are important to consider when making investment decisions for the year ahead.

Hope you find the slides and talking points interesting!

Me kissing up to my LPs for believing in us and our mission


Me kissing up to my amazing sponsoring for supplying the space, food and drink


Quantity of venture deals staying the same, but dollar value increasing due in part to increased number of late stage mega-rounds


Last 10 years, North America accounts for 61% of all venture deals cumulatively. Over the last four years, Asia has shown a substantial increase in activity, even surpassing the US at times.


No surprise that the majority of activity is tech, but there has been an uptick in biotech the last few years


Substantial increase in CVC activity. 75 of Fortune 100 companies are active. This is due in part to substantial cash reserves and the desire to find innovation through strategically relevant investments


On the exit side, global acquisitions have seen a substantial slowdown. Great report here from Deloitte on M&A trends. “… economic uncertainty, capital market volatility, deal valuations, and interest rates ranked sequentially as the leading obstacles to M&A activity by corporate and private equity respondents combined”. “Over the past two years, 65 percent of corporate respondents said their cash reserves have increased (up from 58 percent), and the primary intended use of that cash is for M&A deals.”


Cross border acquisitions and investments largely down partially due to the protectionism of the current administration. Exemplified by the CFIUS rejection of the Broadcomm/Qualcomm acquisition.


Expecting the delta to decrease over the coming decade as mega technology companies emerge outside of the US.


Original thesis of the fund. 26 investments and 20 months later…


Adding these additional points we’re looking for.


Total deployed is $3.8M since Sept 2016


Expect greater diversification in the year ahead


Expect greater diversification in the year ahead


Post-money valuations, not including follow on funding


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