Why Thoma Bravo is taking a break from new crypto investments

At the time, crypto startups had become all the rage in Silicon Valley, garnering rapid growth numbers and high volumes, even attracting pension funds to the cap table. Bravo’s PE firm, Thoma Bravo, had recently hired General Atlantic vice president Christine Kang to lead the firm’s growth equity business’s Web3 and crypto investments, and Bravo hinted that the minority investments in the sector could only be an introduction to larger acquisition deals.

Oh, how quickly things can change.

In an interview yesterday with Financial Times, Thoma Bravo’s CEO said the private equity firm, which has backed at least five crypto companies since last fall, is halting new investments in the sector. Bravo took it a step further and questioned some of the ethical practices he saw in the wider industry.

“I’ve gotten a little bit more familiar with that world, and some of the business practices don’t rise to the ethical level that we’re all used to in private equity with your investors and your clients and your community, and that’s been a little disappointing,” he told the newspaper Financial Timesadding that he was satisfied with the deals Thoma Bravo had already made and believed that the industry was young and that ethical issues would “be fixed over time.”

Bravo’s statements are certainly a radical departure from just five months ago, when he praised how crypto business models tend to have better margins than software startups. Even in July, Thoma Bravo had received a new appointment to invest in Web3 companies. Since the end of last year, Thoma Bravo has supported FTX, Anchorage Digital, FalconX, Figment and TRM Labs. Thoma Bravo’s team had been working with crypto-native funds to better understand the space for a year before the first investments.

Why the sudden change of tone?

First, the crypto markets are cruel, if you haven’t already noticed. Bitcoin is trading around $20,000 as I write this – worth about half of what it went for this year. Ether is trading at around $1,300, down from $2,800 in January.

Not to mention a series of suspicious activity has left a bitter taste in people’s mouths. It is the two hedge fund investors who blew up their own billion dollar company. Do Kwon, who founded the Luna and TerraUSD tokens that collapsed in May, is facing arrest in Korea and his whereabouts are unknown. Celsius Network has reportedly advertised its crypto deposit account as a high-yield savings account, and investors who say they lost everything are fighting to get some of their money back in court.

But while the headlines have been extra devastating in recent months, none of this is new to anyone who’s been paying attention to cryptoland. (And if you haven’t, just read the “Web3 works just fine” blog to get caught up.)

After all, crypto is unregulated and there have been plenty of bad actors to point to. So why now?

You have to wonder if this change in attitude has anything to do with crypto investing being less sexy these days on the scoreboard. In 2021, crypto values ​​increased and new startups became unicorns in less than a year – giving VCs immediate results. Now tokens are plummeting. These descending calculations look like a much worse when you sit next to the padded private equity and venture capital performance numbers that don’t necessarily reflect reality. Here’s the thing: Even though valuations across the private market are on the decline, most VCs aren’t have to write down their investments until a formal liquidity event when they report profit figures to their LPs. But if they own crypto tokens, which are even more liquid than stocks, they have no choice. (Investors usually have a combination of tokens and equity, although sometimes it can be just equity)

Or maybe some investors are just now taking note of the bad actors who have been galloping around in the first place, experiencing the market’s interconnections, or realizing how spotting a winner in such a volatile market might not be as easy as you’d think. , chaotic market. Whatever the reason, some seem to think it’s a better idea to sit on the sidelines until it’s more clear how this will all play out.

Anyway, Bravo hasn’t gone sour on crypto entirely. Bravo remains bullish on bitcoin, he said Financial Times, and he seems happy with the company’s current investments. The firm will “certainly look at” pouring more capital into crypto exchange FTX, which has acquired other crypto startups during the downturn and doesn’t appear to be facing a downturn.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: [email protected]
Submit an agreement for Term Sheet newsletter here.

Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE OFFER

– Flat filea Denver-based data exchange platform, raised $50 million in Series B funding. Tiger Global led the round and was joined by investors including Gradient Ventures, Scale ventures, Workday Ventures, Before the capital, Two Sigma Venturesand other angels.

– Sanitation groupa Berlin-based cannabis company, raised $37.6 million in Series B funding. The BAT group led the round and was joined by investors including Redalpine and Casa Verde capital.

– Hadeana London-based metaverse infrastructure company, raised $30 million in funding. Molten Ventures led the round and was joined by investors including 2050 capital, Alumni Ventures, Aster capital, Contractor first, and InQTel.

– GlossGeniusa New York-based business solution for the beauty and wellness industry, raised $25 million in Series B funding. Imaginary Ventures and Bessemer Venture Partners co-led the round and was joined by Left Lane Capital.

– JITXa Berkeley and San Jose-based circuit board design firm for engineers, raised $12 million in Series A funding. Sequoia Capital led the round and was joined by investors including Y-combinator, Funders Cluband Liquid 2.

– Karat and cakea New York-based financial operating system for the events industry, raised $10.6 million in Series A funding. 1Sharpe Ventures led the round and was joined by investors including Founders Fund, Acrew Capital, Moore’s specialty, Correlation bets, GMO VenturePartners, Argosy Capitaland SilverCircle.

– Cakea Los Angeles-based sexual wellness brand, raised $8 million in Series A funding. Silas Capital led the round and was joined by investors including Learning Hippeau, Bullish, Self Venturesand Find Capital Partners.

– Checkmatea San Francisco-based smart shopping tools company, raised $5 million in seed funding. Fuel capital led the round and was joined by investors including f7 Ventures, Blackbird Ventures, Scribble Ventures, Hyper, Susa Venturesand former CEO of Ebates at Rakuten Kevin Johnson.

– Quiloa Staten Island-based loan syndication network, raised $5 million in Series A funding led by FinCapital, StudioVC, Venture Centerand others.

– Helloa Chicago-based research and development collaboration platform, raised $2.6 million in seed funding led by Asymmetric capital partners.

– Employed cyclea Philadelphia-based HR analytics dashboard for small and medium-sized businesses, raised $2.5 million in seed funding. Impellent Ventures led the round and was joined by investors including Collaborative capital, Converge VCand others.

– Gentlya San Francisco-based second-hand trading platform, raised $2 million in pre-funding. LaunchBloom Tech’s Austen AllredShutterstock’s Jon OringerRXBar’s Peter Rahal, Hostel fund, and V1.VC invested in the round.

– Kalogona Melbourne, Florida-based smart wheelchair cushion company, raised $1.9 million in seed funding. DeepWork Capital, SeedFundersOrlando, VenVeloand others invested in the round.

PRIVATE EQUITY

– Quickpartsa portfolio company of Trilantic North Americaacquired Xcentric Mold & Engineering, a Clinton Township, Mich.-based digital production company. Financial terms were not disclosed.

– Stonepeak took over a minority stake in Equalbase, a Singapore-based development and asset management platform focused on the logistics sector across the Asia-Pacific. Financial terms were not disclosed.

DEPARTURE

– Berkshire Partners agreed to acquire a majority share in FORWARDSa Chicago-based provider of cloud services, from Centerbridge Partners. Financial terms were not disclosed.

OTHER

– Send in blue acquired Yodel.io, a remote cloud-based business phone solution. Financial terms were not disclosed.

SPAC

– NioCorp Developmentsa Centennial, Colo.-based mineral development company, agreed to go public via a merger with GX Acquisition Corp. II, a SPAC. A deal values ​​the company at $313.5 million.

FUNDS + FUNDS OF FUND

– Partners for industrial opportunitiesan Evanston, Illinois-based private equity firm raised $650 million for its fourth fund focused on acquiring and overseeing middle-market manufacturing and distribution companies.

– Furtheran Abu Dhabi-based venture and investment firm, committed $200 million to a fund focused on digital assets, fintech and supply chain investments.

HUMAN BEINGS

– Antlersa Singapore-based venture capital firm, employed Robbie Crabtree as a venture partner.

– Concord Health Partnersa Summit, NJ-based investment firm, employee Robert B. Schulz as managing director. Previously he was involved CB Health Ventures and Healthcare business partners.

– Ronin Equity Partnersa New York-based private equity buyout firm, hired Davis Hein as a senior financial analyst. Previously he was involved Gray star.

– TA Associatesa Boston-based private equity firm, employee Jennifer Barbetta as COO, Lori Stachelski as head of talent, and Darlene Karis as global head of human resources. Previously, Barbetta was involved Starwood Capital GroupStachelski was there Abry Partnersand Karis was there Bain Capital.