Dear Friends and Family,

Every time Sam Altman, the CEO of OpenAI, speaks, a few hundred startups die.

His presentations, lasting just an hour, dramatically reshape the landscape, causing startups worth millions or even billions to reevaluate their competitive position.

ChatGPT has become the Swiss army knife of software seamlessly replacing an array of specialized applications.

It reminds us of the number of devices that the Apple iPhone has replaced: Telephones, telefaxes, scanners, Rolodex, directories, typewriters, calendars, calculators, alarm clocks, dictaphones, cameras, CD players, and the list goes on and on.

Watching the value of startups, nurtured over many years, reduced to rubble overnight, is brutal.

Both investors and founders will deal with it in their own ways navigating through their emotional cycle of change.

Unfortunately, for many, the outcome is a hard-hitting wave of write-offs, especially impacting older venture capital portfolios.

At the same time, the power of AI in coding is revolutionizing software development.

Small teams, comprising just two or three skilled developers, can now craft complex applications in weeks – doing what previously required large teams and years of efforts.

This shift brings "tech defensibility" to the forefront for startups and investors alike.

Understanding barriers to entry, intellectual property, industry expertise, and the impact of AI on business models becomes critical.

Our colleagues at Angular Ventures recently wrote, "The factors that define these attributes are shifting before our eyes. Much of our energy over the next year will be devoted to understanding the new contours of technology defensibility in the era of AI."

We couldn't agree more.

In this context, our focus on a deep, industry-specific understanding in the founder team – as opposed to a purely technology-centric approach – is more relevant than ever.

Coming to Hollywood

Every so often, we encounter a founder team that raises our expectations of what excellent product-founder fit looks like.

Today, we're thrilled to introduce you to such a team: Daril Fannin and Austin Worrell, the dynamic duo behind our latest investment, KINO.

The glitz and glamour of Hollywood often overshadow the gritty reality of film and TV production.

In so many ways, creating a movie or series is akin to starting a garage-based company, complete with similar challenges and high failure rates.

It's a marathon of fundraising, pre-production, production, post-production, and marketing — each stage is as critical as the last.

The film industry, often perceived as an exclusive club dominated by major studios, has long set the rules of the game.

KINO is here to challenge this status quo.

By providing more factual data for price negotiations and creating a unique platform that brings superfans closer to the creative process and talent, KINO aims to rebalance the scales of power.

Blockchain technology is at the heart of KINO's strategy. It will enable fans to invest in movies early, help reduce filmmaking costs, and open up several other areas that are yet to be announced.

The company is already generating revenue and is backed by an A-list of co-investors, including Sequoia Capital, Slow Ventures, Blockchain Founders Fund, Genius Ventures, MetaWeb Ventures, NEAR Protocol, and more to come.

We are very glad to add our Web3 know-how to this stellar list of partners and look forward to every time Daril and Austin shout, "Lights, Camera, Action!"

And then there were four

We are very happy to announce a new addition to our team - Marcel(lo) Uhlmann.

We first met Marcel at the ETHMunich hackathon, co-organized by our colleague Sagar, where we talked for two and a half days.

His deep understanding of blockchains and decentralized finance instantly caught our attention.

Marcel's winning nature and ability to forge trusting relationships quickly stand out and make him a natural fit for our team.

He has over two decades of experience in asset management across the DACH region, having contributed significantly to B2B banks like DAB BNP Paribas, Baader Bank AG, and V-Bank.

In addition, Marcel successfully managed DeFi investment strategies at Immutable Insight, where he established a BaFin-regulated crypto asset management service.

Marcel's arrival comes at a perfect time, aligning with our upcoming focus on fintech investments.

Recommended

If you have a spare moment during the holidays, consider watching Sam Lessin's video "The Factory System Era of Venture is Dead".

In this video, Sam presents a compelling argument for a more sustainable approach to business growth.

He advocates for a slower, more deliberate expansion strategy that benefits both founders and investors in the long run.

His perspective is exemplified by companies like Zapier, Backblaze, and Squarespace, which predominantly bootstrapped their operations before opting for external funding.

The "capital light strategy” that Sam describes is also one that we look out for in startups because "just because someone gives you money, it doesn’t mean that you are going to grow faster".

We’re investing

There is a considerable gap between what is possible with technology and what is being done today.

And that is why, even amid geopolitical instability and financial market uncertainties, we wake up each morning filled with great optimism about the potential for technology to leave a positive and enduring legacy.

We're always looking for founders leveraging Web3 tech to solve problems 10x better, faster, or cheaper. If you should come across a great team in this space, we would love to hear about them.

Merry Christmas and Happy Holidays

Reflecting on 2023, we are grateful for the journey we've shared with many of you.

It truly takes a village to raise a startup, and we've been fortunate to experience the kindness and wisdom of many remarkable individuals and teams.

Thank you for being an integral part of our story. Your engagement and feedback have been instrumental in shaping our path.

We wish you all the very best during this festive season and look forward to a prosperous and fulfilling 2024.

Wolfgang, Ben, Marcel, and Sagar