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Techcrunch

VC Lindy Fishburne on the seemingly sudden democratization of science

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Deep science investor Lindy Fishburne cofounded the seed- and early-stage venture firm Breakout Ventures several years ago, after cofounding Breakout Labs within the Thiel Foundation back in 2011, and she has amassed a wide array of stakes in the process. Among her firm’s portfolio companies is Cortexyme, a company that aims to treat Alzheimer’s disease; the sustainable materials maker Modern Meadow; and Strateos, a company whose robotic cloud platform is remaking how lab work gets done.

We talked with Fishburne late this week about where — based on what she is seeing — we are in the arc of this pandemic. We also talked about why more of her investments, which once seemed like long shots, suddenly look like solid bets. Parts of our chat, below, have been edited lightly for length and clarity.

TC: We want to be excited about the progress being made in vaccinating Americans. Based on the conversations you’re having, what’s your sense of things?

LF: The acceleration of the vaccines is like nothing we’ve ever seen before in science, and now we really are down to the unsexy part of of the logistics of rolling them out. That’s clearly our biggest challenge. Then the next piece we’re going to have to confront is what happens when the world is vaccinated [at] very unequal levels and how people feel about travel and exposure and equity along those issues.

TC: Science has been the big story of the last year. Are you hearing from investors and potential syndicate partners who weren’t reaching out previously?

LF: Yes. The pandemic has brought the importance of investing in science into sharp relief. For the first time, we’re really seeing a whole set of what you would think of as traditional tech investors who read about the mRNA vaccine that Moderna coded in a weekend and who are starting to believe that we’re able to engineer biology and that it doesn’t feel like a craft process anymore.

TC: You talk about coding a vaccine. Are laboratories becoming less important in that scientists are able to do much more in simulation and, if so, what does that mean for human testing? Are we getting to a point where we don’t have to rely on human testing as much as we did in the past?

LF: That’s where we hope to get on the human testing piece. We’re not there yet. You may have read and heard about organs on a chip and growing organoids, where you can have a very small piece of liver that you’re able to test toxicity on [and] we’re doing more of that. That said, we’re not ready to make that leap from completely doing it in silico to humans with a super-high level of confidence.The human body is such a complex system that we’re not able to model that fully yet.

I do think what you’re pointing toward to some degree is democratization in science and the access for more people to be able with lower skills to be able to work in drug discovery and drug development at a distance. So for example, we have a company that we’ve worked with called Strateos that has a full robotic lab that — instead of having technicians standing there — you have robots and a little train track that moves assays throughout the room so that scientists who were stuck at home this year were able to continue experiments regardless of their geography or safety in the lab or time constraints.

TC: You have another interesting portfolio company, Opus 12, which is transforming industrial carbon dioxide emissions into chemicals. Toward what end?

LF: So obviously, decarbonizing the world is a huge focus. And you’re seeing for the first time corporations like United Airlines making commitments as to what their carbon footprint will be, or going to zero carbon emissions. Opus 12 emerged from two PhDs and an MBA out of Stanford a few years ago and their breakthrough is a catalyst material that allows you to take for example, waste CO2 — the bad stuff — and run it through this catalyst material and produce useful CO. This year, for example, they produced green polycarbonate car parts in partnership with Daimler. The material is exactly the same, which makes it easy to slot into existing products, but it’s actually made by reusing carbon.

The shift in consumer awareness around carbon made materials is an enormous opportunity.

TC: Do companies get some sort of carbon credit for doing that?

LF: Yes, and in the past what we’ve seen is a lot of companies trying to green themselves by basically buying and trading carbon credits, and the shift that we’re going through right now is everyone saying, ‘Okay, to some degree, that was a bit of financial engineering; now we actually need to see these businesses making a change in their direct use of fossil fuels and their direct impact in the amount of carbon.’ [There’s growing awareness that] buying carbon offsets isn’t going to be enough. So you’re now for the first time really seeing commitments to change processes, supply chain and ultimately products.

TC: In recent years, biotech companies have been going public two and three years after being formed. Now, we’re seeing a much wider array of younger companies being transformed into public companies through a growing number of blank-check companies. Any thoughts about whether or not there are parallels here?

LF: On the therapeutic side, you tend to have a very clear playbook around what the potential exit is and who the acquirers are. We know that big pharma is cash rich and pipeline poor, and so [these pharma giants] have to pick up the assets that are working, and you see them do that regularly. And you’ve got comps, and you know what that looks like,  so in placing a wide range of bets on early-stage therapeutics, it’s clear that if one wins, you’re covered.

The SPAC world is going to be really interesting because most of these companies are not operating off traditional playbooks, and it’s not clear whether they operate as public companies longer term. Are they really set up for acquisition?

[Another] difference here is these companies are going to have this enormous amount of funding, and yet they’re not going to be able to toil in obscurity, so the traditional metrics that we all want [in] public companies and looking at revenue and profits and those metrics, we’re going to have to look at these SPACs and their growth through a different lens, and I’m just not sure how receptive the public markets will be to that in the next 24 months. I think it’s unclear whether we’ll have a reckoning there or not.

If you’re curious to learn more, including about why new pots of money might be on the horizon for deep tech startups, you can hear the full conversation here

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Source: https://techcrunch.com/2021/03/05/vc-lindy-fishburne-on-the-sudden-democratization-of-science-and-deep-tech-investing/

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Start Ups

Weekly VC Overview: All 65 European startup funding rounds we tracked this week (1-5 March, 2021)

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Source: https://www.eu-startups.com/2021/03/weekly-vc-overview-all-european-64-startup-funding-rounds-we-tracked-this-week-1-5-march-2021/

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Blockchain

GameStop tale exposes regulatory paternalism and DeFi’s true value

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Though seemingly coming from nowhere for many, the themes behind the Reddit-fueled r/Wallstreetbets pump of GameStop feel familiar. Watching it unfold, I tried to figure out just why it had captured my interest to such a degree, and, to me, it was a spillover into the traditional markets of some pervasive themes driving crypto.

Despite some competition in the narrative, I view the motivating force — and by it, I mean the social media-fueled spread of the message that drew enough widespread interest to have an impact in the market — behind the GME pump as analogous with what, at one point, was an impetus behind Bitcoin (BTC). It is a driver for (depending on your level of cynicism) the crypto markets more broadly and the decentralized finance movement — a desire for the “democratization of finance.” Behind that movement is the view that finance and financial products should be open-sourced, accessible to all, as opposed to hinging on whether you are an accredited (read: high-net-worth) or an institutional player.

Related: Time to shine? Crypto should be given a chance after GameStop drama

Accredited investor rules, long the subject of critique, were recently expanded in 2020. Far short of a revolution, the amendment allowed additional classes of investors with certain financial credentials, like a Series 7 and knowledgeable employees of PE funds, to meet the definition among other changes that did not amount to anything meaningful. See the Securities and Exchange Commission’s press release describing the recent amendments to the definition.

There was a folkloric element to the narrative, a David and Goliath tale of sorts, where the everyday man was able to pull off a coup in inspiring a sizable crowdfunded movement in the market. Yet, while it evoked some degree of euphoria, the episode also brings to the forefront some of the simmering underlying tensions in U.S. society, including a strong sense of paternalism toward the poor, in this case, the retail investor, and mounting generational tensions.

Related: GameStop saga reveals legacy finance is rigged, and DeFi is the answer

The regulatory paternalism

In the United States, as a somewhat toxic offshoot of self-determination, there is the underlying bias or presupposition that those who are wealthy became so because of their personal attributes and, likewise, those who are poor will remain poor as a result of some personal failing on their part. Outside the academic setting, policy toward retail hasn’t reflected much exploration into the social and economic factors that allow people to accumulate wealth and the feeling that “the game is rigged” through increasing barriers to achieving upward mobility in the United States.

This manifests itself in regulatory paternalism, the government imposing limitations on who it deems able to afford to make investments or has access to certain financial products. Most visibly, this has left those who are non-accredited without access to early-stage investments. Many have argued that the wealth test systematically disenfranchises any and all investors capable of understanding risk despite their income level, making an argument that I agree with, that “being wealthy is no proxy for financial sophistication.”

But at the same time, this allows access to casinos and lottery tickets, payday loans and other predatory financial instruments, such as reverse mortgages, presumably where a competing interest, such as state budgetary shortfalls or effective lobbying on the part of industry, won out.

What you end up with is a system that seems engineered to reinforce class-based barriers — where the wealthy get to shape law and dictate the narrative as well. This is most starkly evidenced by the Melvin Capital sympathetic content that ran on CNBC portraying the hedge funds as the protagonists, leveraging the dogmatic network-wide belief system that, somehow, Melvin’s actions were good for society and universally just.

This was juxtaposed against a characterization of the Redditors as huddled, unwashed masses who, through chaos and destruction, embarked like lemmings on a path toward personal financial ruin and created a situation where there was some sort of systemic risk created by touting a random low volume stock. Not to put too fine a point on it, but while rich people lost some money here, among others, it is not exactly the financial apocalypse it was portrayed to be.

To me, putting aside the unending joy of having mainstream finance publications quote Reddit netizens like u/DadBod39 and prompting untold memes around Robinhood changing its name to Prince John’s Trading or RobingtheHood, this episode in the stock market captured my attention by highlighting the above-described tension, as well as a generational shift to social-media-based messaging, where the internet can be leveraged widely to produce decentralized market forces.

A paradigm shift

Fueled by (semi)-anonymous decentralized actors, this episode brings forward one of my core fascinations with crypto: the prospect of a paradigm shift that challenges existing regulations. Much like the regulatory challenges applicable to decentralized finance, how do you address a movement of the masses when law presupposes there is a central figure with more culpability than Keith Gill, to which you can attach liability? Addressing this poses a conundrum, as regulators are increasingly faced with cutting heads off hydras with the prospect of more growing back.

Most recently, the House Committee on Financial Services had a post-mortem hearing on GameStop and the surrounding market volatility, and while I always go into these with the lowest of expectations, I come out each time with a sense of renewed nihilism and hopelessness. While the recent House hearing on Feb. 18, 2021, provided an opportunity for a rehashing of the r/Wallstreetbets pump from those with a first-row view of the events that transpired and gave legislators the opportunity to saber rattle and virtue signal to their respective constituents, there were no clear signs of a path forward.

Related: Twitter, GameStop… enough! The world needs true decentralization

There was a cursory discussion of the merits of reducing settlement time (and yes, blockchain), the downsides of relying on high-growth fintech startups to provide market infrastructure type services, and the balancing act, as Sean Casten put it, of trying to democratize finance while not “being a conduit to feed fish to sharks.”

It was also an opportunity for legislators to play “who can be the most tone-deaf to the underlying market incentives” that fuel today’s ad tech and surveillance-driven economy, questioning whether this was indeed a free service for consumers — in this case, retail investors (breaking news, it isn’t) while remaining a for-profit institution. One House member asked if Robinhood would stop the practice of earning revenue by allowing Citadel to “pay for order flow” and allowing for the institutional players to front-run retail, pointing out that the practices that Robinhood engages in are legal, with disclosure, and certainly not unique, and are used by Fidelity, E-Trade, Charles Schwab and TD Ameritrade, among others, according to SEC Rule 606 disclosures. The answer was clearly and universally no, or, as Casten, cited earlier, put it: “There is a tension in [Robinhood’s] business model.”

This is the same legislature that has stalled in an attempt to stem consumer data from being bought and sold as a business model, thereby achieving peak-level hypocrisy in the triple threat of: (1) allowing the monetization of violations of privacy and somehow both; (2) blaming free-market actors for making money off acts that are legal; and (3) also suggesting at times that regulation was the cause of the harm that was done.

In a particularly depressing segment of the hearing, Robinhood was all at once villainized for not providing the committee with disclosure forms that are publicly available; for not foreseeing a tenfold spike in the capital it would need; and for taking emergency steps to meet capital requirements, which involved some degree of discretion in how to address but not as much as House members insinuated.

Others suggested that Robinhood should be responsible for the relative gains in its users’ portfolios, and still, others decried that there were capital requirements for Robinhood in the first place, suggesting that regulations were the root cause of the capital crunch. Altogether, the hearing left no discernable path forward except that we should expect more hearings.

In all, the fallout continues, with a couple of indications that there is certainly more to come. Maxine Waters has stated that regulators will be present to testify at additional hearings of the House Financial Services Committee, and class actions have been filed naming Keith Gill.

I view this as likely a beginning rather than a one-off, where we can look forward to additional skirmishes breaking out with increasing frequency as well as corresponding pressure on regulators to address them. Though I am not hopeful there will be any more movement in the accredited investor definition, maybe it is an opportunity for market regulators to reexamine underlying regulatory bias, as this has shone a spotlight on the need to create new opportunities for younger generations to build wealth.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Sarah H. Brennan is counsel and leader of the digital assets and disruptive technologies practice at Harter Secrest & Emery LLP. Sarah has a broad range of experience in corporate and transactional matters. She focuses primarily on corporate and securities law, representing public and private companies, venture capital and private equity firms, investors, and clients in every stage of the corporate life cycle.

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Source: https://cointelegraph.com/news/gamestop-tale-exposes-regulatory-paternalism-and-defi-s-true-value

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Source: https://coingenius.news/gamestop-tale-exposes-regulatory-paternalism-and-defis-true-value/?utm_source=rss&utm_medium=rss&utm_campaign=gamestop-tale-exposes-regulatory-paternalism-and-defis-true-value

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Private Equity

Private equity pair agree £2.3bn buyout of temporary power equipment business Aggreko

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Private equity firms I Squared Capital and TDR Capital have agreed a £2.3bn buyout of temporary power equipment provide

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Source: https://www.altassets.net/private-equity-news/by-news-type/deal-news/private-equity-pair-agree-2-3bn-buyout-of-temporary-power-equipment-business-aggreko.html

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