| It probably hasn't escaped your notice that there is a lot going on right now at the intersection of technology, economics and innovation. With the fall of Silicon Valley Bank, my favorite bank where I was once a customer, being the recent low point. But precisely because there are many great things going unexposed, I started a weekly newsletter about what has caught my eye in the tech world. Below is the content of the first newsletter, dated April 10, 2023. You can subscribe to this weekly newsletter here. Silicon Valley Bank was my favorite bank What kind of banks are Silicon Valley Bank and First Republic? There has been much media coverage of Silicon Valley Bank's pike dive, with its counterpart, First Republic Bank, often mentioned in the same breath. But there are fundamental differences between these San Francisco Bay Area banks. Early this century, I was a very satisfied Silicon Valley Bank customer with a startup that later failed ingloriously. As soon as you were accepted as a client at a good law firm in San Francisco, the lawyer would normally grab the phone and call his relationship at Silicon Valley Bank. That's how we ended up in a far too small cubicle opposite a jovial account manager at Silicon Valley Bank the very same day our firm was founded. The work instruction there was clear: "any customer can be the next Apple or Microsoft, so even though 98% of companies don't survive the first five years, treat your customers as if they were that successful 2%. Every Dutch bank could learn from the way Silicon Valley Bank treated customers. SVB's failure also has nothing to do with creative accounting or strange products as in the banking crisis, but with treasury management failures and rising interest rates. In short: watching one's own pennies carefully. Already it appears that Silicon Valley Bank is being missed, for example in financing climate tech companies, the very startups needed to combat climate change. First Republic does something very different First Republic Bank, on the other hand, excels at lending money to founders and C-level management of successful startups. So not in lending money to startups, as Silicon Valley Bank did. People like Mark Zuckerberg were offered particularly low mortgages, for example. Why does a billionaire need a $6 million mortgage? Founders of successful companies prefer to hold on to all their shares as long as possible, as long as the prices are rising. So they borrow money from banks with shares in their own companies as collateral. For example, there is still a persistent rumor in Silicon Valley that Zuckerberg even borrowed a few billion, yes, billion, from First Republic, in part to finance his own charitable foundation. Rather pay a percent interest than sell shares that, until last year, rose many times faster than interest. |
| Spotlight: iXora immersion cooling I often get asked which Dutch startups are interesting. That the driving solar car Lightyear received so much media attention made sense, because everyone understands what cars are and where the sun is, but there were two reasons why few professional investors believed in a solar-powered car. |
| First of all, it costs not millions but billions to set up a car company, let alone on a new energy source, see Tesla. No investor in the Netherlands puts the roulette ball on red or black at that kind of sum. Perhaps more importantly, a regular sized car cannot carry enough solar panels to provide enough propulsion, range and some geeky extras like headlights and brake lights with the current generation of solar panels. I like to be surprised but don't see Lightyear doing well. Cooling is cool One startup that did successfully develop a relevant product for a huge market is Ede-based iXora. The company led by CEO Job Witteman (founder and for years CEO of the Amsterdam Internet Exchange AMS-IX, I know him from his time before that at British Telecom) has developed a solution where data centers can save a lot of space and energy. iXora's liquid cooling technology eliminates the need for space- and energy-consuming air cooling (fans). Warren Buffett's company Lubrizol bought a worldwide license and it would not surprise me if iXora reaches unicorn status within three years (cliché alert!), or becomes worth more than a billion Euros. Because energy consumption of data centers must be reduced and it is in their best interest to cut costs and reduce CO2 emissions. iXora's solution is as simple as it is effective and can easily be fitted into standard data centers, which is why it seems logical that the company will eventually be acquired by a party such as Dell, for example, in order to be able to offer an iXora chassis to all its data center customers, as an extra box to check on the order form. Similar to how EMC once acquired VMWare and even took it public a few years later. A startup on its own could never reach that global customer base so quickly. Friends & family investment round iXora is currently holding an investment round and from 5,000 Euro you can participate. I'm not giving advice, but my maxim is that you should think of an investment in a startup as money that you are definitely losing now and that very possibly one day will come back - but hopefully a bit more than you put in. I do like this kind of low-stakes opportunity, usually the minimum entry point is many times higher. Note that this is not investment advice and you are investing outside AFM supervision, there is no licensing and prospectus requirement. And the founders of iXora are friends of mine, so I am far from neutral in this. |
| The iXora HRM chassis can house multiple servers. HRM, by the way, does not stand for good old Personnel in a new guise, but for Hypotherm Rack Mount. It is so named because these liquid-cooled cabinets fit into standard 19″ racks common worldwide. This allows data centers to quickly fit them into their infrastructure, unlike competitors' open tanks full of liquid. |
Good event calendar
| Where are the events and conventions you absolutely must attend? That always remains tricky and I have felt at many a congress that I had ended up at the wrong party. That is why the event calendar of Luna PR from Dubai is so handy, it lists all the important congresses, parties and meetings in the field of crypto and Web 3. The sisters Nikita (CEO, right) and Nisheta (COO, left) Sachdev usually know where it is happening. |
| Are you also inundated by a glut of podcasts and newsletters? There are very few that I never skip. But the newsletter from former journalist, now investor, Om Malik I always read. Through Malik, I came upon this sharp analysis on why ChatGPT means the Gutenberg moment for software. Another recommendation: this article on the "give, to get back" model for AI startups. Also applicable for other companies that need user data to function better. And neat that the author mentions that he had used Chat GPT4 to write the article. |
| Finally, a look at the major share prices in tech. Google is the winner of the week with 7.5% rise. Viewed from the beginning of this year, we don't yet have to tip our hat to Mark Zuckerberg, who just last year lost $30 billion in assets in one day, because his Meta is now up 76% after the annus horribilis 2022. And you don't hear much about it, but those who bought Bitcoin and Ethereum on Jan. 1 would also have experienced 69% and 56% increases by now: |
| Next Week Among other things: why the U.S. government's lawsuit against Binance is important for the future of crypto as part of the mainstream economy. I wrote about the ongoing problems at Binance exactly a year ago. And spotlight on Unveil, an Amsterdam-based startup focused on the intersection of two huge markets: the art world and the market for NFTs. |