FINTRX Private Wealth Weekly Roundup | 12.01.22 | Volume 33

Family Office & RIA Weekly Roundup?

Volume 33

12/01/2022 (4 Min. Read)

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Instacart Co-Founder Begins a New Venture, Commodity Hedge Funds Reap Rewards and the U.S. Job Market Slows in this week's edition...

Take a Lap Around the Industry

• Markets Tread Lightly Amid Chinese Protests and Powell Speech?(WSJ)
• Wall Street Banks Seek to Unload Hung Debt, Totaling $42B?(Bloomberg)
• Germany signs 15-year Oil Deal with Qatar to Mitigate Energy Crisis?(Fox)
• AMC Networks to Lay Off 20% of U.S. Workers Amid CEO Departure?(WSJ)

Instacart Co-Founder Secures Funding for New Healthcare Startup

Earlier this month Apoorva Mehta, co-founder of Instacart Inc., raised $30M for his company Cloud Health Systems. The San Francisco, CA-based healthcare startup aims to offer clients medical consultations among other health services. The funding round was led by VC firm Thrive Capital, with terms of the deal valuing the company at $200M. The transaction took part in the midst of a wary venture funding environment which has witnessed total venture capital investments decline more than 87% since last April. This valuation comes at a bit of a surprise, given that Cloud Health Systems remains a pre-revenue company and has yet to launch any services. In August 2021, Mehta agreed to step down as CEO of Instacart following disagreements over the future of the company. The time away from Instacart has provided the opportunity for Apoorva to pursue a variety of startup ideas including those in the space and climate technology sectors.

"Mr. Mehta’s role in growing Instacart made him one of the most well-known entrepreneurs in Silicon Valley. Investors say such repeat founders’ record of success justifies the higher prices for their new ventures."

Wall Street Journal

Private Funding Pulse Check

• Celeres Investments has participated in an $11.5M Series A funding round for?Obrizum, an artificial intelligence learning platform that helps companies create and scale digital learning courses
• Cajal Neuroscience, a drug discovery company focused on neurodegenerative disease, has finalized on a $96M Series A round with participants including?Ray Dolby's Family Office, Dolby Family Ventures
• Hellen's Rock Capital engaged in a Seed investment with?Licenseware, an IT asset management toolbox that automates analysis, totaling €1M
• Zinal Growth took part in a $15M Series A deal with?Pomelo, an infrastructure company scaling fintech startups predominantly from Latin America

https://www.fintrx.com/

Commodity Hedge Funds Make a Comeback, Raise Fresh Capital

As a result of heightened volatility in commodity prices over the course of this year, hedge funds with commodity strategies have experienced a resurgence in regards to both their popularity and returns. According to?Bridge Alternative Investments, the top 15 commodity-focused hedge funds have increased their assets by 50% this year to a total of $20.7B. Among some of the biggest players include the Quantix Commodities and Pimco Commodity Alpha Funds, with $1.7B and $2B in AUM respectively. In response to the uptick in dry powder for these funds, many companies have increased their hiring efforts, attempting to bolster their specialist teams with experienced traders.?However, current industry conditions are a far cry from the "boom era" of the 2000s that was eventually brought down by the 2008 collapse of oil.

"There is a lack of supply of commodity hedge funds...If there is enough demand and there is not enough supply, you will see some groups launch their own vehicles."

Ryan Duncan, Bridge Alternatives

U.S. Job Market Reveals Signs of a Winter Cooling

On Wednesday morning, the U.S. Labor Department released disappointing employment numbers, reporting the addition of 127K jobs, falling short of a previous consensus estimate of 200K. On the final day of October, job openings edged down to 10.3 million, primarily driven by declines in the education, nondurable good manufacturing and federal government sectors. Economists say that layoffs are not yet widespread, but rather predominantly isolated to a group of tech companies that have announced layoffs or hiring freezes. However, consumer demand has remained resilient despite ongoing inflation and elevated interest rates. According to?ZipRecruiter, the leisure and hospitality industries have fueled the continued strength of the job market, driven by a broad-based bounce back for the industry as it emerges from the pandemic.

"There’s still little sign of serious weakness in the labor market right now...The pain of tech layoffs and the real estate slowdown are still quite contained in those few industries directly affected by rising interest rates."

Julia Pollak, ZipRecruiter

BlockFi Declares Bankruptcy as the FTX Fallout Continues

Jersey City, NJ-based digital asset lender BlockFi is the next in line to succumb to the FTX bankruptcy. Earlier this month, it was reported that BlockFi had "significant exposure" to FTX and soon after the news of the collapse the company halted withdrawals on its platform.?Fitch Ratings?has proposed its concerns of "significant risks of contagion within the crypto ecosystem" and the level at which companies manage risk and compliance. BlockFi blamed its failure on "crypto market volatility", the Celsius bankruptcy and a broader market downturn. However, BlockFi's problems exceeded macro conditions. The firm had previously settled charges with the SEC for $50M and had its license suspended by California's Department of Financial Protection for 30 days earlier this month.

"We are deeply saddened to see the devastation that is cascading across an industry that we love and believe in, touching the lives of so many people..."

Zac Prince & Flori Marquez, BlockFi

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https://www.npr.org/2022/11/28/1139431115/blockfi-ftx-bankruptcy-chapter-11

Industry M&A Wrap Up

• Perigon Wealth Management has announced the acquisition of Nauset Wealth Management, a four-person RIA based in Westport, CT, managing assets totaling $330M?(FAIQ)
• Wealthspire Advisors is set to acquire Sage Financial Advisors Inc., a Reno, NV-based RIA with $194M in assets?(FA)
• Advisor Group, one of the nation's largest networks of independent wealth management firms, has announced the closing of the acquisition of New York-based American Portfolios Financial Services Inc., which oversees approximately $40B in client assets?(Yahoo)