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WeWork Disaster Shows Crowdfunding’s Advantages

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Just this week, I came across an intriguing startup investment opportunity. A Philadelphia-based company was offering shared office space for physicians and related medical practices. Doctors — especially those just starting their practices — are often forced to accept expensive and long-term leases. It’s a real problem that needs fixing. 

Then I remembered WeWork — the shared offices startup. And the huge IPO that was planned. It was set to generate enormous profits in 2019 for VC investors and the company’s rock star founder, Adam Neumann. 

But the IPO never happened. The company’s future and survivability is now in doubt. And Neumann’s reputation is shot. His many excesses, bad behavior and mismanagement of a once high-flying startup has made him persona non grata with the VC crowd.

But Neumann wasn’t the only villain in WeWork’s demise. VCs were complicit in WeWork’s rise and fall. They poured hundreds of millions of dollars into the company — funding outrageously excessive behavior while looking the other way.  

It’s easy to say in hindsight that they should have known better. After all, WeWork never came close to making money. The more it spent, the more it lost. But this isn’t so unusual for startups. One startup strategy is to achieve hyper growth as fast as possible. To grow now and conquer markets before other companies smell the opportunity — and worry about profits later. 

This strategy depends on a high level of responsible execution. And that often comes down to the founder. VCs loved Neumann a little too much. In an early assessment of the startup’s prospects, Benchmark wasn’t entirely convinced that the model would work. But it liked  Neumann. “Let’s give him some money, and he’ll figure it out,” a partner advised. So Benchmark wrote its first check to WeWork — worth $17 million. 

The head of Softbank’s $100 billion investment fund, Masayoshi Son, gave WeWork $4.4 billion after a mere twelve-minute tour of its headquarters. Neumann later explained that it was based “on our energy and spirituality.” 

VCs take their relationships with founders seriously. In traditional startup investing, the impression a founder makes is often a major deciding factor in whether to fund a company or not. The founders that impress with knowledge or charisma have a huge leg up on attracting VC money. Neumann thought and talked big. He told investors he was going to conquer the world. And they believed him. 

Attracting VC money was never a problem for WeWork — because Neumann was convincing. And the company used its huge mountain of money to expand into one city after another, first in the U.S. and then in dozens of other countries. But that huge capital cushion did more than enable growth. It also covered up huge dysfunctions. 

VC investors were both victims and perpetrators of one of the most spectacular failures Silicon Valley has ever seen. But I’m not a VC investor. I’m a proud member of the growing crowdfunding community. Yet — like VC investors — I also place a great deal of weight on the quality of a startup’s leadership team. And I always begin with the founders.

If I don’t like a startup’s founder, I don’t invest. And I don’t recommend that others invest. I believe a startup without an exceptional founder can’t be expected to achieve exceptional results. 

Neumann would have gotten my attention… probably my serious attention. But he would not have been able to seduce crowdfunders (including me) into investing with the same outsized success he had with VC investors. Consider…

  • VC investors are like movie studios. They need hugely successful investments for their business model to work — it’s just a numbers game. Huge funds need huge windfalls. Crowdfunders, obviously, would welcome huge returns too. But they don’t need startups to become multi-billion dollar companies in order to become wealthy. For VCs, unicorns are a “must-have” — which is why Neumann portrayed WeWork as a world conqueror. For crowdfunders, it’s a “nice to have.” Crowdfunders would have been a much tougher crowd for Neumann to seduce. 
  • For better or for worse (and I think it’s for the better), crowdfunders don’t get the up-close-and-personal contact with founders that VC investors get. Founders communicate with crowdfunders via presentation decks, written Q&As and brief videos. Crowdfunders’ digital interactions with founders ultimately serve them well by forcing founders to rely on more than just charisma. 
  • Real talk matters more than big talk with crowdfunders. Founders with big personalities still need to know their stuff. Crowdfunders ask them questions ranging from friendly to probing, from obvious to outside-the-box. And founders are expected to answer all of them — while displaying a mastery of their industry, company and growth strategy. That’s what excites crowdfunders the most. I don’t think Neumann would have been up for that challenge.

Let’s be clear. The last thing I want to do is demonize daring, audaciously optimistic and big-thinking founders. But these founders must also demonstrate a seriousness of vision and purpose. If Neumann once had that, he lost it along the way. And sitting on a mountain of cash probably had something to do with that. 

Crowdfunding — for the most part — avoids these pitfalls. With a more responsible founder, WeWork might have turned into a great company. VCs created Adam Neumann, the monster founder, because they were dazzled by him. The crowdfunding community would have exposed his weaknesses much more quickly. It would have been a much different story — or very possibly no story at all. 

I’m still evaluating that Philly-based startup I mentioned earlier. And I’m glad I’ve got the strengths of crowdfunding on my side as I do it.

Source: https://earlyinvesting.com/wework-disaster-shows-crowdfundings-advantages/

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Litecoin Price Analysis: 22 January

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Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice

The Bitcoin market registered an important price drop recently, one wherein the value of the digital asset dipped briefly under $30k on the charts. Although the cryptocurrency’s value later bounced back above the $30k-level, the said drop in price also contributed to major altcoins like Litecoin plunging on the charts.

Litecoin briefly breached the support at $125, following which it managed to recover from its sudden fall on the charts. At the time of writing, Litecoin was valued at $137.27, with the cryptocurrency trading close to its immediate resistance levels.

Litecoin one-hour chart

Source: LTCUSD on TradingView

From the attached chart, Litecoin’s price can be seen falling within a descending channel and hitting a low of $121.97. This low was followed by an immediate retracement as the market tried to stabilize. In fact, later, the price of the digital silver immediately pushed higher, which was why LTC was trading above $130, at press time.

Given the aforementioned drop, the digital asset may breach the resistance at $138 and be priced higher on the charts.

Reasoning

The 50 moving average moved above the price bars and acted as a resistance level for the price of LTC. The said fall pushed LTC into the oversold zone, with Bitcoin’s own depreciation on the charts contributing to growing selling pressure. However, as the price recovered, the Relative Strength Index also moved into the equilibrium zone. As this level looked like a consolidating range for LTC’s price, the emergence of bullish pressure may push it higher on the price scale.

Further, the Awesome Oscillator highlighted the momentum shifting towards the sellers’ side. The AO dipped under zero a couple of days back, and a short position of traders must have realized here as the market went on a downtrend. With the downtrend sustaining itself, all momentum in the market was lost.

Crucial levels to look out for

Entry: $138.03
Stop-Loss: $134.73
Take-Profit: $144.88
Risk-to-Reward: 2.39

Conclusion

The press time price level looked like a consolidating level for Litecoin. However, a northbound push for the digital asset may result in traders benefiting from a long position as they realize a profit at $144.88.

Source: https://ambcrypto.com/litecoin-price-analysis-22-january

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VanEck files for a ‘Digital Asset ETF’ with the SEC

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According to a filing published today by the United States’ Securities and Exchange Commission, New York-based investment management firm VanEck intends to launch a Digital Assets ETF, one that will track as closely as possible, before fees and expenses, “the price and yield performance of the MVIS® Global Digital Assets Equity Index.”

The fund will invest in companies that generate at least 50% of their revenue from digital asset projects, or developing projects that have the potential to generate half of their revenue from the digital assets industry.

It should be noted, however, that the term “digital asset industry” is by and large a broad terminology for companies that operate digital asset exchanges, payment gateways, mining operations, software services, equipment, and technology. This may well mean that there is potential for companies like Coinbase to be included in the fund after a successful IPO.

The SEC filing also notes that this fund will invest in companies that hold a significant amount of digital assets on their balance sheets. This suggests that companies like MicroStrategy may be a part of its portfolio, considering its own billion-dollar Bitcoin holdings.

The New York-based investment firm isn’t a stranger to SEC filings. VanEck had previously submitted applications for Bitcoin-based ETFs with the SEC, with a majority of them being rejected by the regulatory agency for a host of reasons.

On the contrary, back in September 2019, VanEck withdrew its application for a Bitcoin ETF. Interestingly, the verdict on its most recent application for an ETF, titled “VANECK BITCOIN TRUST” is still undecided.

If the development comes to pass, it will be a huge step, especially since the said offering will be launching in a country where regulatory agencies have often been seen with a suspicious eye. In Europe, on the other hand, crypto-ETPs surpassed a billion Euros in assets in 2020, despite a regulatory ban on selling these products to retail investors in the U.K.

While a crypto-ETF is still yet to be officially approved in the U.S, many investment advisors have cited concerns saying that without a crypto exchange-traded fund, there is little incentive for registered investment advisors to put clients’ cash into crypto.

Source: https://ambcrypto.com/vaneck-files-for-a-digital-asset-etf-with-the-sec

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Stellar Lumens, Steem, Maker Price Analysis: 22 January

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Stellar Lumens registered significant losses recently. However, since a lot of the asset wasn’t sold on the market, XLM could see some upside in the next day or two. STEEM also showed signs that it was poised for a bounce while Maker slipped under a triangle pattern and could move towards $1000 on the price charts.

Stellar Lumens [XLM]

Stellar Lumens, Steem, Maker Price Analysis: 22 January

Source: XLM/USD on TradingView

While Stellar Lumens did not show strength in the market with regard to its price, there was reason to believe that XLM was heading back towards the range high at $0.31. The trading volume was low over the past few days, and the OBV showed that there was not a significant volume of XLM sold over the past few sessions, despite strong losses.

The range lows at $0.223 offered some pushback and at the time of writing, XLM was trading under the mid-point of the range at $0.264.

While the momentum seemed bearish, rising above the mid-point and defending that level will be a reason to conclude that XLM is likely to move towards $0.31 once more.

Steem [STEEM]

Stellar Lumens, Steem, Maker Price Analysis: 22 January

Source: STEEM/USDT on TradingView

STEEM registered a local high at $0.22 earlier this month and set a lower high at $0.211 a few days ago. Since then, it has faced strong selling pressure, with the crypto trading at $0.177, at the time of writing.

It saw a candlewick below the $0.168-support level, but that was quickly bought up. The RSI registered a value of 38, indicating bearish momentum. Further, the Stochastic RSI was deep within the oversold territory.

Combined with the buying pressure that drove the price all the way up from the wick to $0.164, it could be that STEEM is poised to attempt a bounce to the $0.185-$0.19 region. The reaction there will set its next direction.

Maker [MKR]

Stellar Lumens, Steem, Maker Price Analysis: 22 January

Source: MKR/USDT on TradingView

The MACD was steadily falling further into bearish territory after MKR closed under a symmetrical triangle pattern and re-tested the $1400-level as resistance. The Directional Movement Index also showed that the -DMI (pink) and ADX (yellow) were both climbing past 20 on the charts to show that a strong downtrend was in progress.

The 38.2% level at $1200 could offer support to MKR, should it flip the level to support in the coming hours. Further downside for Bitcoin towards $27.7k will likely see MKR move towards $1000 as well.

Source: https://ambcrypto.com/stellar-lumens-steem-maker-price-analysis-22-january

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