A Cautionary Tale

FTX Saga Takes a Twist, Bain Bets Big on New Opportunities Fund, and a Former Alphabet Subsidiary Raises Half a Billion.

Author

Adam from VC Brags
February 15, 2023

Welcome Shareholders,

In this daily edition of the Brags Newsletter, we'll cover the latest legal twist in the FTX Saga, Bain Capital raising money for its second tech opportunities fund, and a startup raising money to fund its AI and Quantum Computing ambitions.

So sit back, grab a snack, and enjoy!

Venture Today 👏

  • Former Customers of Sam Bankman-Fried led cryptocurrency exchange FTX are now suing three venture firms in a class action for giving it 'an air of legitimacy.'

A complaint was filed in San Francisco federal court on Tuesday, alleging that Sequoia Capital, Thoma Bravo, and Paradigm were motivated to promote FTX due to the $550 million they collectively invested in the company in 2021 and 2022, prior to its abrupt downfall. The filing says that the venture funds provided FTX with a sense of credibility by asserting that they had scrutinized its activities - including a statement by a Sequoia executive claiming that "we did our homework" - and had determined that it was a reliable and secure platform for investors in cryptocurrency.

The lawsuit is pursuing compensation for purported infringements of California consumer protection legislation, as well as deceitful persuasion, deliberate misrepresentation, and civil collusion. Previously, lawsuits have charged public figures such as football quarterback Tom Brady, basketball guard Stephen Curry, and actor Larry David with illicitly inducing individuals to invest in FTX.

Who's Raising?

  • Bain Capital has raised $2.4 billion from investors for its second growth Tech Opportunities fund, which targets mid-market buyouts, cross-platform investments, and late-stage startups.

The new fund is nearly twice the $1.3 billion raised from the debut tech opportunities fund back in 2020.

Bain's new fund has already made investments, including acquiring a minority stake in data management platform Ataccama, a controlled buyout of Italian sports and entertainment tech company Deltatre, buying primary and secondary shares in connected video services platform Hudl and an investment in fintech startup SumUp.

Startup of the Day

  • Artificial Intelligence and Quantum Computing Startup SandboxAQ is raising $500 million from investors nearly a year after spinning out of Alphabet.

SandboxAQ spent six years in Alphabet before spinning out last year. Led by CEO Jack Hidary, and chaired by former Google CEO Eric Schmidt, the company started off with 55 engineers, scientists, and technologies. SandboxAQ is looking at the related effects of both AI and Quantum Computing and is looking to develop commercial products for the telecom, financial services, and security sectors.

The company's software scans systems to identify which parts use old cryptography, identifies the parts that needs to be replaced urgently and fortifies the encryption of the enterprise. Over the last year, SandboxAQ has signed on 15 enterprise and government customers.

Memes and Other Things

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