 U.S. tech stocks are taking a beating as yields on U.S. government debt increase. Investors are switching to the lower-risk asset and away from highly speculative bets on largely unprofitable publicly-traded tech companies. More: - The tech-heavy Nasdaq Composite index closed 3.3% lower on Wednesday, its worst day since Feb. 2021.
- An index from Goldman Sachs tracking the returns of loss-making tech groups is down 9.8% this year, beyond the 1.4% fall by the S&P 500.
- The Bessemer Cloud Index, a key barometer of the performance of modern software shares, closed at 46.30, around 29% down from its recent all-time highs.
- The index bled 5.91% on Wednesday alone.
- Software maker Snowflake’s shares are down 12% in the first few days of 2022, while e-commerce operator Farfetch’s shares have fallen 13%, and those of cyber security company Cloudflare have declined 19%.
- Beyond the growth in interest rates, the downward pressure on tech stocks comes from expectations that the Omicron variant will not decimate the Mainstreet U.S. economy in the way that previous coronavirus waves have.
- The biggest gains in 2022 so far have been from non-tech companies, while the biggest losses are all from recently-debuted former startups.
- The main fear that VCs and startups now have to contend with is whether the previously bull market for tech IPOs will hold strong.
- The VC funding race of 2022 was largely based on the public market’s ability to process eye-watering valuations. If private valuations are forced to correct for the public market, many investors are going to take a haircut, to say the least.
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 Global venture investment in 2021 totaled $643B, falling short of a doubling of the $335B from 2020 by just $57B. The growth came in at 92% YoY, according to Crunchbase data. Compared with the figure from 10 years ago, total investment has increased 10-fold. More: - Late-stage and growth-stage companies pulled in a strong majority of all funding with $413B, a $196B step up from the previous year.
- Early-stage startups boosted their funding numbers by $100B since 2020, collectively raising $201B.
- Seed-stage startups raised $29.4B, $10B more than in 2021.
- The number of rounds per stage also increased across the board.
- With 1,000 more startups raising Series C or later fundings in 2021 than in 2020, the round and unique startup count grew 50% YoY.
- The bombastic pace of funding minted an average of 10 new unicorns per week worldwide.
- With the 586 new entrants in 2021, there are now 1,148 companies with unicorn status. They have raised a total of $682B over time and are collectively valued at $3.8T.
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Chinese tech employees, formerly the most sought-after in the country, are increasingly joining the unemployed. Their swelling ranks are due to Beijing’s brutal regulatory crackdown, reports the New York Times. Always a threat, the latest barrage has kept tech companies second-guessing all their decisions, forcing many to shut down entirely. More: - The decline of the tech industry’s job offerings has resulted in a return to more traditional forms of income for the country’s best-educated citizens.
- There will be 10 million college graduates in China in 2022. About 4.5 million have applied to graduate schools, up by 800,000 from 2021. Over 2 million have applied to take civil servant examinations, up by half a million in the same period.
- Beyond the high-profile attacks on companies such as Tencent, Ant Financial, Alibaba, Meituan, Didi Chuxing, and others, the once-booming digital content creation sector has been targeted.
- The government announced that it has ordered platforms to shut down more than 20,000 accounts of top influencers in 2021.
- Because of the trickier regulatory dance required of consumer tech companies, many Chinese VCs have switched to investing only in those technologies that are part of Xi Jinping’s initiative to break free of the “stranglehold” of the U.S.’s technological dominance.
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French fintech provider PayFit has become the country’s youngest unicorn following a $289M (€254M) Series E raise led by General Atlantic. The round also saw participation from existing investors, including Eurazeo, Bpifrance’s Large Venture Fund, and Accel, and valued the company post-money at $2.1B ($1.82B). More: - PayFit targets SMEs and provides a platform to service their payroll and HR needs with a SaaS offering.
- Its main advantage over other similar companies is that its online platform is set up such that companies need not contact an accountant to generate payroll. Regulatory changes are automatically integrated into the platform.
- The startup’s annual recurring revenue grew by 70% in 2021.
- The great majority (80%) of the company’s 6,000 clients are based in France.
- Other customers are located in Spain, Germany, and the U.K. Due to the large market potential in these four countries, PayFit will opt to push for market dominance in them before expanding to others.
- It is betting on the difficulty of switching payroll providers to establish itself, and will then expand into other services.
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New York/Mumbai-based Fractal raised $360M from TPG and entered the illustrious club of unicorns. The provider of AI and analytics solutions to Fortune 100 firms has begun preparations for an IPO. More: - The company boasts a client list 3,500 long, including more than 100 of the top 500 companies (such as Google and Wells Fargo) in the world. It generates over $100M in annual revenue.
- CEO and co-founder Srikanth Velamakanni did not mention if the company was profitable during an interview with TechCrunch.
- The latest round brought Fractal’s funding-raised to date to $685M. The capital injection also included some secondary sales.
- Fractal’s platform is diversified to serve a wide variety of analytics needs. For example:
- Its Qure.ai assists radiologists in making diagnostic decisions.
- Theremin.ai focuses on improving firms’ investment decisions.
- Eugenie.ai identifies anomalies in high-velocity data.
- Beyond its customer-facing side, the company also invests in and incubates AI projects.
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Online workspace provider Miro just raised $400M Series C at a $17.5B valuation, driving the company’s total raised to date to $476M. The round was led by Iconiq Growth and was joined by Accel, Atlassian, Dragoneer, GIC, Salesforce Ventures, and TCV. More: - The firm’s most recent funding round was in 2020 and saw it reel in $50M Series B, also led by Iconiq. Since then, the Amsterdam/San Francisco-based company has reported a 500% increase in user numbers from 5 million to 30 million.
- Its paying customer base grew by 550%. It caters to several Fortune 100 clients, of which 20 have more than $1M in annual recurring revenue contract value.
- The company has seen 300% annual growth since the onset of the pandemic and is profitable.
- However, given that more than half of American workers plan to return to the office, co-founder and CEO Andrey Khusid thought it sensible to take advantage of the booming VC market to raise capital.
- He plans to use to invest in making its platform more amenable to hybrid environments, in addition to M&A opportunities and pitching the product to more enterprise clients.
- Miro’s platform consists primarily of a visual collaboration tool and integrates with name-brand apps such as Atlassian, Cisco, Google Workspace, Microsoft Teams, and Zoom.
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 Today's Funding 💸 Biotech/Health - Korro Bio (Cambridge, Mass.), RNA editing company: $116M B led by Eventide Asset Management, participation from Fidelity, et al.
- SalioGen Therapeutics (Cambridge, Mass.), gene coding platform: $115M B led by GordonMD Global Investments, EPIQ Capital Group, participation from Fidelity, et al.
- Accro Bioscience (Suzhou, China), research into molecular mechanism of regulated cell death: $50M led by Hongtai Aplus, participation from South China Venture Capital, Shenzhen Capital Group, Suzhou Oriza Holdings, et al.
- mPharma (Ghana), community pharmacy operator in several African countries: $30M from JAM Fund, Unbound, Lux Capital.
- Kiddo (San Francisco, Calif.), remote patient monitoring and continuous care platform for pediatric patients:...
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Quick Hits - HR/payroll software provider Justworks filed for an IPO with an upward valuation of $2B. The company will issue 7 million shares between $28 and $32 each to raise as much as $224M.
- San Diego-based startup studio Launch Factory raised $6M to launch several new AI/ML companies.
- SOCAR, a South Korean car-sharing startup, debuted on the country’s stock exchange and raised $50.7M at an $834M valuation. It has raised a total of $275M since its founding.
- China Mobile debuted on the Hong Kong stock exchange and raised almost $9B with a $130B market cap. The state-owned mobile operator was booted from the NYSE almost eight months ago.
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 |  | Inside VC's writer/curator Stephen currently lives in Berlin and is pursuing a Master's degree in philosophy. He otherwise spends his time trying his hand at recipes from India and Southeast Asia, escaping it all at the kickboxing gym, and offending aural sensibilities with his band. |  | | Editor | Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 Ford. | |
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