This week we asked Inside VC readers: When do you expect venture funding to resume its normal pace? Unicorns are being created at a slower pace than last year. Venture funding continues to drop quarter on quarter. Meanwhile, venture firms continue to stack up their cash reserves with new funds. Do you think 2021 was an outlier in terms of the size and frequency of venture funding? Or do you think 2021's funding will be the new normal going forward? Let us know your thoughts. Questions from the Community: New Community Members:
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Some startups have been able to increase their valuations, despite the venture funding dip, by providing higher liquidation multiples to investors, according to The Information. Last year, when venture capital was flowing freely, investors had a liquidation preference of 1x on the majority of the deals. Louis Lehot, a business lawyer with Foley and Lardner, estimates that over 60% of mid- and late-stage deals he sees are offering 2x to 3x liquidation preferences in 2022. More: - Swedish payments fintech firm Klarna had to lower its valuation by 85% during its most recent $800M fundraiser in July.
- The firm was valued at $46B in June 2021.
- Other startups are also expected to raise down rounds as the venture funding dip continues.
- However, startups like Tonal, Jokr, and Acorns were able to increase their valuations during their most recent funding rounds.
- Delivery app Jokr is in talks to increase its valuation from $1.2B to $1.3B at the upcoming $50M Series C round and is reportedly offering investors a 1.4x liquidation multiple.
- Fitness equipment manufacturer Tonal offered a 2x liquidation preference at its most recent $100M funding round.
- Tonal’s valuation increased from $1.6B to $1.9B.
- Investment platform Acorns guaranteed a 1.4x multiple to investors, which will increase to 1.65x after five years, when it raised $300M from a Series F round led by TPG.
- Lehot says that the increased liquidation preferences might work against founders in case the company actually has to liquidate, as founders are at risk of being left without any money in case the business goes under.
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Corporate credit card, expense, and travel management platform TripActions raised $304M in funding. The fundraiser increased the firm's valuation from $7.5B to $9.2B. The funds include $154M in equity funding and the remaining $150M in debt financing. The round is a Series G round, per Skift. More: - Andreessen Horowitz and Premji Invest backed the equity tranche.
- Coatue Management provided the structured debt financing from its $2B Tactical Solutions fund.
- Reuters learned from sources that the firm has confidentially filed for an IPO, which could potentially happen next year.
- The firm is reportedly targeting a $12B valuation at the public listing.
- TripActions CFO Thomas Tuchscherer said, "We are investing for the company to be ready to be a public company."
- The Palo Alto, California-headquartered firm intends to use the proceeds to develop new features for its platform and boost sales and marketing efforts in the U.S. and Europe.
- To date, the firm has raised $1.8B in equity and debt funding.
- Exactly a year ago, the firm nabbed $275M in Series F funding led by Greenoaks.
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Virginia-based indoor farming startup Soli Organic nabbed $125M in funding led by CPDQ. The latest funding, a Series D round, brings the total raised by the firm to date to $487.5M. Soli will use the funding to construct additional indoor farms. More: - The firm is currently building a 130,000-square-foot farm in Marysville, Washington.
- Including the new facility, the firm has plans to open 15 indoor farming locations across the U.S.
- Existing backers S2G Ventures, Cascade Asset Management Company, and XPV Water Partners participated in the funding round along with new investor Movendo Capital.
- The firm received a $50M venture debt facility from Horizon Technology Finance in May this year.
- Last year in October, it received $120M in venture funding led by Decennial Group.
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Nxyz, a Web3 data infrastructure platform for blockchains, emerged from stealth with a $40M capital. The Series A funding round was led by Paradigm. The firm will expand its team, add support for other blockchains, and support emerging use cases for its product with the fresh capital. More: - Coinbase Ventures, Greylock Partners, Sequoia Capital, and other Web3 angel investors participated in the fundraiser.
- The firm was co-founded by Sridhar Ramaswamy, a former Google executive who last held the post of senior vice president for the firm’s internet ad business in 2019.
- Ramaswamy will lead nxyz as its CEO, as announced by the firm today.
- Nxyz currently supports Ethereum, Polygon, Binance, Avalanche, Arbitrum, and Optimism blockchains.
- In 2019, he started a privacy focussed search engine called Neeva, which nxyz has spun out from.
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San Francisco-based cybersecurity firm Vanta secured a $40M extension financing to its Series B funding round. The funding round was backed by cybersecurity organization Crowdstrike, along with new individual investors. Incoming funds will boost the firm's go-to-market and customer acquisition efforts and help accelerate product development. More: - Vanta cemented its unicorn status, with a $1.6B valuation, at the initial $110M Series B round led by Craft Ventures in June 2022.
- The firm has raised $203M to date including the fresh funding.
- A platform offered by the firm automates the security compliance process for organizations.
- Vanta's platform helps companies get SOC 2, HIPAA, GDPR, and ISO 27001 certifications.
- Autodesk, Quaro, and Modern Treasury are a few of Vanta's 4,000 corporate customers.
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- Scribble Ventures received $55M of capital commitments for its second fund and $29M for its opportunities fund.
- Automated data privacy solutions provider DataGrail closed its oversubscribed Series C round with $45M in funding. Thomson Reuters Ventures, Sixty Degree Capital, Next47, and others joined the Third Point Ventures-led funding round.
- 7wireVentures led a $30M Series B round into digital healthcare services provider FOLX Health. Funding round participants include Bessemer Venture Partners, Foresite Capital, and Polaris Partners.
- BlackRock, along with Promethean Investments, invested $150M in growth funding into indoor mini-golf firm Puttshack.
- Venture-backed decacorn edtech startup Byju’s has reportedly laid off 5% of its staff, equating to 2,500 employees. The move comes as the company targets profitability by year-end.
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Upcoming Events: - October 13 - AMA with Ram Bartov (Chief Accounting Officer at TripActions)* (Register Here)
- October 19 - AMA with Zecca Lehn (Responsibly VC) (Register Here)
- October 25 - Meet Our Fund 4, an Inside.com Summit (Register Here)
- November 02 - AMA with Bill Glenn (Executive Chairman at Crenshaw Associates) (Register Here)
- November 09 - Live AMA with Yashar Behzadi (CEO and Founder of Synthesis AI)* (Register Here)
- December 07 - Live AMA with Deividi Silva ( Head of Developer Relations at Gun.io) (Register Here)
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 |  | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | | | 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 and 1972 Fords. | |
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