 Silicon Valley founders are raising debt to fund their companies as VCs continue to hesitate to invest. New VC funding has dropped by 42% compared to the same period in 2021. More: - Macroeconomic conditions such as inflation, the pandemic, supply chain issues, and dry powder among VC firms have resulted in the lowest overall funding levels for startups in the last few years.
- Industry experts are now highlighting the fact that startups are raising funds through bridge loans, structured equity, convertible notes, participating bonds, and other forms of debt that have typically not been preferred by startups.
- Some of the most notable examples include food delivery company Gopuff ($1B funding through convertible notes), Arctic Wolf ($400M convertible note fundraising), Betterplace ($40M), etc.
- This trend signals the dependence that startups continue to have on external funding to keep their operations going and, more importantly, that startups are willing to adapt regardless of the market conditions.
- These market conditions have even affected large tech companies such as Meta, Twitter, Netflix, Roku, Cisco, etc., all of which had to lay off thousands of employees.
- Meta's layoff round made headlines around the world, as the social media giant had to let go of 13% of its total workforce, marking the first time that it had faced such a difficult situation.
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VC investment in German startups fell by 46% YoY in 2022, reaching $11.9B. The drop is consistent in both the total monetary value invested and the number of funding rounds. More: - Late-stage startups were the most impacted, as the number of deals where investors deployed $250M or more fell by more than 100%.
- Investment volume fell from $10B in 2021 to $2.2B in 2022.
- Rounds between $100M and $250M also declined in terms of the number of deals. From January to November, 19 deals in this range were closed, compared to 33 in the same period last year.
- 2022 has been the best year yet for early-stage funding on the continent if measured for investment volume, as Series A investment volume increased by 13%, while Series B investments increased by 12%.
- However, this trend did not apply to all early-stage funding rounds, as funding for Pre-Seed startups fell by 37%.
- Investors are rationalizing this trend by claiming that startups in the Series A and B stages are strong enough to outlast the current market downturn and dropping valuations but are still proven in the market to feel like less of a risky investment.
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Baltic startups received $1.7B in VC investments in 2022, a 15% decrease compared to 2021. Estonia, led by Bolt's $667M round, led the region in funding and beat the downward trend. More: - Estonian startups saw a 26% increase in total funding volume compared to 2021, reaching $1.375B in funding.
- Lithuania had a 49%YoY drop in funding, closing the year with $256M.
- Latvia, however, had the most significant drop, seeing a 70% decrease in startup funding. Having attracted $239M in startup funding in 2021, the country only managed to attract $71M in funding during 2022.
- Estonian startups were dominant in the number of funding deals that they reached, representing 81% of all funding activity in the Baltics region.
- Lighthouse Ventures, Icebreaker.vc, and Superhero Capital were the most active foreign-based VC firms.
Zoom Out: - Estonia alone has created 10 unicorns so far, including names such as Skype, Wise, Bolt, etc. The figure means the small country has the most unicorns in the world, adjusted per capita.
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A new report claims that the Dutch economy could struggle because its startups face a $531B gap in growth funding. The report estimates that the Dutch government needs to provide $26.5B in funding for the next 25 years in order to catch up with other countries and create 2-3% economic growth. More: - The report recommends that The Netherlands invests pension funds and insurance funds in the private markets in order to provide enough liquidity, something that theoretically would enable startups to create new market dynamics and job growth through innovation.
- Economic growth in the country during the 2000-2020 period has stood at around 1% CAGR.
- In order to reverse this trend, the Netherlands would need to create around 3,000 growth companies.
- The startup scene in the country received over $2.4B in VC funding in 2021.
- Notable startups founded in the Netherlands include
- WeTransfer,
- Mambu,
- Messagebird,
- BitFury,
- Hotmart, etc.
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10D VC has raised an oversubscribed $245M funding round to back early-stage startups and top performers in its portfolio. The Venture Capital firm is based in Israel. More: - This funding round will be deployed as two separate funds. One will be used to provide capital for early-stage startups, while the other will invest in the top-performing companies that are already part of 10D's portfolio.
- The early-stage fund will have $185M at its disposal, while $60M will be used to fund the most promising portfolio startups.
- Some of the most notable investments that the company has made in the past include Exodigo, Juno Journey, OneStep, Obligo, and Seebo (exit).
- Company officials stated that they believe this is the best time to invest in startups that have the potential to become category leaders in the future.
Zoom Out: - There are around 300 VC firms in Israel. The country has one of the most active startup ecosystems in the world, being one of the leading countries for receiving funding adjusted per capita.
- These firms have invested in thousands of startups, including almost 40 unicorns that the country has minted so far.
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Molecular diagnostics company BillionToOne has raised an $83.5M equity and debt funding round to make molecular testing more accessible. The company is based in California. More: - BillionToOne is a molecular diagnostics company that uses proprietary technology to detect and quantify disease at single base-pair resolution.
- This solution could help patients discover life-threatening conditions in their system faster than possible today.
- BillionToOne has doubled its revenue and test volume since its last funding round in March 2022.
- The equity portion of the deal ($48.5M) was backed by investors such as Libertus Capital, Hummingbird Ventures, Baillie Gifford, Adams Street Partners, Neotribe Ventures, Fifty Years VC, Norwest Venture Partners, and Time BioVentures, while the debt funding was secured with the backing of Bridge Bank.
- The company aims to use the funding to scale UNITY Screen™, a solution that is the only commercially available non-invasive prenatal test that assesses fetal risk for recessive conditions and red blood cell antigen incompatibility, according to BillionToOne.
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- Chicago-based early-stage VC firm The 81 Collection, which invests in industries such as manufacturing, real estate, retail, and construction, has raised a $41M fund.
- Nectar, a healthcare company that aims to provide help for those affected by allergies by providing under-the-tongue treatments, lab testing, and telehealth services, raised $24M in a Series A funding round led by Harmony Partners.
- Caffeinated Capital led a $12.75M funding round for code integration cloud platform Ganymede Bio. The startup is based in Palo Alto, California.
- Xscape Photonics, a startup that develops high-performance computing hardware in an environmentally sustainable way, has raised $10M in a round led by Altair.
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 |  | Arbër is an Inside writer who also has experience in entrepreneurship. He has experience covering Consumer Tech, Venture Capital, NFTs, Crypto, etc. Arbër holds a Bachelor's degree in Business from XAMK University in Finland. When he is not reading(and writing) business news, he chooses to watch sports or anime...and then read news about sports or anime. |   | | 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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