A high number of U.S. venture capitalists are traveling to the Middle East in an attempt to raise funds from new potential limited partners, per The Information. Their move is in response to the tough fundraising environment and the withdrawal of traditional limited partners such as U.S. pension funds and endowments. In contrast, the sovereign wealth funds of the Middle East have access to $3T of funding. Abu Dhabi Investment Authority has increased its allocation target for private equity from its earlier range of 5%-10% to 7%-12%, indicating a growing appetite for U.S. technology funds. More: - Abu Dhabi's wealth fund Mubadala Investment Company, which has over $284B in AUM, held a reception in Abu Dhabi on Nov. 18, which was attended by several global investors, including some VCs from Palo Alto and Manhattan.
- Top executives from Tiger Global Management, Coatue Management, SoftBank, Dragoneer, and VentureSouq were in the region before Mubadala's reception.
- Mubadala has been a major backer of SoftBank's Vision Fund.
- Ben Horowitz, co-founder of Andreessen Horowitz, apparently visited the region in October.
- Gaming and crypto-focused venture firm Galaxy Interactive is in the process of raising a new $650M fund.
- Galaxy's general partner Sam Englebardt took a five-week trip to the Middle East to build relations with potential new limited partners.
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Coatue Management and Viking Global Investors are among the six top lenders driving the debt financing in the market as equity and public market funding options remain scarce, per The Information. Haim Zaltzman, chair of law firm Latham & Watkins, said that debt financing is an attractive opportunity for lenders as "It's more equity-like returns with more of the downside debt protection." More: - Startups are opting to pay interest and make convertible debt deals rather than raise equity funding in the current environment at sharply lower valuations.
- Cybersecurity startup Arctic Wolf raised $401M through convertible notes from Owl Rock Capital in October.
- Lenders are in talks with several startups, but many deals haven't closed yet as startups are still flush with cash.
- Investors expect that to change and debt financing deals to pick up next year as startups run out of runway.
- Other top lenders in the domain include Sixth Street Partners, Owl Rock, Blackstone, and Portage Ventures.
- Many of the firms have been eyeing startups that have shelved their IPO plans.
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Over half of venture capital firms surveyed by GSR believe that oncology startups show the most promising potential in the clinical sector. Early-stage healthcare-focused venture firm GSR, which has over $3.5B in AUM, surveyed over 50 VCs, per Axios. More: - The survey found that 37% of respondents choose mental health as the second most promising domain in the clinical sector.
- However, mental health also showed the least promising potential for startups.
- The healthcare sector has been severely impacted due to the venture funding pullback.
- In some cases, Series B+ stage valuations have fallen by over 60%, as confirmed by 42.3% of the respondents.
- Investors highlighted provider shortages and reimbursement changes as the top current challenges in the healthcare sector.
- The most promising oncology startups identified by respondents include data integration and collaboration platform OncoLens, cancer care coordination platform Jasper Health, patient care solutions provider OncoHealth, and precision medicine tech company Synapse.
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Thai venture capital firm V Ventures, a subsidiary of Thoresen Thai Agencies Pcl, is investing $100M into the crypto platform Zipmex. V Ventures will gain 90% ownership of Zipmex through the venture buyout. The funds will help Zipmex to unlock frozen customer accounts on the exchange by April 2023. More: - Zipmex halted withdrawals on its platform in mid-2022 following a crypto rout.
- In August, the High Court of Singapore granted three months of creditor protection to the company.
- The Singapore court is currently considering Zipmex's application for an extension of the moratorium until April 2023 to support the restructuring efforts.
- The deal terms were presented before the court in Singapore.
- $30M of the sum will be offered in cash, with the balance in crypto tokens.
- Zipmex has operations in Thailand, Singapore, Indonesia, and Australia.
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Latin America-focused private equity and alternative asset manager Patria Investments entered the venture capital domain with the acquisition of Igah Ventures. The move will help the firm to provide financing to startups across all stages of growth. Igah’s early-stage focus complements Patria’s focus on mature companies. More: - Patria expects the acquisition will help the firm unlock a new level of growth and increase its client base.
- Igah will continue to invest in seed to Series B stage startups.
- The firm has raised three funds since its establishment in 2013 and is in the process of launching its fourth fund.
- Limited partners of the firm include Infracommerce, Contabilizei, Unico, Avenue, and Conexa Saúde.
- Igah has $320M worth of assets under management and $140M worth of fee-earning assets under management.
- Patria has over $26.5B worth of assets under management.
- The transaction includes a mix of cash payment and equity in the form of PAX Class A shares.
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Minneapolis-based investment firm Rice Park Capital Management announced Chris Bixby will lead its venture capital investments. Bixby joins from digital payments fintech Sezzle. At Rice Park, Bixby is tasked with leading early- to mid-stage investments in the proptech and real estate technology sector. More: - Bixby will have the designation of managing director, venture capital strategies.
- He will be supported by co-chief investment officers Matt Kennedy and Craig Feel.
- Bixby's experience managing middle-market private equity and fintech startups makes him a valuable addition to Rice Park.
- Bixby is a Harvard MBA graduate and has had stints at Jefferies and General Mills throughout his career.
- He founded Collaborate Brands, where he advised early-stage businesses on growth, fundraising, and strategy.
- The Minneapolis-based firm raised its first $8.4M fund in mid-2019.
- It has made six investments to date, including Blue Water, SiteKick, Unreal Estate, and Realized.
- The firm exited Blue Water after it was acquired by Voxtur Technologies for $101M.
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I'm Kiani from Inside.com, and this week, we asked our venture capital community, "What are the top three red flags investors should notice in a startup's pitch?" We received over a dozen responses from our members. ⭐️ Here are some highlighted responses we received: Rishi Sharma (p/rishi-sharma), Venture Partner at GV Partners, wrote: - The startup is trying to solve a problem that doesn't exist.
- The startup's solution is not well thought out.
- The startup is trying to copy a successful company.
He dives deeper into each one, and you can read his full comment here. Pamela Stevenson (p/pamela-stevenson-123 | LinkedIn), Director of Pathfinder Capital, wrote: - When the founder has no answer when asked, "what is your monthly recurring revenue?"
- When the founder has no answer when asked, "what is your burn rate?"
- When the founder says that the exit strategy for their startup is to sell in the next two years and then have no participation in the ongoing business.
Stephanie Dorsey (p/sdorsey), Founding Partner at E²JDJ VC, wrote: - Unclear founder background or connection to the problem.
- Overemphasis of advisors' track record.
- High-level language and abstract concepts with no product description.
I encourage you to read her full comment here, where she explains each point further. We're flattered by all of the startup founders that gather on Inside.com to answer our weekly questions. The insight and advice they provide are invaluable, and we're grateful to have such a knowledgeable community on our site. Join the conversations at Inside.com, and we may shout out your name and business or contact you for more! ⭐️
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- So far this year, venture firms have invested $2.6B in hydrogen-related companies. Notable funding rounds in the year include Monolith’s $300M Series D and Electric Hydrogen’s $198M Series B financing.
- Crunchbase data shows that cultivated meat startups have raked in $700M in venture funding so far this year.
- Yzr Capital has raised 60% of its $100M target for its debut early-stage digital health-focused fund.
- Indian fintech platform KreditBee nabbed $80M in Series D funding from Premji Invest, Motilal Oswal Alternates, NewQuest Capital Partners, Mirae Asset Ventures, and MUFG Bank.
- Passwordless platform Hypr secured $25M in Series C1 funding led by Advent International.
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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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