 VCs invested $650M (CA$876.2M) into Canadian startups in Q1 2023, down 82% YoY and 61% QoQ, per Briefed.in data seen by Betakit. Fintech startups raked in 12% of the funding in the quarter, followed by marketplace and SaaS startups, with 10.5% and 10% share of funding, respectively. More: - Per Briefed.in, VCs curbed their investments into pre-seed and seed-stage startups, deploying 1.2% and 7.9% of the total capital, respectively.
- Series A and B startups secured 20% and 18.6% of the total funding deployed in the quarter.
- Notable deals concluded in the quarter include operations management software developer Jobber's $133.7M Series D led by General Atlantic, insurance end-to-end solutions maker Equisoft's $125M funding round led by Investissement Québec, and cleantech startup Summit Nanotech's $50M Series A led by Evok Innovations and Climate Tech Fund.
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What the numbers say: VCs invested nearly $1B in Series D funding rounds in Q1 2023, down 86% YoY and 92% from peak values of $12B in Q4 2021, per Crunchbase. In comparison, there were three Series D rounds of over $1B each in Q4 2021, with a median deal size of over $100M. This year's largest Series D round was cloud security company Wiz's $300M funding round from February. Only six rounds have been priced at more than $100M this year. 
What happened: Generally by the Series D stage, startups have attained product-market fit and seek additional funding from VCs to scale their organization. However, the absence of exit opportunities, slumping tech valuations, and funding slowdown have made securing Series D funding difficult in recent months. Relevance: VCs that previously were the most active late-stage investors, such as Tiger Global Management, SoftBank Vision Fund, Andreessen Horowitz, and Insight Partners, have not led a single Series D round so far this year. The latter two have not led a Series D round for U.S. startups for over a year. Tiger Global and SoftBank led 43 Series D rounds in 2021 and 2022, whereas A16z and Insight led 22 rounds in 2021 and 2022. The fundraising slowdown will impact Series C businesses seeking Series D funding.
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Microsoft venture arm M12 founding partner Matthew Goldstein joined British VC firm Systemiq Capital. Goldstein joined Systemiq to "turn [it] into the Sequoia of climate tech," per Business Insider. Systemiq Capital spun out of advisory firm Systemiq in 2022 and intends to close its second fund at $200M by the end of this year. More: - Goldstein is the latest executive to leave M12 after it changed its investment strategy from being an autonomous entity to investing in line with Microsoft's strategic objectives.
- Per Fortune, eight other employees have left M12 since 2021.
- Systemiq invests in climate-tech-focused fintech and deep-tech early-stage startups in Europe.
- Individual check sizes for late-seed to Series B rounds range from $2M to $10M.
- The firm has backed biodiversity monitoring startup Basecamp Research, carbon removal startup Charm Industrial, and lab-grown animal fat company Hoxton Farms.
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VC firm Accel's partner Harry Nelis expects the European VC market to recover between the end of this year and the beginning of the next. Nelis told TechCrunch that Accel had deployed around 50% of its $650M seventh fund that closed in 2021. Despite a lack of growth stage and pre-IPO opportunities, the firm is still committed to investing the entire fund capital, unlike in 2001 when it downsized a fund and gave the money back to limited partners. More: - Nelis acknowledged that the entire VC industry was focused on growth, "sometimes inefficient growth."
- As a result, Accel is now focused on efficiently scaling its portfolio companies.
- Accel previously focused on fintech startups. However, due to the sector's slowdown, the firm is now concentrating its bets on generative AI and the security sector.
- The VC funding retrenchment has helped the firm carve out time for thorough due diligence on potential investment opportunities.
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Johnson & Johnson's consumer health spinoff Kenvue raised $3.8B through its IPO debut on Thursday, selling 172.8 million shares at $22 apiece. Kenvue's share prices ended the trading day at $26.90 per share, 22% above its original asking price. At the close of the trading day, the company had a market capitalization of $50B. More: - Kenvue IPO is the largest U.S. IPO debut in over a year, per Crunchbase.
- Kenvue spun out from J&J in 2021.
- The firm has popular medical products, such as Tylenol, Band-Aid, and Neutrogena, in its product portfolio.
- J&J is still the majority shareholder in Kenvue, with 1.7 billion common stock shares, representing a 90.9% stake in the company.
Zoom out: - Kenvue's IPO will likely pave the way for startups waiting for the right public market conditions to pursue their listing, such as fintech platform Stripe and fashion startup Shein.
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Fin Capital general partner Peter Ackerson has established his own VC firm, Audere Capital. The newly established VC firm intends to champion "American innovation through early-stage technology investment." Maggie Sprenger, a former Kauffmann Fellow, joined Ackerson at Audere Capital. More: - Ackerson left Fin Capital in Jan. 2023, having led investments into Pipe, Teampay, Maxwell, SamCart, and Ternary during his four-year stint at the VC firm.
- According to sources, Ackerson allegedly left Fin Capital due to rising tensions with the managing partner and founder Logan Allin over portfolio company Pipe.
- Revenue-based financing startup Pipe was valued at $2B last year.
- Shortly after, three co-founders resigned from their respective executive roles, with Luke Voiles named the new CEO.
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- VC firm Portal Innovations secured $100M in capital commitments from investors to back life sciences startups in emerging biomedical hubs, including Chicago and Atlanta.
- Khosla Ventures founder Vinod Khosla warned against pausing AI research as advocated by several business leaders, including Elon Musk. Khosla said that the U.S. cannot afford to slow down AI research as it would relinquish the lead to China, which "can take many more risks, make many more errors."
- Mekong Capital's partner Chad Ovel is eyeing startup investment opportunities in Vietnam, as he believes that valuations could fall by 50%. The firm is considering launching a new fund in Vietnam sometime next year.
- Massachusetts-based Impact Nano, which makes specialty chemicals for the semiconductor sector, raised $32M in fresh funding from Intel Capital, Goldman Sachs Asset Management, and others.
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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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