| |
| 1 | | Atlanta, Georgia-based VC firm Invesco marked down portfolio firm Swiggy's valuation by 48.6% to $5.5B at the end of January 2023, per filing documents seen by TechCrunch. This is the second time that Invesco has slashed Swiggy's valuation, previously reducing it from $10.7B to $8.2B last October. Invesco had led a $700M Series J funding round into the Indian food delivery startup in January 2022. After the news about Swiggy's valuation markdown came to light, stocks of its publicly traded competitor, Zomato, dropped by 6%, wiping away $400M in market capitalization. Zomato's stock prices ended the trading day at $0.74 (60.94 Rupees) per share, giving it a current market cap of ~$6.78B. Zomato had a market cap of over $13B when it went public in July 2021. Indian startups could postpone a reassessment of their valuations by opting to raise capital via convertible notes or venture debt. However, this year the true impact of volatile global market conditions on the valuations of Indian startups is expected to come to light. In March 2023, BlackRock nearly halved the valuation of India's most valuable startup Byju's, from $22B to $11.5B. Recent filing documents seen by TechCrunch show that Fidelity has maintained the valuations of its portfolio of Indian startups Meesho and Pine Labs. 
Due to the macroeconomic headwinds, startups globally are looking at valuation cuts. Last year, Tribe Capital marked down cloud-based machine startup Invenia's valuation by 95%. Stripe has had three valuation markdowns since its peak valuation of $95B in March 2021. The firm's internal valuation is currently $50B, down 47% from the peak. Buy-now-pay-later platform Klarna's valuation dropped 86% when it raised a down round late last year. Fast-fashion startup Shein lowered its internal valuation from a peak of $100B to $64B. Fitness equipment maker Tonal's valuation dropped 90% when it raised a "cram down" round in March 2023. 
In Q1 2023, the average pre-money valuation of U.S.-based late-stage startups declined by $120M to $159.1M. At the end of last year, Series D valuations had dropped 58% compared to the previous year. Pitchbook expects the downward valuation trend to continue this year. Startups typically raise fresh funding every 18 months. Several startups that were able to avoid fundraising in the last year will be in the market on the lookout for new funds and will likely have to accept lower valuations. SoftBank founder and CEO Masayoshi Son warned that the funding retrenchment might stretch longer if founders were unwilling to accept lower valuations. 
Startups that have previously raised funding at inflated valuations in 2021 will have trouble growing into "sky-high" valuations, per Pitchbook. IVP's general partner Ajay Vashee added, "I think we are back at 2017 levels, just as public markets have reverted to 2017 [prices]." Median valuation multiples of SaaS late-stage startups analyzed by IVP was 114.3x ARR, seven times the 15x multiple fetched by similar firms in 2017. Valuation multiples were declining for all stages, per Carta. |     | |
| A message from our sponsor, PUBLIC.COM. |  | | Lock in a 5% Yield on Your Cash in Less than 30 Seconds Treasury Accounts are officially live on Public, offering a new way to lock in a 5.0% yield on your cash in literally seconds. (That’s significantly higher than a high-yield savings account.) It’s easy to get started. Once you create your Treasury Account, you can move your cash into the safety of US Treasury bills.
As a Public member, you can now instantly invest your cash in 26-week Treasury bills. At the time of your deposit, you lock a fixed rate of return, backed by the full faith and credit of the US government. Public then stores your Treasury bills at The Bank of New York Mellon—the world's largest custodian bank and securities services company.
Once your Treasury bills reach maturity, they are automatically reinvested, so you have one less thing to think about. However, you also have the option to sell your Treasury bills at any time—even before they reach maturity. So, it's the best of both worlds: the high yield of US Treasuries and the flexibility of a savings account. Join Public | |
|
| 2 | | Sequoia Capital is looking to turn around its recent misfortunes by aggressively targeting AI startups, per The Information. So far this year, the firm has already backed 10 AI startups, including Harvey and LangChain. Sequoia partners Sonya Huang, Konstantine Buhler, and Pat Grady are actively looking for AI startups to invest in. Roelof Botha took over the "senior steward," or CEO role, at Sequoia over a year ago. However, his first year at the top role was laden with "unprecedented levels of tumult," per The Information. The firm's losses have compounded due to "poorly timed" changes to its fund's structure. Last year, the Menlo Park-based VC firm became a registered investment advisor (RIA), allowing it to invest more capital into crypto assets and secondary stocks, following in the footsteps of peers Andreessen Horowitz and General Catalyst. The move would allow it to also hold stakes in portfolio companies even after their public market debuts. Sequoia reorganized the fund structure in such a way that the firm's seed, venture, and growth funds would sit below its main singular permanent fund, dubbed The Sequoia Fund. The main fund would serve as the sole limited partner for future sub-funds. The proceeds from liquidating assets under the sub-funds would be returned to the main fund. The new structure was put in place to allow limited partners of Sequoia more exposure to top-performing public companies. However, the firm's new structure coincided with a dip in equity markets, wiping "billions in value from Sequoia's public portfolio." By mid-2022, Sequoia had missed out on a potential $7B in returns after holding onto stocks of Unity and DoorDash. Sequoia also holds public stocks of Snowflake, Robinhood, and UiPath. 
Sequoia's losses were further aggravated by the valuation markdowns and write-offs in private markets. The firm is facing markdowns on its investments in Stripe, Twitter, and ByteDance. Its $800M investment into Twitter is less than half its original value. Plus, its 10% stake in ByteDance — valued at $22B — is endangered due to the rising probability of a U.S. ban on the social media platform TikTok. Last year, Sequoia wrote down its entire $210M investment into FTX to zero after the crypto exchange filed for bankruptcy. Shortly after its FTX write-down, the firm lowered its management fees on two of its recently launched funds in a bid to pacify LPs. With the change, Sequoia intends to charge LPs management fees only on the capital deployed rather than the entire capital under management. At the start of last year, the firm's U.S. division had nearly $85B in assets under management. The slump in public markets and the changing macroeconomic conditions have resulted in a 38% drop in AUM to $53.2B at the end of March 2023. A filing from early February 2023, seen by TechCrunch, shows that the firm has nearly $13.6B in capital available for deployment. Sequoia's focus on AI startups indicates a likely change in its investment thesis, which was tipping toward the fintech sector last year, when capital markets, payments, and payroll startups accounted for 25% of its investments. | | | |
| |
| 4 | | Quick Hits: - Mayfield Fund raised two funds worth $955M, of which $580M is earmarked for early-stage fund Mayfield XVII with the remaining $375M for Mayfield Select Fund II, to back Series B and beyond startups.
- Andreessen Horowitz earmarked $500M to back aerospace, defense, public safety, education, housing, supply chain, and manufacturing early-stage startups that "support the national interest."
- ProLogium Technology, a Taiwanese startup building solid-stage batteries, is looking to raise nearly $300M in fresh funding at a $2B valuation.
- Eli Lilly increased its commitment to the Social Impact Venture Capital Portfolio by $50M, bringing the total allocation to $300M.
- VC firm RX3 secured $150M in capital commitments toward its second consumer-focused growth equity fund. RX3 was founded by Aaron Rodgers, Nate Raabe, and Byron Roth.
- Stride Ventures held the first close of its third venture debt fund at $100M. The firm is targeting a final close at $200M.
| | | |
| A message from our sponsor, ATAKAMA. |  | | Which tech investment opportunity is making waves in the $2T cybersecurity market?
Over 5,000 investors have already claimed their piece of a growing cybersecurity technology company that is solving the data privacy and protection problem.
The rise of cybercrime has highlighted the need for innovative solutions to protect our most valuable information. This is where Atakama comes in. Atakama is a patented, cutting-edge data security platform that utilizes advanced encryption technology to protect sensitive data against a data breach. As the demand for safeguarding sensitive, proprietary and private data accelerates, Atakama's is well-positioned to capitalize on this trend. Investing in Atakama is an opportunity to be part of a growing industry and a company with a unique and effective solution to a critical problem. With a strong team, impressive customer portfolio, and innovative technology, Atakama is well-positioned for success in the years to come. Learn More | |
|
| Upcoming Events | | MAY
11 | | Testing and monitoring large language models (LLMs) with TruEra | | | | | | | MAY
17 | | Monthly Meditation guided by Nicholas Whitaker | | | | | | | MAY
17 | | Join Vanta's webinar to see Vendor Risk Management in action and learn about automating security reviews. | | | | | | | MAY
23 | | Advance your security program and win more deals by joining this Vanta webinar | | | | | | | MAY
25 | | Inside.com Book Club - Zero To One by Peter Thiel | | | | | | * This is a sponsored event | | | |
Term of the Day Deferred compensation: Deferred compensation is not paid out by an employer at the time services are rendered, but instead at a point in the future, usually upon retirement Question of the Week What's the most bizarre work-related dream you've ever had? Join the conversation Today's Knowledge Hub Is Brought To You By Get the latest Axios Pro report on what the current economic downturn means for your bottom line, and how to plan for the future. Download for free. Backed by Mark Cuban on Shark Tank, Collars & Co. makes polos and long-sleeve shirts that are lightweight, comfy, and have just the right amount of stretch. Use code INSIDE for 15% off.
|
INSIDE VENTURE CAPITAL LEADERBOARD (7 DAYS) |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Aaron Crutchfield | |
| |
| |
|
| |
|
| |
Comments
Post a Comment