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| Hey Insiders, Today we are taking a look at Addition's $1.5B target for the fifth fund, U.S. investors scaling back on Chinese funds, and Y-Combinator's unicorn creation rate. Scroll down for some top funding news and quick hits, then let us know which sector-specific funding you'd like to see more of in future issues! Karan
p/karan-chafekar | |
| 1 | | Addition is looking to raise $1.5B of capital toward its fifth fund, per a securities filing reviewed by TechCrunch. The news comes as established VC firms are having difficulty raising VC funds, causing them to lower their fundraising targets amidst the VC funding pullback trend. More: - Addition has made four investments so far this year and is unlikely to match its peak number of 49 deals from 2021.
- Per Pitchbook, the firm still has $3.8B of dry powder available for deployment.
- Addition's assets under management (AUM) currently total $6.5B.
- The firm's previous four funds have all closed above $1.3B.
- Notable portfolio startups include Stripe, Synk, Navan, Alchemy Insights, Chainalysis, and Hugging Face.
- The New York-headquartered firm was founded by former Tiger Global executive Lee Fixel.
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What the numbers say: U.S.-based investors contributed at least 60% of the total $200B raised by China-focused funds from global investors over the past decade. Due to rising tensions between the U.S. and China, American funding deployed into China-focused VC and PE funds fell sharply from the peak of $48.6B in 2021 to $16.5B in 2022. This year, the downward trend has continued, with just $1.15B deployed into China-focused funds. What happened: U.S. investors are concerned about the returns on investments due to the geopolitical rift between the two nations and China's regulatory crackdown on domestic businesses, causing them to reduce their commitments to China-focused VC and PE funds. Investors that have pulled back their investments include public pension funds and major U.S. endowments, such as the University of Chicago and the Robert Wood Johnson Foundation, per The Information. Dietrich Foundation — which invested in Chinese VC funds for the past 17 years — has curbed investments in China. Where to see the impact: China-focused funds are now courting investors from the Middle East, specifically Saudi Arabia. In April, Chinese government-backed investment bank China International Capital Corp. set up offices in Saudi Arabia and the United Arab Emirates to connect Chinese VC and PE firms with potential investors in the region. | | | |
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An estimated 4.5% of startups that emerged from Y Combinator's accelerator program since 2010 have achieved unicorn status with over $1B valuation, per Pitchbook. Y Combinator's unicorn creation rate is higher than other top accelerators, such as Techstars, MassChallenge, 500 Global, and SOSV. More: - Between 2010 and 2015, roughly 5.4% of all startups emerging from its accelerator programs cemented their status as unicorns.
- The figure dropped to 3.4% for startups in the 2016 to 2020 cohorts.
- Y Combinator's portfolio startups have also raised more cumulative capital than startups that went through other accelerator programs.
- Startups emerging from its cohort between 2010 to 2022 secured around $80.9B in funding through subsequent funding rounds.
- Founded in 2005, Y Combinator became known for its early bets in companies like Airbnb and Reddit.
- Due to the economic downturn, Y Combinator cut its summer cohort size by 40%.
- Additionally, it shut down its late-stage growth program and laid off 20% of its staff.
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| 4 | | Bicycle Capital, a new VC firm established by former SoftBank COO Marcelo Claure, secured $440M in capital commitments towards its inaugural fund. The firm expects to close the fund at $500M. The debut fund will focus on Latin American startups. More: - Claure's family office, Claure Group, and Abu Dhabi's sovereign wealth fund Mubadala are the two anchor investors, each contributing $200M to the fund.
- Brazilian billionaire Andre Esteves and NuBank co-founder David Velez have contributed the remaining $40M.
- Bicycle has roped in BTG Pactual, an investment bank founded by Esteves, to help bring in more accredited investors to the fund.
- Claure is joined by former SoftBank international managing partner Mwashuma "Shu" Nyatta, who joins Bicycle in the same role.
- Claure led SoftBank's investment into WeWork, in which he also served as a chairman from late 2019 until early last year.
- He had a noncompete clause with SoftBank which expires on June 14.
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| 5 | | Mistral AI, an AI startup co-founded by alums from Google's DeepMind and Meta, raised €105M ($113M) in seed funding. The four-week-old startup is building large language models and generative AI applications, competing head-to-head with OpenAI. Mistral was valued at €240M ($260M) at the seed round. More: - Lightspeed Venture Partners led the funding round with participation from JCDecaux Holding, Motier Ventures, Headline, Exor Ventures, First Minute Capital, LocalGlobe, and others.
- The French startup counts Bpifrance, French telecoms billionaire Xavier Niel, and Google CEO Eric Schmidt as shareholders.
- Mistral AI intends to use the proceeds to develop its enterprise-focused text-based generative AI models, with a target to release them in 2024.
- CEO Arthur Mensch co-founded the firm along with Timothée Lacroix (CTO) and Guillaume Lample (Chief Science Officer).
Zoom out: - Per Dealroom.co, Mistral's funding round is the largest seed round raised by a European startup to date.
- VCs have invested $4B in AI startups in Europe, including the U.K. and Israel. The figure pales in comparison to the $25B invested in AI startups in the U.S.
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| 6 | | Today's funding: AI - San Francisco-based AI-powered data analysis solutions provider Primer Technologies held the first close of its Series D round at $69M. Addition led the funding round with participation from the U.S. Innovative Technology Fund (USIT).
- AptEdge, a Redwood City, California-based generative AI startup focusing on technical customer service, nabbed $11M through its oversubscribed seed+ funding round led by Stage 2 Capital.
Biotech - Canadian biopharmaceutical startup Feldan Therapeutics raised $16.5M in Series B funding from Investissement Quebec, Amgen Ventures, GC Cell, and FSIT2.
- Boston-based clinical data technology and automation company closed its Series B funding round at $14M. NewVale Capital led the funding round.
Climate Tech - Gridware, a climate tech startup developing real-time monitoring solutions for grid assets, extended its seed round with $10.5M in additional funding led by Fifty Years and Lowercarbon Capital.
Enterprise - Income and employment verification platform Truework received $24M in equity funding through a strategic partnership with consumer credit reporting firm TransUnion.
Insurtech - German insurtech startup Thinksurance nabbed $24M in fresh funding led by Viewpoint Ventures, M-Tech Capital, and Segenia Capital.
Transportation - German autonomous trucking startup Fernride secured $31M in Series A funding led by logistics firm HHLA's corporate VC arm, with participation from 10x Founders, Promus Ventures, SpeedInvest, Fly Ventures, and others.
- Plasma-assisted combustion and hypersonic propulsion technology maker Specter Aerospace secured $9.5M in funding through defense contracts awarded by the Department of Defense and equity funding from CS Ventures and Mandala Ventures.
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- VCs Nat Friedman and Daniel Gross set up an AI cloud service dubbed Andromeda Cluster with 2,512 of Nvidia's H100 GPUs. The VCs have set up this unit to provide computing power to portfolio startups because several of them were encountering AI GPU shortages.
- HSBC is building a large team of technology and healthcare bankers to cater to venture capital firms and startups across the U.S., Hong Kong, and Israel.
- Nestle is partnering with Yield Lab Latam, a backer of agri-food solutions across Latin America.
- Bay Area-based non-profit organization How Women Lead intends to bring 10,000 women into the VC sector by matching them with potential investment opportunities.
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Aaron Crutchfield | |
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