| |
| Hey Insiders, Today we are bringing you an analysis of IQ Capital's $400M deep tech funds and the impact of China IPO reforms on exit activity. 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 | | British deep tech VC firm IQ Capital secured $200M in capital commitments toward its fourth fund. Additionally, the firm launched its second $200M Growth Fund to provide follow-on funding to promising startups within its portfolio. IQ Capital's fundraising comes as deep tech funding remains "at the forefront of investor's minds," per managing partner and co-founder Kerry Baldwin. 
European deep tech startups secured $17.7B in VC funding in 2022, down 22% from record-setting highs of $22.8B in 2021, per Dealroom's latest European Deep Tech Report. Funding in 2022 was up 60% from 2020's total of $11.1B. Despite the dip in funding, VCs still see deep tech as the second most promising sector in Europe. With $5B invested into European startups so far this year, funding will likely remain slightly below last year's total as the sector feels the heat from the global VC funding pullback. 
Nevertheless, funding for the sector is poised to see a lower decline than other sectors due to the recent advancements within the novel segments in the sector, especially generative AI. In the second half of last year, funding for the sector declined by 9%, while overall European VC funding slumped by 46%. The four emerging segments within the deep tech sector that raked in the maximum share of VC funding were novel AI, quantum computing, novel energy, and space tech. Collectively, the four segments raked in $4.4B in 2022. Investors' interest in the generative AI sector has increased this year, driven by the recent advancements in technology and the rising number of use cases for the technology. Despite increased investor interest and European government support, the growth of European deep-tech startups remains stifled due to a lack of late-stage capital and risk appetite. Investors have to outweigh the risk associated with deep tech investments as their risk profile differs from tech startups. Per Dealroom, they have high capital expenditures, technology risk, market risk, and development times as the technology is usually in its nascent stage and takes time to mature. However, they also have a low competition risk, as competitors find it difficult to replicate the technology, giving incumbents a lasting competitive advantage over rivals. IQ Capital's new fund pushed its assets under management (AUM) over the $1B mark. Fund IV is backed by one of the U.K.'s largest limited partners, British Patient Capital, and other global institutions, funds-of-funds, and family offices. IQ Capital has backed over 100 deep tech startups since its founding in 2007. Banking startup Thought Machine, ultra-fast battery charging startup Nyobolt, and speech recognition platform Speechmatics are a few of the most notable startups in its portfolio. Several portfolio companies were acquired by Oracle, Google, Apple, and Facebook, paving an exit for IQ Capital. Despite IQ Capital's vast experience in investing in the domain, it still found the fundraising environment challenging. Baldwin added, "Obviously, it's been quite hard to raise in this market environment, putting it bluntly. But we're doing something different." |     | |
| A message from our sponsor, impact.com. |  | | In today's highly competitive business landscape, it's essential to explore innovative avenues to reach your target audience effectively. That's where partnership marketing comes into play. By leveraging the power of partnerships, you can tap into new customer segments, expand your brand's reach, and drive significant growth for your business. To help you master the art of partnership marketing, we have prepared a comprehensive guide that covers everything you need to know. From understanding the fundamentals to implementing successful campaigns, this guide will equip you with the knowledge and strategies to take your marketing efforts to new heights. Download Your Guide | |
|
| 2 | | China is looking to lure back companies to its stock exchanges with IPO reforms that are designed to simplify listing requirements and improve registration and vetting processes. The move indicates the Chinese government's desire to encourage new IPO listings. Per Pitchbook, the reforms — which went into effect Feb. 1 — are already having an impact, with reports suggesting an increased activity on both Chinese exchanges — the Shanghai Stock Exchange and the Shenzhen Stock Exchange. Additionally, the first cohort of companies that listed on the exchange following the rule changes have seen a significant increase in share prices. 
Sixty-one VC-backed Chinese startups have gone public this year, raising $45B through their IPO debuts, per Pitchbook. In Q1 2023, 39 companies listed on Chinese exchanges, 22% down from the previous quarter. VC-backed startups have yet to increase their listings. However, the new reforms are poised to increase the number of VC-backed startup listings later this year. IPO listings declined in China, mimicking the global trend after the rout in technology company prices and lack of investor appetite. China's ongoing tensions with the U.S. and the impact on businesses due to its "zero-COVID" policy further hampered the number of listings on its exchanges. As a result, foreign investors also stayed away from investing in publicly listed Chinese companies. In the past, Chinese companies, such as e-commerce giant Alibaba and app maker Baidu, have chosen to list in the U.S. over China due to a host of factors. The new rules aim to reverse the trend and make it easier for companies to list on its two exchanges. The new rules have empowered the exchanges to grant listing approval to companies. Previously, China's securities watchdog — China Securities Regulatory Commission (CSRC) — would grant approval to companies looking to list through an approval-based system after thoroughly reviewing the company's financials, business plans, management, and compliance documents. With the transfer of the approval system from the watchdog to the exchanges, the registration process is expected to become simpler and quicker. With the new system, the exchanges will have the responsibility of the vetting and approval process, with CSRC only restricted to making sure the listings are in line with national industrial policy. Additionally, CSRC has removed the administrative restrictions on the issuance prices and size of shares, letting the market dictate the share prices. The IPO pricing cap, meant to prevent volatility in the initial few days of trading, has also been abolished. CSRC will also support variable interest entity structures — which allow foreign investors to own shares in offshore entities where the Chinese company can transfer profits — as long as they are compliant with regulations. | | | |
| 3 | | Today's Funding: Biotech - Cambridge, Massachusetts-based biopharmaceutical startup Alkeus Pharmaceuticals secured $150M in Series B funding. Bain Capital Life Sciences led the funding round with backing from TCGX, Wellington Management, And Sofinnova Investments.
- Medical device company Conformal Medical raised $35M in Series D funding led by SPRIG Equity. All major investors in the company's Series C round participated in the current fundraiser.
Database - Israeli database schema management platform maker Ariga raised $18M in fresh funding led by Tiger Global and TLV Partners.
Energy - Amogy, a Brooklyn, New York-based startup making clean energy using ammonia, increased its Series B round size to $150M with an $11M Series B-2 capital infusion from Marunouchi Climate Tech Growth Fund, Mitsubishi Corporation, Mitsubishi Heavy Industries America, and Synergy Marine.
Fintech - Consumer payment fintech startup PayNearMe nabbed $45M in Series D funding led by Queensland Investment Corporation (QIC). True Ventures, Costanoa Ventures, August Capital, DNS Capital, and Invicta Management participated in the funding round.
- Singaporean B2B cross-border payments solutions provider Thunes raised $25M in Series C funding led by Bessemer Venture Partners.
SaaS - After-sales SaaS platform maker Fixably secured $10M in fresh funding from 468 Capital, Cusp Capital, icebreaker.vc, and Business Finland.
| | | |
| 4 | | Quick Hits: - Want to invest in one of the Top 5 Fastest Growing Industries in the U.S.? Join R3 Printing as they take on the $18B 3D printing industry.*
- British private investment firm Isomer Capital held the first close of its third €250M ($267M) fund, with a €60M ($64M) commitment from British Business Bank's subsidiary British Business Investments.
- Alphabet's independent $8B early-stage VC division GV promoted Issi Rozen, Frédérique Dame, Brendan Bulik-Sullivan, and Crystal Huang to the general partner role, per Fortune.
- Yana Watson Kakar joined Canadian investment giant CDPQ as managing director and head of Americas.
- Automate tedious project management work with Notion Projects.*
*This is sponsored content. | | | |
| A message from our sponsor, monday.com. |  | | Work management software: does it really increase productivity? In today's fast-paced business landscape, productivity has become the holy grail for teams striving to achieve remarkable results. The question lurking on everyone's mind is - how? Used and loved by more than 180,000 customers, monday.com enables you and your team to easily plan, manage and track all your work, centralize and streamline all communication. With real-time notifications, keep your teams aligned and boost collaboration. With customizable dashboards, track business performance and reduce repetitive work with no code automations. With 72+ integrations, eliminate the need to switch between tools, saving time and money. So after all of that, if you're still wondering if it's worth it - try it, and see for yourself. Get started for free 
| |
|
| Upcoming Events | | JUN
14 | | Monthly Meditation guided by Nicholas Whitaker | | | | | | | JUN
20 | | Contract Negotiations 101 with Mathew Kerbis | | | | | | * This is a sponsored event | | | |
Term of the Day Stocks (equity): Stocks, or equity, are securities that give the holder fractional ownership of the issuing company. Question of the Week Have you ever had to compromise your values for your career? Join the conversation |
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 | |
| |
| |
|
 | monday.com enables you and your team to easily plan, manage and track all your work, centralize and streamline all communication. | |
|
| |
Comments
Post a Comment