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| Hey Insiders, Today we are taking a look at why founders risk alienating early backers with new structured deals and why Thomson Reuters acquired Casetext. We have also rounded up the top leadership changes in VC this week. Scroll down for some quick hits, then let us know what other content you'd like to see in future issues. Karan
p/karan-chafekar | |
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Pitchbook data shows cumulative dividends increased from 20% in 2022 to 26% in Q1 2023. Deal terms are tilting into investors' favor, with nearly 9% of 899 deals recorded by Carta having a liquidation preference of over 1x. Founders are opting for structured deals with covenants and investor-friendly deal terms in order to avoid raising down rounds. However, founders risk alienating the early backers of the firm, as such deals will likely leave them at the bottom of the cap table. More: - Granting new investors better deal terms may sever ties with early backers.
- Thomvest Ventures managing director Don Butler said, "The fight that I've seen play out is: a company that's done a seed or a Series A where the documents called for everyone being 'pari passu' ('on equal footing'), and then somebody comes in with a term sheet and says, 'No, I want to stack my preferences.'"
- The deal terms are more in favor of new investors in bridge rounds, pay-to-play rounds, or equity rounds with liquidation preferences as high as 4x.
- Tola Capital's partner Aaron Fleishman is witnessing such deal terms in late-stage growth deals and internal bridge rounds.
- He adds, "That's where you're seeing a lot of pay-to-plays, you're seeing 3x, 4x liquidation preference and major 25% or 30% discount to the next round."
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| 2 | | Palo Alto, California-based venture firm Eclipse roped in Kaitlyn Glancy, the former vice president of North America at logistics company Flexport, as its newest partner. Glancy will focus on early-stage startups in the supply chain domain. In addition to Eclipse, Windham Venture Partners, Crossbeam Venture Partners, and Enez Capital announced leadership changes in the past week. Hires: - Digital health and medical technology-focused VC firm Windham Venture Partners appointed David Kereiakes as managing partner. Kereiakes is tasked with leading the new Cincinnati office and building Windham's presence in the Midwest.
- Grant Miller joined Crossbeam Venture Partners as vice president of operations. Miller was previously working for sports, entertainment, and consumer investments-focused growth equity firm SC.Holdings.
- Emerging venture capital fund Erez Capital added 40 venture partners. A few of the notable hires include:
- Omar Agely, managing partner at Mandatory Ventures
- Garth Daniels, CEO of Ensign Global Fund
- Kenneth Asher, CEO of Kasher Capital
- Pankaj Kedia, managing partner at 2468 Ventures
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| 3 | | Thomson Reuters acquired legal tech startup Casetext for $650M in cash. The transaction is expected to close in the latter half of this year, subject to regulatory approvals. Thomson Reuters CEO Steve Hasker said, "The acquisition of Casetext is another step in our 'build, partner and buy' strategy to bring generative AI solutions to our customers." More: - Casetext started in 2013 as a knowledge-sharing community for lawyers before pivoting into an AI-powered tools and automated workflow platform for legal teams.
- The startup leveraged OpenAi's GPT-4 language model to develop CoCounsel, its AI-powered solution that reviews documents, prepares depositions, drafts legal research memos, and analyzes contracts.
- The San Francisco-based startup had raised $64M from Union Square Ventures and other investors.
Zoom out: - The acquisition is part of Thomson Reuters' larger initiative to integrate generative AI into various verticals, including legal, tax, accounting, and news.
- The firm earmarked $100M to invest in AI and generative AI platforms in the second half of this year.
- It expects to invest $10B to acquire mostly AI-focused startups until 2025.
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| 4 | | AI-powered analytic solutions maker ThoughtSpot acquired business intelligence startup Mode Analytics for $200M in cash and stock. With the acquisition, ThoughtSpot will be able to provide analytic applications and data visualization tools to data teams. ThoughtSpot's CEO Sudheesh Nair adds that the acquisition will bolster its generative AI apps, grow its customer base, and increase annual recurring revenue (ARR) to over $150M. More: - The San Francisco-based Mode Analytics has raised $81M in venture capital since its founding in 2013.
- Notable backers of the firm include H.I.G. Growth Partners, Valor Equity Partners, and others.
- Mode reportedly had 50% of the Forbes 500 companies as its customers at one point, including Anheuser-Busch, Lyft, Bloomberg, Capital One, and VMware.
Zoom out: - The Mode Analytics acquisition is ThoughtSpot's fourth to date, spending a total of $663M.
- ThoughtSpot acquired analytics firm SeekWell in March 2021 and data integration company Diyotta two months later.
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| 5 | | Indian VC firm Arkam Ventures is aiming to raise $180M for its second fund. The second fund will help the firm double down on Indian startups by writing bigger checks into emerging startups. The firm expects to back 20 early-stage companies with the new fund. More: - The second fund's size is nearly double the debut fund, which closed at $110M.
- Notable portfolio investments from the debut fund include Jar, Smallcase, KreditBee, Jumbotail, and Jai Kisan.
- The firm expects key institutional investors from the first fund, such as British International Investment, SIDBI, and Evolence, to support the second fund.
- Co-founder Rahul Chandra said that the firm could have set a higher target for the fund, but it curbed its target considering the market conditions.
- The firm intends to invest in financial services, skilling, food, agriculture, healthcare, mobility, and SaaS startups across Series A to Series B stages.
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| 6 | | Today's Funding: AR/VR - Chicago, Ill.-based surgical navigation augmented reality solutions provider Augmedics closed its Series D funding round at $82.5M. CPMG led the funding, joined by H.I.G. Capital, Revival Healthcare Capital, Almeda Ventures, and others.
Biotech - San Francisco-based clinical-stage medical device company Presidio Medical raised $72M in funding from its Series C round led by Deerfield Management.
- Nvidia's venture arm NVentures and Novalis LifeSciences co-led a $54M Series D funding round into medical imaging data and AI platform Flywheel. Microsoft, 8VC, Hewlett Packard Enterprise, and others participated in the funding round.
Data - AI-powered data security platform Cyera closed its Series B funding round with $100M in capital. Accel led the funding round with participation from Sequoia, Cyberstarts, and Redpoint Ventures.
- Kafka API compatible streaming data platform Redpanda Data secured $100M in Series C funding led by Lightspeed Venture Partners with additional support from GV and Haystack VC.
E-commerce - E-commerce and logistics enablement solutions provider Cart.com nabbed a $60M Series C funding at a pre-money valuation of $1.2B. B. Riley Venture Capital, Kingfisher Investment Advisors, Snowflake Ventures, Prosperity7 Ventures, Legacy Knight, and others provided the funding.
Gaming - In-gaming advertising solutions developer Anzu raised $48M in Series B funding led by Emmis Corporation.
- Gaming studio Mythical Games raised $37M in funding through its Series C1 funding round led by Scytale Digital, with participation from ARK Invest, Animoca Brands, Andreessen Horowitz, Gaingels, WestCap, and others.
Mobility - Israeli AI-powered traffic signal platform NoTraffic raked in $50M in Series B funding led by M&G Investments, with participation from NVN Global, UMC Capital, Vektor Partners, North First Ventures, and others.
Software - Rust-based coding terminal maker Warp secured $50M in Series B funding from Sequoia Capital, GV, BoxGroup, and Neo.
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| 7 | | Quick Hits: - Kubernetes doesn't need to be complex. Join us for a conversation about how to increase developer productivity & reduce your pull request time by 75%.*
- Planeteer Capital expects to secure $100M in capital commitments toward its debut fund.
- Unshackled Ventures secured $35M in capital commitments toward its third fund to invest in pre-seed stage startups founded by immigrants.
- Joyful Ventures raised a $23M fund to invest in plant-based foods and cell-based meat startups.
- Polish VC firm Innovo VC closed its third fund at €105M ($115M), slightly above its initial target of €100M ($109M). The firm intends to use the fund to invest in 20 to 30 early-stage startups in the CEE region.
- Identity verification solutions startup Socure acquired Berbix for $70M in cash and stock.
- It's never been easier for your sales organization to accelerate growth. Learn how AI and more can help you sell in a whole new way.*
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Term of the Day Assessed value: The assessed value is an official estimate of a property's worth that is used to determine the appropriate tax rate for the property. Question of the Week How do you feel about the phrase "The customer is always right"? Join the conversation |
INSIDE VENTURE CAPITAL LEADERBOARD (30 DAYS) |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Aaron Crutchfield | |
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