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| Hey Insiders, Today we are taking a look at why more public companies are going private than the other way around, why VCs are scooping up stakes in the secondary markets, and why Eight Roads is investing $500M in Israel. Scroll down for some quick hits, and then let us know what other content you'd like to see in future issues. Karan
p/karan-chafekar | |
| 1 | | So far this year, 47 deals have been proposed or completed to take U.S. public companies private, compared to 39 IPO listings, per Bloomberg. The cumulative value of the privatization deals is estimated to be $113B, while the value of IPO listings was $9.3B. More: - The largest take-private deals announced so far this year were Silver Lake's $10B buyout of software firm Qualtrics International and the Elliott Investment Management-led $4.4B buyout of drug-research firm Syneos Health.
- Public companies are realizing that they cannot reach their long-term objectives while focusing on shareholders' short-term centric goals.
- Bloomberg Intelligence analyst Andrew Silverman adds, "Going private allows them to put aside shareholder goals, for a period, in order to refocus on their long-term strategy."
- Notable public listings so far in the year include Johnson & Johnson's consumer health division Kenvue's $4.4B IPO listing and solar power tracker NEXTracker's $734M public listing.
- Despite fast-casual restaurant chain Cava Group's $318M public debut this month, investors are still pessimistic about IPO listings.
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What the numbers say: VC firms, such as Andreessen Horowitz, Bain Capital Ventures, Bessemer Venture Partners, and Kleiner Perkins, are tapping into the secondary market to scoop up shares in promising startups at a discount, per Bloomberg. The situation was different until a year ago when hedge funds and VCs "would shun the secondary market," per EquityZen founder Phil Haslett. Relevance: VC firm Accel is using the opportunity to scoop up stakes in promising existing portfolio companies, including cloud-computing startup Vercel and developer software maker Sentry. Coatue acquired $700M worth of shares in security software maker OneTrust. What happened: According to a Forge Global report, shares of startups were trading at a median discount of 61% compared to their peak valuations. New York-based investment firm Liberty Street Advisors acquired stakes at a 30% to 50% discount over the last priced round. The fundraising slump, economic headwinds, and lack of exit options are forcing cash-strapped founders, employees, and investors to accept lower valuations. | | | |
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| 3 | | Eight Roads' managing partner and head of Europe, Davor Hebel, told Calcalist that the firm intends to invest $500M in Israeli startups over the next few years. The firm already has 10 active investments in the region. Hebel is confident about investments in Israel, citing the region's strong entrepreneurial spirit. More: - Eight Roads, backed by Fidelity, manages $11B across several funds.
- Israeli startups currently in its portfolio include HiBob, Appsflyer, Fireblocks, Eleos Health, Noogata, and Gloat.
- Hebel told Calcalist that three of the startups, namely Appsflyer, HiBob, and Fireblocks, are already generating over $100M in revenue.
- Hebel adds that 2023 is the right time to invest in startups and expects the capital deployment to increase next year.
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| 4 | | A new three-month-old AI startup founded by former Salesforce co-CEO Bret Taylor and former Google executive Clay Bavor has nabbed more than $20M in funding, per The Information. The name of the startup was not revealed. Benchmark is reportedly leading the round, with Sequoia Capital participating in the fundraiser. More: - The startup received a valuation of over $100M, according to sources.
- Taylor admitted that the firm had raised capital but disputed the details.
- The startup aims to help enterprises use AI.
- Taylor was previously the CTO of Facebook and founded a cloud-based spreadsheet app called Quip — which Salesforce acquired for $750M in a stock deal in 2016.
- Bavor led virtual and augmented reality product development at Google.
- Bavor published a LinkedIn post shortly after his departure from Google earlier this February, saying, "We share an obsession with recent advances in AI, and we're excited to build a new company to apply AI to solve some of the most important problems in business."
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| 5 | | Broadband, automotive, and media conglomerate Cox Enterprises launched its corporate venture capital arm Socium Ventures. The firm did not disclose the overall size of the fund. However, it did confirm that it will invest in Series A and beyond startups, with individual ticket sizes ranging from $3M to $25M. More: - Cox's president and CFO, Dallas Clement, said, "Socium Ventures is a new chapter in the way Cox approaches our investment strategy, but it's built on the same principles that guide all our businesses. Our goal is to create mutually beneficial partnerships that help these companies scale to their full potential."
- Cox rakes in more than $20B in annual revenues through all its divisions.
- The firm has previously invested in EV automaker Rivian and owns a 4% stake.
- Since the firm has only a single limited partner, the firm can invest over a long time horizon without worrying too much about liquidation options.
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| 6 | | Today's Funding: Biotech - Dutch precision therapy startup Tagworks Pharmaceuticals nabbed $65M in Series A funding led by Ysios Capital and Gilde Healthcare. Novartis Venture Fund, New Enterprise Associates, Lightstone Ventures, and others participated in the funding round.
- AltPep Corporation, a biotech firm developing novel therapeutics for Alzheimer's and Parkinson's diseases, closed its Series B funding round at $52.9M. Senator Investment Group led the round with support from Section 32, Partners Investment, and Eli Lilly.
Climate Tech - Lightspeed Venture Partners led a $13M Series A funding into the carbon removal marketplace Supercritical. RTP Global, Greencode Ventures, MMC Ventures, and others participated in the round.
Energy - Laser-based fusion energy startup Focused Energy extended its Series A round with $11M additional funding led by Prime Movers Lab, with participation from VCP Capital and Tony Florence. The funding brings the total raised under the round to $82M.
Healthcare - Seattle-based healthtech startup DexCare secured $75M in Series C funding led by Iconiq Growth, with additional backing from Transformation Capital, Kaiser Permanente Ventures, Define Ventures, Frist Cressey Ventures, and SpringRock Ventures.
IT - Computerized maintenance management systems developer Limble nabbed $58M in Series B funding led by Goldman Sachs Asset Management at a $450M valuation.
Space Tech - French space tech startup Look Up Space raised €14M ($15.4M) in seed funding. Half of the funding came from the French Tech seed fund, with the remaining coming from private investors led by CosmiCapital and MIG Capital.
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| 7 | | Quick Hits: - Combine traditional project management with your docs, knowledge base, and AI.*
- Sequoia Capital announced the general availability of its online interactive tool Atlas, which has mapped Europe's technical talent.
- SVB Financial Corp is still evaluating strategic options for its VC division SVB Capital.
- Dropbox's corporate venture capital arm Dropbox Ventures announced a $50M fund to back AI startups that are building products that "shape the future of work."
- Lumikai, an Indian gaming-focused VC firm, announced a $50M fund. The firm intends to back Indian gaming and interactive media market startups between the pre-seed to Series A stages.
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Term of the Day Capital expenditure: CapEx is the spending by a company for the acquisition, improvement, or maintenance of long-term assets such as buildings, equipment, or land Question of the Week How do you feel about the phrase "The customer is always right"? Join the conversation |
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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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