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| Hey Insiders, Today we are taking a look at why SoftBank is shifting into "offense mode" now, the surge in crypto funding, and Nat Friedman and Daniel Gross's $1B AI fund. 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 | | SoftBank CEO Masayoshi Son told shareholders it's time to "shift to offense mode" and capitalize on the AI sector. The firm was in "defense mode" as it suffered losses due to China's crackdown on tech startups and the overall VC funding slump. Son told stakeholders that the firm now has nearly $35.3B (5T yen) in cash on hand to restart its investments. More: - SoftBank posted a $32B (4.3T yen) loss on its Vision Fund in the fiscal year ending March 31, 2023.
- The Japanese VC firm diluted its stake in Alibaba to recoup losses.
- SoftBank is gearing up its British chip design company Arm for an IPO listing this year.
- Considering the recent AI boom, CNBC's equity market strategist Amir Anvarzadeh said, "$30B is what we thought could be what Arm is worth. I reckon now, even $60B might not seem too insane, given the backdrop."
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What the numbers say: VCs invested $1.1B in crypto startups in the month of May, per Cointelegraph Research's VC database. Funding for the sector surged 34% from the preceding month. This is the first month since September 2022 when funding crossed the $1B mark. Relevance: Infrastructure startups nabbed 68% of the total funding, ending the month with $783.9M from 23 funding rounds. Although Web3 had the most rounds (24), it nabbed only $170.1M in funding. DeFi and CeFi startups raised $93.6M and $24.8M, respectively. Brands that should care: Notable funding rounds in the month include Worldcoin's $115M Series C round and blockchain privacy and security provider Auradine's $81M Series A round. What's next: With the Federal Reserve putting interest rate hikes on hold and the inflation showing signs of easing, VC funding in the sector is poised to increase in the latter half of the year. | | | |
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| 3 | | A regulatory filing shows that Nat Freidman and Daniel Gross quietly raised an investment fund, dubbed C2 Investment, worth $1B to invest in AI and infrastructure startups. The duo was in the news last week after Business Insider learned that they are enticing AI startups by offering access to its AI computing chip cluster, which is in short supply. More: - Friedman and Gross set up an AI cloud service dubbed Andromeda Cluster with 2,512 of Nvidia's H100 GPUs, roughly half the size of Nvidia's in-house supercomputer.
- Per Friedman, each unit is worth $40,000, giving the entire cluster a value of over $100M.
- Yesterday, British voice AI startup ElevenLabs raised $19M in Series A funding led by Andreessen Horowitz, Nat Freidman, and Daniel Gross.
Zoom out: - Large organizations with significant computing power at their disposal, such as Microsoft, Google, and Oracle, were already using this tactic to get equity stakes in promising AI startups, as such startups have high compute needs to train AI models.
- Now, other VCs are also considering dedicating part of their funds to buying AI computing chips.
- Spark Capital, a backer of AI firm Anthropic, is considering earmarking $50M from its fund for purchasing AI hardware.
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| 4 | | Singapore's sovereign wealth fund GIC intends to increase its commitments to U.S.-focused funds this year, per the Financial Times. GIC has made the move in a bid to shift away its investment focus from China due to the nation's rising tension with the U.S. Despite the VC funding slump and the dropping valuations of U.S. startups, GIC is confident about the U.S. tech investments buoyed by the recent boom in the AI sector in the nation. More: - GIC is one of Asia's largest sovereign wealth funds, with over $700B in assets under management (AUM), per analysts' estimates.
- The firm ramped up its investments from 39 in 2019 and 2018 to 63 in 2022 and 2021, per Refinitiv.
- 37% of its portfolio was made up of U.S. startups in 2022, up from 34% in 2021.
- GIC has historically invested in technology, healthcare, and proptech startups in the U.S.
- The firm is reportedly looking to hire investment specialists in the U.S.
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| 5 | | Insight Partners is reportedly paying $1.5M in penalties to settle allegations of charging excessive management fees and failing to disclose a conflict of interest related to fee calculations. The New York-based PE and VC firm also agreed to pay its investors $865,000 in disgorgement and interest. More: - The SEC said that Insight overcharged management fees after failing to readjust the fees to account for a drop in investment value.
- Additionally, Insight employed "narrow and subjective" criteria to determine whether to lower fees, resulting in an unreported conflict of interest.
- The disclosure and management fee discrepancies were for Insight's funds between 2017 and 2021, per SEC.
- Insight is one of the largest PE and VC firms with over $79B in assets under management.
- Notable bets include Alibaba, Nextdoor, and Twitter.
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| 6 | | Today's Funding: AI - DNX Ventures led a $32M (4.4B yen) Series B funding round into Japanese AI platform developer Flux. Archetype Ventures, Aozora Corporate Investments, Salesforce Ventures, Sony Innovation Fund, and others participated in the funding round.
ClimateTech - Sustainability platform GreenPlaces raked in $13M in Series A funding led by Redpoint Ventures, with participation from Felicis, Tishman Speyer Ventures, and Bull City Venture Partners.
Cloud - Cloud application hosting platform Render secured $50M in Series B funding led by Bessemer Venture Partners with participation from Addition, General Catalyst, and the South Park Commons Fund.
Cybersecurity - Oso, an authorization system for developers, raked in $15M in Series A1 funding from Felicis, Sequoia, and Harpoon Ventures.
Fintech - British payments infrastructure firm Volt nabbed $60M in Series B funding led by IVP, with additional backing from CommerzVentures, EQT Ventures, Augmentum Fintech, and Fuel Ventures.
- Vehicle-secured credit card platform Yendo closed its Series A funding round at $24M. FPV Ventures led the funding round with participation from Human Capital and Autotech Ventures.
- Real-estate investing integrated technology provider Picket announced a $20M Series B funding round led by LL Funds.
Healthcare - Aledade, a startup that offers analytics, workflows, and regulatory solutions to primary care providers, raised $260M in fresh funding at a $3.5B valuation. Lightspeed Venture Partners led the funding round with participation from Venrock, Avidity Partners, OMERS Growth Equity, and Fidelity Management & Research. To date, the firm has raised $660M from investors.
- New York-based digital healthcare company Caraway raised $16.75M in Series A funding led by Maveron and GV.
Mining - Berkeley, California-based mining startup KoBold Metals, which leverages AI for battery mineral exploration, cemented its unicorn status with a $195M funding round led by T. Rowe Price. Existing backers Andreessen Horowitz, Breakthrough Energy Ventures, and Bond participated in the current round. The firm was valued at $1.15B.
PropTech - Automated building design platform Augmenta raised an $11.75M seed extension round led by Eclipse.
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| 7 | | Quick Hits: - Notion combines traditional project management with your docs, knowledge base, and AI. Try it for free.*
- Investment management firm Wellington Management held the final close of its Wellington Hadley Harbor IV Fund at $2.6B, exceeding the initial target of $2.5B.
- Indian climate-focused VC firm Avaana Capital secured $70M in capital commitments towards its latest fund that aims to invest in the clean energy and climate-technology sector. The firm expects to hold a final close of the fund between $100M and $125M.
- Essence VC raised a third fund worth $27M to invest in data infrastructure, developer tools, and AI startups. Ticket sizes will range from $250,000 to $700,000, typically in pre-seed stages.
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Term of the Day SAFE notes: The acronym SAFE (when used with notes) refers to a simple agreement for future equity. Question of the Week How do you feel about the phrase "The customer is always right"? 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 | |
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