| Hey Insiders, Today we are taking a look at the sharp drop in venture debt deals in H1 2023, Hugging Face's upcoming $200M funding round, and Wing Venture Capital's $600M AI startup fund. We have also rounded up the top funding rounds in global late-stage startups this week. Scroll down for some quick hits, and then let us know what other content you'd like to see in future issues. Karan
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| 1 | | Startups secured $6.34B from 931 venture debt deals in H1 2023, down 68.41% from the $20.07B raised across 1,513 deals from the same period last year. The decline is largely due to the absence of prominent venture debt lender Silicon Valley Bank, which imploded earlier this year. More: - The number of venture debt deals for seed-stage and early-stage startups declined 44% YoY and 45% YoY respectively in H1 2023, per Pitchbook.
- Venture debt deal values declined by 27% YoY for late-stage startups and by 39% YoY for growth-stage startups.
- Startups have found it difficult to raise venture debt amidst the challenging fundraising environment.
- This has caused the deal terms to shift in favor of lenders, who are able to demand more favorable covenants, warrant coverage, and higher interest rates.
- Additionally, lenders are being selective of the type of startups to back, typically extending credit to startups that are likely to raise subsequent funding from investors and have a path toward profitability.
- Pitchbook analyst Kaidi Gao said, "Since SVB's collapse, lenders have reported that they have not seen other banks stepping up to replace that specific function that made SVB so unique."
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VCs deployed $533.8M in late-stage and beyond global startups this week between July 8 to July 14, per Crunchbase data. Biotech startups raked in 45% of the funding this week. Food and beverage, aerospace, and cybersecurity startups nabbed 19%, 11%, and 9% of the financing, respectively. Here are the top five largest rounds announced this week: - Ophthalmic therapeutics company SpyGlass Pharma secured $90M in funding led by RA Capital Management. New Enterprise Associates, Vensana Capital, Samsara BioCapital, and Vertex Ventures HC participated in the round.
- Clinical-stage biotech startup Arthrosi Therapeutics secured $75M in Series D funding led by Guangrun Health Industry.
- Belgium-based sustainable agriculture agtech startup Aphea.io nabbed €70M ($77.5M) in Series C funding led by Innovation Industries, with additional support from the Bill & Melinda Gates Foundation, Korys Investments, SFPIM, and BNP Paribas Fortis.
- Organic infant formula startup Bobbie raised $70M in Series C funding to acquire competitor Nature's One. PowerPlant Partners provided $35M of the funding, with the remaining coming from Bobbie's existing backers.
- Defense technology startup HawkEye 360 raised $58M in Series D-1 funding led by BlackRock.
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| 3 | | AI model startup Hugging Face is looking to raise $200M in Series D funding at a valuation of $4B, sources informed Forbes. Ashton Kutcher's VC firm Sound Ventures is reportedly leading the funding round. However, the startup has received several offers from other investors as well, which it is currently considering. More: - According to sources, the firm is potentially looking at extending the current round to as much as $300M.
- Alphabet's VC division, GV, and DFJ are reportedly participating in the round.
- The firm last raised a $100M Series C round at a $2B valuation just over a year ago.
- Lux Capital led the round with participation from Coatue, Sequoia, A.Capital Ventures, and Addition.
- Hugging Face raked in $10M in revenue in 2021 and is on target to increase that to $30M to $50M this year.
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| 4 | | Palo Alto, California-based early-stage VC firm Wing Venture Capital secured $600M in capital commitments from investors to back AI startups. The firm typically backs startups in the seed to Series A stages. More: - Founding partner Peter Wagner said it is "increasingly difficult to find anything interesting to do in B2B technology that isn't making use of AI in an important and fundamental way."
- Wing has already backed several AI startups, including language tool Copy.ai, software firm Gong, and data processor Pinecone.
- Other notable backed by the VC firm include cloud-computing firm Snowflake, data management platform Cohesity, and cybersecurity specialist Share Security.
- The firm's previous fund closed at $450M in 2020.
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| 5 | | New York-based AI-powered market research and data firm Alphasense Inc. is reportedly planning to raise $150M in fresh funding. The company is targeting a valuation of $2.5B valuation. The firm intends to use the proceeds to fuel growth and back potential acquisitions. More: - Earlier this April, the firm raised a $100M Series D round from Viking Global, Goldman Sachs, and CapitalG at a $1.8B valuation.
- To date, the firm has raised $620M from investors.
- Alphasense leverages AI to gather documents, equity reports, news, and other data for its market research platform.
- The firm's platform has helped Cancer Research Institute to keep track of clinical trials and FTI Consulting to identify new business opportunities.
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| 6 | | Today's Funding: Biotech - AI-powered biomedical research platform Causaly closed its Series B funding round at $60M. ICONIQ Growth led the round, joined by Index Ventures, EBRD, Marathon Venture Capital, and Visionaries Club.
- CurvaFix, a biotech startup developing medical devices to repair fractures in curved bones, raised $39M in Series C funding led by MVM Partners with participation from Sectoral Asset Management. The company roped in Mark Foster as a successor to current CEO Steve Dimmer, who is transitioning into a strategic advisory role.
- Electronic health records biotech startup Parker Health nabbed $25M in Series A funding led by Bias Capital.
Blockchain - Blockchain employment platform Opolis raised a $6.6M bridge round led by Greenfield, with additional support from NEAR Foundation, Draper Associates, and Polygon Ventures.
Cybersecurity - Cybersecurity agile learning platform Secure Code Warrior held the final close of its Series C funding round at $50M. Goldman Sachs, ForgePoint Capital, Paladin Capital Group, and others provided the funding.
Logistics - RFID and computer vision-powered in-store inventory technology platform RADAR raised $30M in Series A funding led by Align Ventures, with participation from RX Ventures.
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| 7 | | Quick Hits: - Combine traditional project management with your docs, knowledge base, and AI.*
- Cambridge, Massachusetts-based VC firm General Catalyst is looking to raise new funds worth $6B to invest in private technology and healthcare companies.
- Early-stage VC firm Silverton Partners hired Rob Taylor as an operating partner and Addie Rasche as a senior associate.
- Turkey's fintech startup Papara became the nation's first unicorn after it gave Spain's Beka Finance an undisclosed amount of cash and shares to acquire competitor Rebellion.
- Prosus and Accel-backed Indian food delivery startup Swiggy acquired retail logistics startup LYNK for an undisclosed sum.
- Abu Dhabi-based food and beverage company Agthia Group established its CVC division, Agthia Ventures, and armed it with a $54M fund to back startups.
- Sharpen your mind in minutes a day with Brilliant. From AI to math and data science, their interactive lessons help you level up. Try it free today.*
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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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