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| Hey Insiders, Today's newsletter covers: - 📉 Canadian fintech investments slump
- 🚀 European angel startup valuations increase
- 💰 U.K.'s £1B fintech growth fund
If you find this newsletter useful, please share it with your friends and colleagues. Thank you. Karan
p/karan-chafekar | |
| 1 | | Investments into the Canadian fintech sector halved in H1 2023 compared to the same time last year, per data from KPMG seen by Reuters. The Canadian fintech sector witnessed 57 private equity, venture capital, and M&A transactions worth $353.7M in H1 2023, down from 109 transactions worth $834.1M in H1 2022 and 87 deals totaling $1.09B in H2 2022. More: - The IPO listing drought for the sector continued from last year, with no public listings for the fintech sector in the first half of this year.
- KPMG Canada's partner Geoff Rush said, "Investors are still quite concerned about the state of the global economy, with fears of a recession, elevated inflation, and interest rates continuing to put a significant strain on valuations."
- Businesses looking to raise fresh funding will likely need to settle for down rounds or flat rounds.
- Investors believe the market may show signs of improvement at the end of 2023 or early 2024.
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| 2 | | Median valuations of European angel-stage startups showed resilience to the VC funding dip, while valuations across all other stages slumped in H1 2023. 
What the numbers say: Median valuations of angel-stage startups touched €3.1M ($3.4M), up 10.7% over its values from 2022. Valuation of early-stage startups dipped 11.4% to €6.2M ($6.7M), while late-stage valuations slumped 12.9% to €10.8M ($11.8M) over their respective values from 2022. Relevance: While early-stage valuations dipped compared to the previous year's figures, they showed a 27.5% QoQ increase in Q2. The quarterly rise suggests a reversal trend after valuations plunged consecutively for the three previous quarters. What happened: The slump in valuations is due to the muted exit activity, with median exit valuations continuing their downward trajectory from €33.9M ($37M) in Q1 to €17.3M ($18.9M) in Q2. Macroeconomic headwinds have resulted in an increase in down rounds, which accounted for 26.3% of all European VC deals. Q: Do you think European early-stage and late-stage startup valuations will recover this year? Let us know here. | | | |
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| 3 | | U.K. FinTech Growth Partners launched a new £1B ($1.3B) FinTech Growth Fund to back growth stage fintech startups in the nation and cement Britain's status as a fintech investment hub. The fund intends to invest between Series B and pre-IPO stage challenger banks, payment technology, financial infrastructure, and regulatory technology startups. More: - U.K. investment bank Peel Hunt will advise the fund.
- The fund has also received backing from Barclays, NatWest, Mastercard, and the London Stock Exchange Group.
- Individual check sizes will range between £10M ($12.77M) to £100M ($127.7M).
- FinTech Growth Fund will make between four to eight minority investments per year on average, with the first of the investments planned for Q4 2023.
Zoom out: - Britain's status as a financial hub has been shaken recently due to its exit from the European Union.
- The fund was established in response to a government-commissioned assessment led by former Worldpay Vice Chairman Ron Kalifa in 2021, which showed that tech firms are opting to be listed outside the U.K.
- Shortly after the British chip design firm opted to list in the U.S. instead of the U.K., the London Stock Exchange introduced reforms to convince fintech startups to list in the nation rather than overseas.
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| 4 | | AI-powered data engineering solutions firm Databricks is reportedly in talks with investors to raise "hundreds of millions of dollars," per SiliconAngle. Databricks intends to use the fresh capital to further develop AI applications. More: - Talks of the new funding come as the firm recently crossed the $1B revenue mark in the most recent fiscal year, buoyed by a 70% YoY growth.
- The firm reported a $380M operating loss in the same period.
- Despite the losses, the firm is close to breaking even.
- The San Francisco-based startup has raised $3.5B in total funding to date, per Crunchbase.
- The most recent funding round for the firm was a $1.6B Series H round in August 2021 led by Counterpoint Global.
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| 5 | | ChatGPT maker OpenAI acquired New York-based startup Global Illumination for an undisclosed amount. The acquisition is OpenAI's first in its seven-year history. Global Illumination's "team has joined OpenAI to work on our core products, including ChatGPT," the firm announced in a blog post. More: - Global Illumination builds AI-powered creative tools, infrastructure, and digital experiences.
- The firm recently built an open-source sandbox multiplayer online role-playing game for the web called Biomes.
- The firm had secured backing from Paradigm, Benchmark, and Slow.
- Meanwhile, OpenAI has secured nearly $11.3B from investors, including a multi-billion dollar investment from Microsoft.
- The company reportedly spent north of $540M to develop ChatGPT.
- Per CEO Sam Altman, the firm hopes to rake in $200M in revenue this year and $1B next year.
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| 6 | | Today's Funding: Biotech - Abcuro Inc., a clinical-stage biotech startup developing therapies for autoimmune diseases and cancer, closed its Series B funding round at $155M. Redmile Group and Bain Capital Life Sciences co-led the funding round.
Climate tech - Rondo Energy, a startup delivering zero-carbon industrial heat and power, secured $60M in fresh capital from Breakthrough Energy Ventures, Energy Impact Partners, SCG, Microsoft's Climate Innovation Fund, Rio Tinto, Aramco Ventures, and others.
Crypto - Crypto custody firm BitGo raised $100M in Series C funding at a $1.75B valuation. The current valuation is much higher than its previously estimated valuation of $1.2B during acquisition talks with Galaxy Digital Holdings.
- Blockchain.com, Human Capital, Sky9Capital, VistaLabs, Foundation Capital, and others led a $27M funding round into public EMV-compatible L1 blockchain maker ZetaChain.
Healthcare - Eyecare software solutions startup Ocuco nabbed a €60M ($65M) growth equity investment from Accel-KKR.
Telecommunications - 5G mmWave infrastructure products maker Pivotal Commware raised $102M in fresh funding. Gates Frontier and Tracker Capital led the Series D round.
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| 7 | | Quick Hits: - The AWS Cookbook — packed with practical insights and hands-on examples — is a must-have for your cloud toolkit.*
- Turkish fintech startup Param acquired buy-now-pay-later solutions maker Twisto from Zip Co for an undisclosed sum.
- IT and DevOps solutions maker Apica acquired data observability startup LOGIQ.AI for an undisclosed sum. The firm also secured $10M capital from Industrifonden, SEB Foundation, and Oxx.
- Oneblinc, a fintech startup providing payroll loans to federal employees, availed a $100M credit facility from VC firm Clear Haven.
- Caroline Fernandez and Ava Alemazkoor joined Recast Capital as director of programming and director of network, respectively.
- IPOs are a rare chance to invest in VC-backed startups, but this AI company opened its round to retail investors. Invest and learn more about Jurny.*
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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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