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| Hey Insiders, Today's newsletter covers: - 🔄 Changes to SBIC program to increase access to VCs
- 🦄 Slowdown in new unicorn creation pace
- ✂️ Ramp's expected 30% valuation cut at upcoming down round
We have also rounded up the top late-stage funding rounds this week. If you find this newsletter useful, please share it with your friends and colleagues. Thank you. Karan
p/karan-chafekar | |
| 1 | | The U.S. Small Business Administration is set to unveil a significant change to the Small Business Investment Company (SBIC) program, allowing VC funds to access billions of loan dollars, per Axios. This move aims to boost investment in U.S. startups, particularly small businesses in underserved areas, capital-intensive industries, and those vital for national security. More: - The new rule changes the debentures interest structure, moving it from semi-annual interest payment to interest that accrues over the life of the fund to suit the longer-term investment cycle in VC.
- Now VCs will need to pay interest on a pro-rata basis while making LP distributions.
- "The SBIC program provides a loan to the fund, without the SBA having any profit participation, which has the potential to shift the risk-adjusted return profile so that funds can allocate to parts of the market that they may view as riskier or more volatile," said SBA's Bailey DeVries.
- Per DeVries, the SBA program maxed out its allocation of $4B funds in 2021 and disbursed $3.8B out of the $5B authorized in 2022.
- This year's authorization is $5B and could be increased to $6.9B for fiscal year 2024.
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| 2 | | VCs deployed $445M in late-stage and beyond global startups this week between Aug. 12 and 18, per Crunchbase data. 
Fintech startups raked in 28% of the funding this week. Telecommunications, cybersecurity, and AI startups nabbed 23%, 22%, and 12% of the financing, respectively. Here are the top five largest rounds announced this week: - Teamshares, an employee stock ownership platform for small businesses, raised $124M in Series D funding led by QED Investors' Frank Rotman. Other participants in the funding round include Inspired Capital, Khosla Ventures, Slow Ventures, Spark Capital, and Union Square Ventures.
- 5G mmWave infrastructure products maker Pivotal Commware raised $102M in fresh funding. Gates Frontier and Tracker Capital led the Series D round.
- 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.
- Autonomous driving and robotic automation software maker Helm.ai secured $55M Series C funding led by Freeman Group.
- Bedford, Massachusetts-based interventional radiology liquid embolics startup Instylla bagged $30M in fresh funding led by Delos Capital. Excelestar Ventures, Ascension Ventures, Catalyst Health Ventures, and other investors participated in the round.
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| 3 | | Only two new startups achieved unicorn valuations in July, a stark contrast to 61 new entrants to the board in the same month in 2021. Per Crunchbase's calculations, a new startup is entering the unicorn board every three to four work days on average so far this year. The unicorn creation pace is much slower than in 2021 and 2022, which averaged two unicorns per work day and one unicorn per work day, respectively. More: - The two new entrants to the unicorn board in July were Indian blockchain-based operating system maker Zyber 365 and efficient Ethereum blockchain mining startup Flashbots.
- Zyber 365 cemented its unicorn status with a $100M Series A round led by Sram & Mram, valuing the startup at $1.2B.
- Meanwhile, Flashbots raised a $60M Series B round led by Paradigm at a $1B valuation.
- The funding deployed to existing unicorn startups also slumped in July, closing the month with $2.2B, a third of the $6.6B raised in the same month in 2022.
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| 4 | | Corporate card and spend management platform Ramp is reportedly in talks with potential investors to raise a down round, taking a 32% cut on its previous valuation of $8.1B from last year, per Axios. Ramp is looking at a $5.5B valuation at the new round, per The Information. More: - Thrive Capital is leading the new round, per sources close to the matter.
- Some employees will likely be able to liquidate their stakes at the current round.
- The New York-based startup has raised $1B in total funding to date, $750M of which came in through a debt and equity funding round last March.
- Ramp is on track to process payments worth $13B on its platform, 1.7 times more than the $7.5B transactions processed in 2022.
Zoom out: - Ramp's 30% valuation cut pales in comparison to fintech peers Klarna and Stripe, which have seen markdowns of 85% and ~50%, respectively.
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| 5 | | Peak XV Partners has accelerated its investment pace since its recent split with Sequoia. In the 10 weeks since the split, the firm has invested in 10 startups and exited three previous investments. At the time of the split, Peak XV had $2.5B in dry powder available to invest from last year's $2.85B capital raised. More: - Peak XV has recently expanded its team with nine new hires.
- It is also on the verge of hiring its first employee for its new U.S. office.
- Earlier this week, Peak XV was in talks to lead a $50M funding in asset management and financial advisory startup Neo Group.
- The deal has since been closed, sources informed TechCrunch.
- Over the past three years, Peak XV's portfolio startups have added more than $30B in public market cap.
Q: Was splitting Sequoia's Chinese and Indian and Southeast Asian divisions the right move? Let us know here. | | | |
| 6 | | Today's Funding: Biotech - British biotech startup Lightcast Discovery closed its Series B round at £38M ($49M). M Ventures led the round with additional backing from ARCH Venture Partners, Illumina Ventures, OMX Ventures, +ND Capital, and Longwall Ventures.
Cybersecurity - CRV led a $25M Series A funding into San Francisco-based open-source cybersecurity startup ProjectDiscovery. Point72, SignalFire, Accel, Lightspeed, and Rain Capital backed the funding round.
Healthcare - Cloud-based health benefits solutions maker VBA secured $156M in growth funding led by Spectrum Equity.
Insurtech | | | |
| 7 | | Quick Hits: - The AWS Cookbook — packed with practical insights and hands-on examples — is a must-have for your cloud toolkit.*
- McLaren Applied's electric scooter unit Lavoie is looking to acquire bankrupt Dutch e-bike firm VanMoof.
- German fiber-optic network service firm Metrofibre secured a €120M ($130M) senior debt facility from ING, Kommunalkredit Austria AG, and SEB.
- Business IT solution integrator Insight acquired British software development and digital services startup Amdaris for an undisclosed sum.
- HealthXCapital's partner Seeman Jauhari has joined Jungle Ventures in the same role. Jungle has absorbed the entire team behind HealthXCapital and its portfolio, which includes investments into RED.Health, Homange, Medfin, and THB.
- 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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Term of the Day Hypergrowth: Hypergrowth is a phase of rapid expansion where companies scale at a compound annual growth rate (CAGR) of 40% or greater for more than a year. Question of the Week Do you share details about your salary with your coworkers? 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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