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| Hey Insiders, Today's newsletter covers: - 🌎 SoftBank dilutes Latin America portfolio
- 🇬🇧 U.K. VCTs increased deployment in 2022
- 🏛️ SVB Financial looking to restart VC division
If you find this newsletter useful, please share it with your friends and colleagues. Thank you. Karan
p/karan-chafekar | |
| 1 | | SoftBank Group Corp. is looking to liquidate some key portfolio stakes of Latin American startups. The Japanese investment firm is selling stakes to strategic investors due to limited exit options as the IPO market is shut. SoftBank has committed $7.6B to Latin American startups to date. The fair value of SoftBank's Latin American portfolio startups is $6B. More: - SoftBank exited its stake in Pismo after Visa agreed to acquire the Brazilian fintech startup for $1B.
- The transaction will double SoftBank's initial investment, fetching a 54% IRR.
- The Japanese investment firm sold its stake in digital brokerage firm Avenue Holding Cayman to Itau Unibanco Holding SA.
- PayStand is acquiring SoftBank's stake in Mexican payment firm Yaydoo SAPI de CV.
Zoom out: - SoftBank initially allocated a $5B fund to the region in 2019, later adding another $3B through a second fund.
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| 2 | | U.K.-based venture capital trusts (VCT) invested £664M ($845M) in 345 early-stage startups in 2022, per data from the Venture Capital Trust Association viewed by Financial Times. 
What the numbers say: Investments made by VCTs increased 8% YoY last year as fund managers sought to help portfolio businesses navigate the economic downturn. VCTs increased deployment in 2022 despite raising lower funds than the previous year. VCTs raised funds worth £1B ($1.3B) last year, slightly lower than the £1.13B ($1.44B) funds raised in 2021. What happened: Venture Capital Trust Association's chair, Will Fraser-Allen, said that VCTs stepped up to ensure the portfolio startups could sustain through the volatile economic conditions after institutional investors retreated. Fraser-Allen said, "All companies are facing the same pressures. The largest element a VCT is funding is people." Why it matters: Given the current economic climate, the graduation rate — the number of startups that can justify additional investment — will be lower. Due to venture fundraising troubles, some startups are instead opting for venture debt, convertible notes, and bridge funding rounds. Relevance: Retail investors participating in VCTs can benefit from a 30% upfront income tax relief if they commit funds for at least five years. Additionally, there are other incentives available for retail investors, including exemption from capital gains and dividend tax. | | | |
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| 3 | | Silicon Valley Bank's bankrupt former parent organization SVB Financial Group sought federal court's approval to pay $12.5M in incentives to nine former employees of its venture capital division in a bid to lure them back and restart the VC division. The nine employees are currently working for First Citizens Bank & Trust, the new owner of Silicon Valley Bank. The judge overseeing the Chapter 11 proceedings approved the program after the company agreed to make changes to the proposal. More: - The VC division, SVB Capital, has assets worth $427M and is a key part of SVB Financial's remaining portfolio.
- SVB Financial retained the assets even after the bank was put into receivership.
- SVB Financial attorney James Bromley told the judge, "One of the benefits of moving the business over is we will no longer have to be paying First Citizens Bank fees and expenses for maintaining the system."
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| 4 | | U.K.-based fintechs raked in "more than half of all funding in Europe" in H1 2023, per a new report published by KPMG. The news suggests that the U.K. has maintained its dominance as Europe's top fintech investment destination despite a drop in VC funding, high inflation, geopolitical tensions, and Brexit. More: - U.K.-based fintechs secured $5.9B in funding from 215 transactions in H1 2023, down 57% YoY.
- The drop in funding in the U.K. is in line with the global fintech funding slump, which dropped from $63.2B in H2 2022 to $52.4B in H1 2023.
- The U.K. is trying to maintain its central role in European fintech, with new crypto and digital asset regulations expected to be introduced in early 2024.
- The new regulations aim to create "a sustainable crypto and digital assets ecosystem and make it an attractive location to participants while also protecting consumers."
Q: Do you think the U.K. will be able to maintain its central role in European fintech, considering the impact of Brexit? Let us know here. | | | |
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| 5 | | Salesforce's VC division, Salesforce Ventures, is reportedly leading a $200M funding round into AI startup Hugging Face. The startup is targeting a valuation of over $4B, double its previous valuation of $2B. More: - Hugging Face lets developers host their code and training data sets.
- The platform has 100,000 open-source AI models.
- The New York-based startup allows developers to automate AI training using AutoTrain functionality and host neural networks on its platform through Inference API.
- To date, the startup has raised $160M in total funding, $100M of which came through its most recent funding round in May 2022.
- The new valuation sought by the firm is over 100 times its current annual revenue.
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| 6 | | Today's Funding: Biotech - Clinical-stage biotech startup Rapport Therapeutics nabbed $150M in Series B funding led by Cormorant Asset Management. Participants in the funding round include Fidelity Management & Research, Goldman Sachs Asset Management, Logos Capital, Sofinnova Investments, and T. Rowe Price Associates.
- SR One and Medicxi co-led a $75M Series D funding round into FORE Biotherapeutics.
Cybersecurity - Riverwood Capital led a $110M growth round into digital account takeover and fraud prevention cybersecurity startup SpyCloud.
- Israeli cybersecurity startup Grip Security bagged a $41M Series B funding round led by Third Point Ventures.
Fintech - Corporate card and expense automation startup Ramp raised a down round, which lowered its valuation by 28% to $5.8B. Thrive Capital, Sands Capital, General Catalyst, Founders Fund, and others provided the $300M fresh capital.
Media and Entertainment - British music ticketing platform DICE raised a $65M funding round. MUSIC, the investment company co-founded by ASCAP and music publisher SONGS, led the funding round.
Wellness - Gym membership platform Gympass raised $85M in Series F funding led by EQT Growth Fund at a $2.4B valuation.
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- ORIX Corporation USA hired Benjamin We as its managing director and head of East Coast for its growth capital business.
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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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