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| Hey Insiders, Today's newsletter covers: - 📜 U.S. executive order restricting investment into Chinese startups
- 🌎 38% dip in global VC funding
- 💰 Blackbird liquidates part of its stake in Canva
And much more! If you find this newsletter useful, please share it with your friends and colleagues. Thank you. Karan
p/karan-chafekar | |
| 1 | | The Biden administration is set to release an executive order restricting U.S. VC and PE investments into Chinese semiconductor, quantum-computing, and AI startups. The order, expected to be released today, is not expected to make an immediate impact, as the Chinese government prefers domestic investment in areas of strategic importance rather than foreign capital anyway. However, the order could have a significant impact in the future if the scope of the restrictions is expanded. More: - Foreign direct investment in China dropped to $20B in Q1 2023, one-fifth of the $100B investment seen in the same quarter a year ago.
- Despite the dip, investments in key sectors that align with China's strategic priorities have remained strong.
- In the first half of this year, investments in the electric machinery and automotive sector rose 39% YoY and 20% YoY, respectively.
- China has also witnessed a 35% dip in VC funding, ending the year's first half with $24.7B.
- While the order will restrict U.S. entities from investing in China, other global investment firms could possibly step in to cover the funding deficit.
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| 2 | | VCs invested $18.6B in global startups in Jul. 2023, making it the second-lowest monthly total this year, narrowly beating February's tally of $18B. 
What the numbers say: Funding deployed in the month was 20% lower than the previous month and 38% lower compared to the same month last year, which closed at $29.8B. Relevance: Despite the heightened interest in AI startups, the sector did not nab the highest share of the funding. Biotech, renewable energy, and financial services sectors raised $3.8B, $3.1B, and $2.9B, respectively. The three sectors surpassed AI startups' tally of $2B, which gave it an 11% share of the total funding. What happened: Funding declined by a third across all startup stages. However, seed and early-stage funding, which initially showed resilience to the VC funding dip, witnessed the largest slump this month. Investor Sam Lessin expects seed-stage investments to slump even further over the next 18 months "until the inventory of dramatically over-marked late-stage private deals got worked through / washed out / expired on the line." | | | |
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| 3 | | Blackbird Ventures has liquidated part of its stake in graphic design firm Canva by selling it to ICONIQ Capital and Coatue Management. The secondary sale transaction valued Canva at $25.5B (AU$39B), down from its peak valuation of $40B. Blackbird has reportedly sold $98M (AU$150M) worth of shares. Blackbird's partner Rick Baker said that Blackbird liquidated only a 3% stake in Canva. More: - Institutional investors in Blackbird's funds, including Hostplus, Aware Super, and First State Super, will likely get distributions from Blackbird following the stake sale.
- Hostplus' chief investment officer Sam Sicilia said the transaction netted the firm $11.1M (AU$17M).
- Sicilia said, "It is logical to assert that they must see plenty of upside in the valuation, so we trust Blackbird that this was the right time to sell some, but there is still plenty of Canva left in Blackbird, and plenty left in Hostplus as a result."
Zoom out: - Blackbird's initial $1.96M (AU$3M) investment in Canva has multiplied by 337 times.
- The overall value of Blackbird's stake in Canva is estimated to be $3.6B (AU$5.5B).
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| 4 | | Canadian pension firm Ontario Municipal Employees Retirement System's VC arm OMERS Ventures is backing out from Europe to focus on North American investment opportunities. OMERS Ventures' decision reflects a change in its global ambitions. OMERS remains committed to early-stage venture investments, an area where it has invested $1.86B so far. More: - The firm intends to open an office in New York, from where it will support its existing portfolio of European startups.
- Managing partner Henry Gladwyn from the U.K. office will move to New York along with another associate.
- Meanwhile, managing partner Harry Briggs has been let go.
- OMERS had invested €76M ($83M) in European startups by 2019.
- The firm had launched a $332M (€300M) fund for European startups four years ago.
- In 2020, the firm announced a $750M transatlantic fund, earmarking 40% of the capital to double down on European startups.
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| 5 | | Swiss crypto VC firm L1 Digital secured $152M in capital commitments towards its second fund. 70% of the funds are earmarked for direct investments into crypto startups, with the remaining 30% to be deployed into early-stage crypto-focused investment firms. More: - L1 Digital has already deployed a third of the capital from the new fund into startups, including institutional credit ecosystem Centrifuge, blockchain REIT platform Groma, crypto wallet Safe, decentralized bridge aggregator Li.Fi, and treasury management startup Squads.
- The firm intends to write checks averaging between $1.5M to $7M.
- L1 Digital intends to make direct investments into digital infrastructure, decentralized finance (DeFi), and decentralized science (DeSci) domains.
- The new fund brings its total assets under management to $400M.
- The firm intends to launch a third fund later this year with a target of $500M.
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| 6 | | Today's Funding: Biotech - RNA therapeutics biotech startup ADARx Pharmaceuticals raised a $200M Series C funding round co-led by Bain Capital Life Sciences and TCGX. Blackrock, Invus, T.Rowe Price Associates, Lilly Asia Ventures, and others participated in the round.
- Danish bio-industrial startup Bactolife secured €30M ($32.9M) in funding led by ATHOS, with additional support from Bill & Melinda Gates Foundation and Novo Holdings.
- Hemodialysis system medical technology company Diality Inc. nabbed a $28M funding round from an undisclosed group of investors.
- Musculoskeletal health and injury recovery technology maker Figur8 closed its Series A-1 funding round with $25M funding. First Spark Ventures led the round with participation from DigiTx Partners and Phoenix Venture Partners.
Climate tech - German climate tech startup Kraftblock secured €20M ($22M) Series B funding from Shell Ventures, Moore Strategic Ventures, A&G Energy Transition Tech Fund, and others.
Fintech - Credgenics, an Indian fintech startup that helps banks collect debt, tripled its valuation to $340M after raising a $50M round led by existing backers Accel and Westbridge Capital.
- Singaporean wealth management platform Endowus raised $35M from Citi Ventures and MUFG Innovation Partners.
Machine learning - MLOps platform developer Weights & Biases secured a $50M strategic investment from ex-GitHub CEO Nat Friedman, former Y Combinator partner Daniel Gross, Coatue, Insight Partners, BloombergBeta, Feclis, Bond, and Sapphire. The San Francisco, Calif.-based startup was valued at $1.25B at the funding round.
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| 7 | | Quick Hits: - Wiz partnered with Wiley to create the AWS Security Foundations Guide For Dummies. This free 46-page guide includes techniques for securing AWS resources.*
- Japanese semiconductor supplier Renesas Electronic Corporation is set to acquire French cellular connectivity firm Sequans for $249M.
- South African VC firm Knife Capital secured $50M in capital commitments from investors toward its third fund, which intends to invest in growth-stage startups in the nation.
- British VC firm Transition intends to back early-stage climate startups that are working on "planetary boundaries," including ocean acidification, climate change, freshwater consumption, and biodiversity loss.
- Kenyan logistics startup Sendly is reportedly shutting down after running out of funds two months ago. The startup is currently in talks with a buyer to acquire the firm.
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Term of the Day Long-tail keyword: A long-tail keyword is a targeted search term used in search engine optimization (SEO) that's more specific and longer than traditional keywords. Question of the Week Do you think the 9-to-5 workday still relevant in today's modern workplace? 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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 | Invest in Virtuix before this opportunity ends on August 10. | |
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