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| Hey Insiders, Today we are taking a look at the 44% YoY slump in VC funding for Asian startups, the 54% drop in early-stage funding, and Arm's upcoming IPO. I hope you enjoy today's edition! Karan
p/karan-chafekar | |
| 1 | | VC funding deployed in Asian startups dropped by 44% in Q2 2023, per Crunchbase. VCs deployed $36.3B in the first half of this year, half of the $73B invested last year. India witnessed the highest slump in the region, dropping 73% YoY from $18.4B in H1 2022 to $4.9B in H1 2023. Other Asian nations, namely South Korea, Singapore, and Israel, encountered similar declines. More: - Despite growing tensions between the U.S. and China, the latter saw a 4% YoY increase in VC funding deployed to $11.2B in Q2.
- China continues to rake in the region's highest share of VC funding, ending the first half of the year with $20.4B.
- South Korean startups nabbed $3.4B in VC funding in H1 2023, down 60% compared to $8.5B from last year.
- Singapore witnessed a 62% YoY drop, falling from $6.1B in H1 2022 to $2.3B in H1 2023.
- VCs invested $2B in Israeli startups, representing a 64% YoY drop over last year's tally of $5.6B.
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What the numbers say: VCs invested $10B in early-stage U.S. startups in Q2 2023. Early-stage funding dropped 54% YoY in the first half of the year. Angel and seed funding more than halved to $6.8B in Q2, compared to $14.5B from the same quarter in 2022. What happened: Per Pitchbook and NVCA, the capital-demand-to-supply ratio was 1.5x for early-stage startups as they continue to face headwinds in securing capital. "To secure equity financing, companies need to show sufficient progress in product development, prove product-market fit, and demonstrate strong traction that it has already received," per Pitchbook. Relevance: VCs will continue to curb their investment until liquidity options improve. H1 2023 saw 471 exits generating $12B in exit value for VCs, a quarter of the $51.5B exit value recorded in the same period last year. $6.8B of the exit value was generated from acquisitions. | | | |
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| 3 | | British semiconductor company Arm is planning to debut on the public markets as early as September, seeking a valuation between $60B and $75B, sources informed Bloomberg. The company's expected valuation is nearly twice as high as the lower range valuation of $30B pitched by bankers earlier this year, which Masayoshi Son –the CEO of Arm's owner SoftBank– considered too low. Some executives are apparently targeting a valuation of $80B. More: - Arm reportedly plans to start the roadshow in the first week of September and will disclose the IPO pricing the following week.
- The Cambridge, U.K.-based company wants to raise $10B from the IPO listing.
- If it meets that target, the listing will be the third largest in the tech industry behind Alibaba's $25B and Meta's (formerly Facebook) $16B listings.
- Arm has held preliminary talks with Nvidia and Intel to rope them in as anchor investors in the deal.
- Banks Goldman Sachs, JPMorgan Chase, Barclays, and Mizuho Financial Group are facilitating the filing.
Zoom out: - SoftBank had taken Arm private in a $32B deal in 2016, delisting it from the London Stock Exchange.
- The upcoming IPO listing could help SoftBank overturn its recent misfortunes after its Vision Fund reported a $48B (6.9T yen) loss in the last two fiscal years.
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| 4 | | Brookfield Asset Management and Sequoia Heritage formed a new investment vehicle dubbed Pinegrove Capital Partners. Each of them has invested $250M for a 50% share in the new entity. The fund aims to scoop up startup stakes from other venture backers that are liquidating their holdings at a discount. More: - Brian Laibow, the former co-head of the North American operations of Oaktree Capital Management's flagship credit fund, will lead the new firm.
- The fund is looking to raise more than $2B for its debut fund from large institutional investors.
Zoom out: - Several venture backers are under pressure to liquidate their holdings and return capital back to their limited partners amid the slump in startup valuations.
- Stakes in some fintech and cryptocurrency startups are available on secondary markets at an 80% discount.
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| 5 | | Indian logistics service startup Shadowfax is reportedly in advanced talks with investors to raise about $60M in fresh funding. According to sources, TPG NewQuest is poised to lead the funding round. More: - The startup was reportedly trying to raise funding for more than a year.
- It had earlier tapped A91 Partners for capital, but negotiations fell through due to a disagreement over valuation.
- To date, Shadowfax has raised $121M from investors, including Flipkart, Eight Roads Ventures, and NGP Capital.
- The firm has been profitable for the last three months, sources told TechCrunch.
- Notable customers include Myntra, Blinkit, Decathlon, Flipkart, BigBasket, and Practo.
- The firm has three million delivery personnel and processes 1.5 million orders daily.
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| 6 | | Today's Funding: AI - Canadian AI processor company Tenstorrent raised $100M in capital through a strategic financing round led by Hyundai Motor Corp and Samsung Catalyst Fund.
Biotech - Kyverna Therapeutics, a cell therapy company working on therapies for autoimmune diseases, secured a $60M Series B extension funding, bringing the total raised through the round to $145M. Bain Capital Life Sciences and GordonMD Global Investments participated in the funding round.
- Gene editing startup Amber Bio emerged from stealth with a $26M seed funding led by Playground Capital, with participation from Eli Lilly, Andreessen Horowitz, Hummingbird Ventures, and others.
Cleantech - Decarbonization technology maker Newlight Technologies bagged a $125M equity investment from Temasek's decarbonization investment platform GenZero, Oxy Low Carbon Ventures, and Charter Next Generation.
DevOps - Code and pipeline governance platform maker Edor Labs raised $70M through an oversubscribed Series A round. The investment came from Lightspeed Venture Partners, Coatue, Dell Technologies Capital, Section 32, and others.
Healthcare - 3D printed braces maker LightForce Orthodontics secured $80M in Series D funding. Ally Bridge Group, Transformation Capital, and CareCapital led the fundraiser.
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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.*
- Nonprofit organization Prime Coalition and its impact investment division Azolla Ventures launched a $239M blended fund to back climate change-focused startups that are neglected by traditional financiers.
- PacBio, an organization that develops sequencing systems to resolve genetically complex problems, acquired Pleasanton, Calif.-based biotech startup Apton Biosystems. Apton will receive 6.3 million shares of PacBio worth $85M, and an additional $25M in stock or cash if Apton is able to reach $50M in revenue, bringing the total value of the transaction to $110M.
- Seasoned VCs Fiona Darmon and Merav Weinryb intend to raise a $100M fund titled Sunvest Capital Partners, per SEC filing seen by Calcalistech.
- Edward Blum-founded nonprofit organization American Alliance for Equal Rights filed a lawsuit against Fearless Fund, accusing it of unlawful racial discrimination and allegedly violating Section 1981 of the Civil Rights Act of 1866.
- How to score a spoke-tacular deal on your next set of wheels. Upway will deliver a top-notch e-bike right to your door for up to 60% less than retail. Use code INSIDE for $150 off.*
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