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| Hey Insiders, Today's newsletter covers: - 🤖 AI startups are 65% of Y Combinator's latest cohort
- 🦄 Nine startups entered unicorn club in August
- 🛒 Instacart targets $7.7B valuation at upcoming IPO
If you find this newsletter useful, please share it with your friends and colleagues. Thank you. Karan
p/karan-chafekar | |
| 1 | | More than 65% of startups, or 134 companies, in Y Combinator's summer cohort were developing AI-powered solutions for a wide range of use cases, including healthcare automation, customer service, sales outreach, coding, and game design. This surge in AI startups within Y Combinator highlights the heightened enthusiasm among investors for the AI industry, which is giving rise to intense competition for AI investment deals and helping even unproved AI startups rake in massive amounts. More: - Pioneer Fund's senior venture partner Francesco Mosconi said, "Either you decide to not play this game in AI, or you decide, 'OK, this is the new normal.'"
- The rapid advancements in technology pose a challenge for investors, as they have to assess how well a startup will be able to maintain its technological advantage and defend against new generative AI offerings introduced by competitors in the ever-evolving landscape.
- Another challenge for AI startup investment is the valuations, which have remained relatively high.
Zoom out: - Seed-stage generative AI deal value nearly doubled from $144M in Q1 2023 to $280M in Q2 2023.
Q: How can VCs differentiate between genuinely promising AI ventures and those that might be riding the wave of AI hype? Join the conversation here. |     | |
| 2 | | Nine startups crossed the $1B valuation mark and cemented their status as unicorns in August. 
What the numbers say: The unicorn count in August was higher than the previous two months, surpassing June and July counts of six and two, respectively. The count in August was closer to the 13 new unicorns minted in the same month last year. However, the current figure is less than a fifth of the 47 new unicorns added to the board in August 2021. Relevance: Both the U.S. and China added two new unicorns to the board, while one new unicorn emerged from South Africa, Israel, Korea, Hong Kong, and India. Among the newcomers were three fintech startups: MTN Group Fintech, Micro Connect, and Korea Credit Data. The remaining unicorns came from a wide range of sectors, including semiconductor, web3, sales, AI, e-commerce, and manufacturing domains. These startups were Runpeng Semiconductor, BitGo, Apollo.io, AI21 Labs, Zepto, and Fullcryo. | | | |
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| 3 | | Cendana Capital has closed several funds worth $470M. $340M of capital has been earmarked to back U.S.-based emerging seed-stage fund managers, with another $67M to invest in foreign ones. Cendana will also invest directly in startups, for which it has set aside $30M. Additionally, the firm has earmarked $30M for startups emerging from the University of Texas. More: - The new funds bring Cendana's assets under management to nearly $2B.
- Cendana has previously invested in funds raised by Forerunner Ventures, K9 Ventures, and IA Ventures.
- Cendana's Michael Kim told TechCrunch that the firm had generated 4.2x returns to its investors through its first fund.
- Kim added, "If we look at our second fund, it's marked somewhere in the mid-threes, and it's almost approaching 100% and distributed."
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| 4 | | Instacart has priced its shares between $26 and $28 for its upcoming IPO, per filing documents seen by CNBC. The company is set to issue 22 million shares, including 14.1 million newly issued shares and 7.9 million from existing shareholders. Instacart aims to raise $616M at a $7.73B valuation at the higher end of the spectrum. More: - Instacart's valuation could increase to $7.8B if underwriters exercise the option to buy additional shares.
- Cornerstone investors have agreed to purchase shares worth nearly $400M.
- Investors interested in purchasing shares include Norway's sovereign wealth fund, Norges Bank Investment Management, and VC firms TCV, Sequoia Capital, D1 Capital Partners, and Valiant Capital Management.
- Additionally, PepsiCo has agreed to purchase $175M in preferred convertible stock through a private placement transaction.
Zoom out: - Instacart's expected valuation at the upcoming IPO listing is 80% lower than its peak valuation of $39B from its last funding round two years ago.
- The firm had lowered its internal valuation to $10B last December.
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| 5 | | Early-stage investor Blackhorn Ventures has reached the halfway mark of its $200M target for its second industrial fund, per Axios. The fund aims to back seed to Series A stage software-focused startups working on decarbonization. More: - Per managing partner Melissa Cheong, the firm intends to back 30 seed-stage startups and 10 to 12 Series A-stage startups with the fund.
- The firm has already backed 15 startups from the capital raised so far, including data model startups Datch and Electric Era, generative AI firm Circuit Mind, deep-learning startup Fero Labs, and infrastructure software company Golioth.
- The firm aims to write checks of $1M for seed rounds and between $4M to $7M for Series A rounds.
- Blackhorn will reserve half of the fund's capital for making follow-on investments.
- Blackhorn's Industrial Impact Fund II is twice as large as its predecessor, which closed at $100M in 2019 and backed 19 startups.
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| 6 | | Today's Funding: Fintech - Perfios, an Indian fintech startup offering credit underwriting solutions to banks, bagged $229M in fresh funding at an over $900M valuation. Kedaara Capital led the Series D funding round.
- SaaS securitization and bank asset distribution platform maker Tradeteq bagged $12.5M through a Series A+ funding round led by MS&AD Ventures, with additional support from Interlock Partners.
Renewable energy - Solar developer BlueWave raised $91M in fresh funding, with $64M coming in the form of debt from KeyBank and the remaining $27M in the form of equity funding led by U.S. Bancorp Impact Finance.
SpaceTech - British climate change monitoring satellite startup Open Cosmos secured $50M in Series B funding. ETF Partners, Trill Impact, A&G, Accenture Ventures, Banco Santander InnoEnergy Climate Tech Fund, and Claret Capital Partners provided the funding.
Transportation - British driverless vehicle startup Conigital raised £500M ($626M) in Series A+ funding.
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| 7 | | Quick Hits: - How much should you pay influencers in Q4? Get the benchmarks in this blog.*
- VC and startup market intelligence firm CB Insights, officially known as CB Information Services Inc., is reportedly exploring sale options. The company is targeting a price of $800M, 10 times more than its expected annual revenue figure for 2023 of $80M.
- B2B fintech-focused VC firm Fin Capital hired Nicolas Cirellas as its general counsel and chief compliance officer.
- Abu Dhabi's sovereign wealth fund, Mubadala Capital, opened its branch office in Beijing.
- Early-stage VC firm First Cheque partially diluted its stake in D2C jewelry brand GIVA Jewellery, netting a 75x return on its initial investment. The total IRR of its stake in GIVA is 194%.
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Term of the Day 51% attack: A 51% attack occurs when an entity takes control of more than 50% of a blockchain network's hash rate. Question of the Week Do you share details about your salary with your coworkers? Join the conversation |
INSIDE VENTURE CAPITAL LEADERBOARD (7 DAYS) |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Aaron Crutchfield | |
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