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| Hey Insiders, Today's newsletter covers: - Unrealized losses for Instacart's late-stage investors
- VC funding for crypto exchanges falls 97%
- HSBC to invest $1B in climate-tech startups
Watch this space for our interview with Sierra Ventures' managing partner, Tim Guleri, which will be live this Friday. If you find this newsletter useful, please share it with your friends and colleagues. Thank you. Karan
p/karan-chafekar | |
| 1 | | While Instacart's successful IPO debut gave early investors massive returns, late-stage investors in the firm are looking at massive unrealized losses due to the ~70% markdown in valuation from its peak of $39B. The firm debuted with a $30 per share price, giving it a market cap of $9.9B. Shares rallied up 12% on the first day before coming back down to nearly $30.10 per share on the following day. More: - Investors in the firm's 2021 round, including Andreessen Horowitz, D1 Capital, Fidelity, Sequoia, and T.Rowe Price, purchased shares at $125 a piece, per The Information.
- These late-stage investors are now looking at unrealized losses of roughly 73%.
- Meanwhile, early-stage investors that acquired shares before Instacart's Series F round in 2018, which was priced at $30 per share, are able to capitalize on the returns.
- Sequoia will profit from its early investments in Instacart.
- The firm participated in Instacart's $8.5M Series A round in 2013, purchasing shares at $0.24 per piece.
- The investment in the Series A round has returned a massive 14,000% gain, per Forbes.
- Other early investors that also profited include Canaan Partners, Khosla Ventures, and Y Combinator.
- Investors in the Series C round, which was priced at $13.31 per share, have received an implied return of about 160%.
Q: Do you think the late-stage investors in Instacart will eventually be able to make a profit? Join the conversation here. |     | |
| 2 | | Funding for crypto exchange startups has fallen by 97% this year, dropping to the lowest point since 2018, per Pitchbook. 
What the numbers say: Crypto exchange startups have only been able to raise $100M so far this year. In comparison, crypto exchange startups raised $1.9B in 2022 and reached the peak of $4B in 2021. Relevance: Notable firms in the sector to raise funding are Zodia Custody and Brine. Zodia raised a $36M Series A round led by SBI Holdings, while Brine raised $16.5M in Series A funding led by Pantera Capital. What happened: The massive slump is due to the fallout of notable crypto exchanges, volatility in crypto prices, and increased regulatory headwinds. FTX collapsed last November, and its founder Sam Bankman-Fried is facing a federal fraud trial, which is expected to start on Oct. 3. Binance-backed Multichain's CEO was arrested by Chinese authorities, causing it to close its exchange. | | | |
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| 3 | | HSBC announced that it intends to invest $1B in early-stage climate-tech startups that are working on reducing carbon emissions. The firm will invest in EV charging, battery storage, sustainable food, agriculture, and carbon removal technologies. More: - The funding comes after the launch of its HSBC Innovation Banking Unit, which aims to provide banking services to startups.
- Additionally, the firm launched a new climate-tech VC division called HSBC Asset Management's Climate Tech Venture Capital to back startups accelerating the transition to zero emissions.
- HSBC pledged to invest $100M in Breakthrough Energy Catalyst, which invests in firms that are accelerating the transition to cleaner sources of energy.
- "Access to finance is critical for early-stage climate tech companies to create and scale real-world solutions. We are already working with some of the most exciting companies at the forefront of climate tech, from seed to global scale-up," said HSBC's global commercial banking CEO, Barry O'Bryne.
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| 4 | | Marketing automation firm Klaviyo's shares jumped 22.5% on the opening day of trading after its IPO debut. The Klaviyo priced the shares at $30 per piece. However, the shares opened the trading day at $36.75 and reached a peak of $39.47 before closing the trading day at $32.76. Klaviyo sold 19.2 million shares at the IPO at a market value of $9.2B. More: - Klaviyo's strong public market performance was down to its recent revenue growth, which increased by more than 50% YoY to touch $320.7M in the first half of this year.
- With the higher revenue, Klaviyo was able to net a $15.2M profit.
- At the same time last year, the company posted losses of $24.6M.
- Per Klaviyo, 78% of its ARR comes from customers who use Shopify's platform.
Zoom out: - Shares of fellow IPO debutants Arm and Instacart rose 25% and 12% on the first trading day of their respective debuts.
- The successful IPO listings of the three firms could pave the way for other startups waiting in the wings.
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| 5 | | Investment firm Humble Growth closed its debut fund at $312M. The firm will write checks worth $10M to $40M in startups in the food, beverage, beauty, supplements, pet care, and personal care sectors. Humble Growth will only back startups with more than $20M in revenue. More: - Three former CPG executives, Andrew Abraham, Peter Rahal, and Nick Giannuzzi, founded the firm.
- The founders have contributed 15% of the entire fund.
- The new fund received commitments from Nestlé Health Science, Verlinvest, Bodyarmor co-founder Mike Repole, Stonyfield Farm CEO Gary Hirshberg, IT Cosmetics co-founder Paulo Lima, and Ainsworth Pet Nutrition founder Sean Lang.
- The firm expects to invest in 12 to 14 startups over the next few years.
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| 6 | | Today's Funding: Biotech - Cardiovascular diseases precision medicine maker DalCor Pharmaceuticals closed its Series D funding round at $80M. Fonds de Developpement Économique, Fonds Propres d' Investissement Québec, Andes Growth, TB Pharma, Fonds de Solidarité FTQ, and CTI Life Sciences provided the funding.
- Drug discovery biopharma startup Lynk Pharmaceuticals raised fresh funding from its Series C-2 funding round, which brings the total raised under the Series C round to 322M yuan ($44M). The latest tranche was led by Shaoxing Binhai New Area Biomedical Industry Equity Investment Fund, Haibang Venture, and Howbuy Primary Fund.
- Orthopedic infection-focused biopharma firm Osteal Therapeutics closed its oversubscribed Series C round at $23M. Asteroid Partners led the funding round with additional backing from Gideon Strategic Partners, Johnson and Johnson Development Corporation, HM Capital, Prism Ventures, and Medvest Capital.
Edtech - Dutch corporate upskilling platform Lepaya raised $38M in fresh funding led by Endeit, with additional backing from Educapital, Mars Growth Capital, Liquidity Capital, Target Global, and Mediahuis Ventures.
Travel - Peak XV Partners, formerly Sequoia Capital India, and Elevation Capital led a $12M Series A funding round into visa processing, foreign remittance, and travel insurance startup Atlys.
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- So far this year, 211 M&A transactions involving venture-backed startups have been completed. At this pace, the transaction number will likely fall below 2017's levels by this year's end.
- Malaysian state pension fund Kumpulan Wang Persaraan Diperbadankan (KWAP) will invest 500M ringgit ($107M) in Southeast Asian VC funds and startups over the next two years. Half of the fund is earmarked for backing Malaysian VC funds.
- Cloud software firm Visma acquired automatic tax compliance startup Quaderno. Financial details of the transaction were not disclosed.
- Techstars partnered with The Ohio State University to launch an accelerator program to support the startup community in Columbus.
- With the right process and tools, dev teams can ship gold every week. This guide breaks down a proven approach to product delivery.*
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Aaron Crutchfield | |
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