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| Hey Insiders, Here are the latest stories: - Atomico bags $1.1B for new funds against a target of $1.35B
- One-year rolling IRR of U.S. VC funds drops to -16.8%
- ByteDance lowers valuation by 26% at share buyback program
If you find this newsletter useful, please share it with your friends and colleagues. Thank you. Karan
p/karan-chafekar | |
| 1 | | European venture firm Atomico has secured $1.1B in capital commitments toward its new venture and growth funds, per security filings seen by the Financial Times. The firm is targeting $1.35B for both vehicles. More: - Atomico was established by Skype founder Niklas Zennström in 2006.
- The firm has backed over 130 startups to date, including buy-now-pay-later firm Klarna and electric flying car startup Lilium.
- Atomico has nearly $5B worth of assets under management.
- The firm raised a $820M fifth fund in 2020.
Zoom out: - European VC funding dropped 60% YoY in the first half of 2023, per Pitchbook.
- Atomico's new fund comes amidst a challenging fundraising environment for fund managers due to increasing interest rates and slumping public valuations of companies.
- Peers Highland Europe and Dawn Capital raised funds worth €1B ($1.05B) and $700M, respectively, defying the fundraising slump.
Q: Will the fundraising environment for established and emerging fund managers improve in 2024? Join the conversation here. |     | |
| 2 | | U.S.-based venture capital funds reported a one-year rolling IRR of -16.8% in Q4 2022, per Pitchbook's latest Quantitative Perspectives Report. 
What the numbers say: The numbers suggest that Q4 had the worst quarterly return in the past 10 years after registering double-digit percentage returns for nearly half a decade. The situation is expected to persist next year. However, Allocate's co-founder and CEO Samir Kaji thinks, "It's not going to be as draconian as we saw in 2022." Kaji predicts that the IRR performance may be in "low single digits" in 2023. What happened: IRR returns in 2023 may not be as bad as in 2022, as several VCs have already aggressively marked down the valuation of their portfolio startups in anticipation of future down rounds. The rising valuations of generative AI startups could help VCs balance out the portfolio losses and probably boost on-paper returns. | | | |
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| 3 | | ByteDance, the Chinese internet technology firm behind short-video content platform TikTok, is buying back shares from U.S. employees at $160 per share, sources informed Reuters. The share price gives ByteDance a valuation of $233.5B, representing a 26% decrease over its $300B valuation at a similar buyback program it launched last year for non-U.S. employees. More: - ByteDance is looking to buy back at least $300M worth of shares.
- In the first quarter of this year, ByteDance posted an operating profit of nearly $6B, double the profits reported at the same time a year earlier.
- ByteDance's share buyback offers existing and former U.S.-based firm employees an option to liquidate their holdings without having to wait for a traditional liquidity event, such as an IPO or acquisition.
Zoom out: - U.S. lawmakers have called upon the government to ban TikTok over concerns about the company's ties to the Chinese government, an allegation that ByteDance has denied.
- Additionally, TikTok CEO Shou Zi Chew faced scrutiny from U.S. lawmakers earlier this March, focusing on the platform's impact on children's mental health.
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| 4 | | After the public debut of three companies — Arm, Instacart, and Klaviyo — several other startups are gearing up for their listings at the end of this year and the beginning of 2024. However, investors participating in late-stage rounds will likely get only limited returns on their investments due to the drop in valuations of startups across all sectors. The average value of the top 10% of late-stage startups halved from $767M in 2021 to $332M by mid-2023, per Pitchbook. More: - Investors that backed Instacart when it was valued at $13B lost at least one-third of its value when the online grocery delivery startup debuted at a $10B valuation.
- The firm's IPO valuation was significantly lower than its peak valuation of $39B in March 2021.
- Investors are now eagerly waiting for the public market debuts of Stripe, Klarna, and Ramp.
- However, late-stage backers in the firm could be disappointed as the startups will likely fetch lower valuations than their respective peak values.
- Stripe already lowered its internal valuation to $50M earlier this March, down from its peak figure of $95B in 2021.
- Klarna's valuation dropped from $45.6B to just $6.7B, while Ramp's valuation has slumped from $8.1B to $5.8B.
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| 5 | | French venture firm HCVC held the final close of its Fund II at $75M (€69M). The fund intends to back pre-seed and seed-stage deep tech startups across Europe and North America. More: - The firm will back startups working on climate, biotech, robotics, space, and other deep tech sectors.
- HCVC has backed 50 companies with its debut $50M fund, including Cowboy, Renaissance Fusion, Span, Caper, Automata, Radia, and Augmenta.
- With the new fund, HCVC intends to back 40 startups, averaging 10 investments per year.
- The Paris-based VC firm will write checks ranging from $260,000 (€250,000) to $2.6M (€2.5M).
- HCVC's new fund is backed by the European Investment Fund, Isomer Capital, and Molten Ventures.
- HCVC's founder and managing partner Alexis Houssou said, "We want to back founders that create a future with more clean energy, more powerful computing, more context-aware robots, better defense tools for democracies, and biomanufacturing that enables us to decarbonize food production."
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| 6 | | Today's Funding: AI - AI-powered accounts payable automation startup Stampli bagged $61M in Series D funding led by funds managed by Blackston. Existing backers Insight Partners, SignalFire, Bloomberg Beta, and NextWorld Capital participated in the round.
Biotech - AI-powered therapeutics discovery platform maker Iambic Therapeutics, formerly known as Entos, closed its Series B funding round at $100M. Ascenta Capital and Abingworth co-led the funding, with additional backing from NVIDIA, Illumina Ventures, Gradiant Corporation, Nexus Ventures, Coatue, Sequoia Capital, and others.
- Automata Technologies, a British startup that offers robotic automation solutions for life sciences labs, raised $40M in fresh funding. Dimension led the round, with support from Octopus Ventures, Hummingbird, Possible Ventures, and others.
DevOps - Open source infrastructure as a code platform Pulumi raised $41M in Series C funding. Madrona led the round with participation from NEA, Tola Capital, and Strike Capital.
Fintech - South African end-to-end payments solution fintech Stitch extended its Series A round with $25M in additional capital, bringing the total raised under the round to $46M. The new funding round was led by Ribbit Capital, with additional support from CRE Ventures, PayPal Ventures, and the Raba Partnership.
Food & Beverages - French plant-based meat alternative products maker Umiami secured €32.5M ($34M) in Series A funding led by SPI fund and French Tech Seed.
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| 7 | | Quick Hits: - It's been 150 years since the last great leap in engine technology. Invest in LiquidPiston to be part of the next one.*
- Mars Inc. and Digitalis Ventures launched a $300M Companion Fund II to invest in early-stage animal health companies across the U.S. and Europe.
- Payments firm Visa launched a $100M venture fund to invest in generative AI startups.
- British fintech firm Wagestream acquired credit card and credit building service Keebo for an undisclosed sum.
- Saudi Venture Capital committed $30M to IMPACT 46's Fund III, a VC fund that aims to back growth-stage companies in the Middle East.
- Even the best engineers can run into challenges. Straight from the cloud experts at DoiT, here are 5 core strategies for cloud innovation.*
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Term of the Day Large language models: Large language models (LLMs) are a statistical method that helps predict the following outcome in a given sequence of input. 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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 | Symon.AI empowers you with predictive and prescriptive insights using a no-code, data prep and AutoML platform. | |
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