Kaszek has $1B dry powder available / Global VC funding shows slight uptick / North American startup funding remains flat

Plus, Accolade Partners raises $325M fund-of-funds

Inside Venture Capital

For October 09, 2023

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Here are the latest stories:

Kaszek has $1B dry powder available to back LatAm startups
Global VC funding shows slight uptick in Q3 2023
North American startup funding remains consistent with the previous quarter

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Kaszek Ventures is waiting for startups to start accepting lower valuations so that it can scoop up stakes in Latin American startups. The firm has nearly $1B in dry powder available for deployment. The firm has already increased its investment pace this year, investing in seven startups already, including a $13M investment in Colombian fintech Cobre.

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Kaszek's investment pace has increased since 2022, when it invested in just two startups.
Co-founder Hernan Kazah said, "Companies are still struggling trying to find the right model, the right unit economics, and the right balance between burn and growth. Some of those will get capital, maybe at a totally different valuation than what they raised last time, and some might not make it."
The firm has a third of the capital from its 2021 fund available for deployment.
Additionally, it raised a $540M early-stage fund and a $435M late-stage fund earlier this year.
To date, Kaszeh has raised nine funds worth $3B.

Zoom out:

Per Latin America's private capital investment nonprofit Lavca, the funding retrenchment in Latin America has been more severe than in the rest of the world.
Latin American VC funding has slumped 75% YoY to $1.7B in the first half of 2023.

Q: What preferential terms or conditions should founders avoid when raising down rounds at lower valuations? Join the conversation here.

Venture capitalists invested $73B in global startups in Q3 2023, per Crunchbase.

What the numbers say: The quarterly total for Q3 was 7% higher than the preceding quarter. Despite the uptick, funding was still 15% lower than the same period last year, when startups raked in $86B. Per Crunchbase, the current venture funding slump has now dragged on for five to six quarters.

Relevance: Early-stage funding witnessed the steepest decline among all other stages, dropping 38% You and $16% QoQ to $23.4B in Q3. Seed-stage startups raked in $6.6B, down 27% YoY. Meanwhile, late-stage funding was up 10% YoY and 30% QoQ due to investors' enthusiasm for the semiconductor, AI, EV, and sustainability sectors, all of which were able to raise large financings. Late-stage funding in Q3 totaled $43B.

What happened: AI startups raised $10B in Q3, thanks to Anthropic's $1.3B round from Amazon and Databricks' $500M funding round led by T. Rowe Price. VCs invested $4.5B in semiconductor startups in Q3, with 96% of the investment going to China-based companies.

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North American startups bagged $31.4B in VC funding in Q3 2023, per Crunchbase. The funding almost matched the previous quarter's tally, declining just 3% QoQ.

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Late-stage VC funding saw an uptick of 8% from the previous quarter, ending the quarter with $16.8B.
The uptick was primarily due to the higher average deal sizes and robust funding for cleantech and AI sectors.
Battery tech startups Redwood Materials and Ascend Elements raised a $1B Series D round and $460M funding, respectively.
Meanwhile, early-stage and seed-stage funding declined 38% YoY and 27% YoY, respectively.
- Early-stage startups raked in $11.5B, while seed-stage startups bagged $3.1B.
Exit prospects improved in Q3, thanks to the three notable IPOs of Arm, Instacart, and Klaviyo.
While M&A activity involving VC-backed startups is on pace to be the slowest year since 2013, several notable transactions have been completed so far, including Eli Lilly's acquisition of Versanis Bio for $1.925B, Occidental's $1.1B purchase of Carbon Engineering, and Novatis' acquisition of DTx Pharma for $500M.

Accolade Partners secured $325M in capital commitments towards its second fund-of-funds. The Accolade Empowerment Fund II aims to invest in venture funds led by minority and women fund managers.

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Accolade, founded by Joelle Kayden in 2000, has nearly $5.7B in assets under management.
The firm's first Empowerment fund, which closed at $200M in 2021, has backed 19 venture and growth equity funds, including Array VC, Base10, and Construct Capital.
Robert R. McCormick Foundation is one of the limited partners that backed Accolade's newest fund.

Zoom out:

Fund managers are facing headwinds while raising new funds, with only 344 VC funds closed so far through the third quarter, a fraction of last year's total funds of 1,278, per Pitchbook.
Investors who previously invested in the VC asset class are now lowering their capital allocations due to a lack of liquidity and a rise in interest rates.
The fundraising challenges have disproportionately impacted emerging fund managers.

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Indonesian VC firm East Ventures and South Korean VC firm SV Investment are jointly raising a $100M fund to back tech startups in Southeast Asia. The collaborative fund will back startups across biotech, healthcare, the future of mobility, green technology, and media and content sectors.

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The firms expect to benefit from the synergies created from the collaboration, including their expertise in investing in Southeast Asia and South Korea.
- East Ventures has invested in 300 technology startups, while SV Investment has a portfolio of 200 companies.
"I am confident that SV Investment's proven investment experience in the technology industry, as well as East Ventures' extensive portfolio and network, will bring positive changes to the venture ecosystem in Korea and Southeast Asia," said SV Investment's managing partner, David Junghun Bang.

Zoom out:

East Ventures has nearly $1B of assets under management and raised a $250M growth fund earlier this year.
Meanwhile, SV Investments' assets total over $1.5B.

Today's Funding:

Biotech

AstronauTx, a biotech startup developing treatments for neurodegenerative conditions, raised $61M (£48M) in Series A funding led by Novartis Venture Fund. Brandon Capital, Bristol Myers Squibb, EQT Life Sciences, MPM Capital, and the Dementia Discovery Fund invested in the round.
Swiss biotech startup LimmaTech Biologics closed its Series A round at $37M. Adjuvant Capital, AXA IM Alts, and Novo Holdings' REPAIR Impact Fund co-led the funding.

Cybersecurity

French cybersecurity startup HarfangLab closed its Series A funding round at €25M ($26.3M). Crédit Mutuel Innovation led the round, which was also backed by MassMutual Ventures and Elaia.

Healthcare

Accel led a $21M Series A funding into eldercare online marketplace startup Lottie.

Insurtech

Indian insurtech startup Onsurity secured $24M in Series B funding. The World Bank's International Finance Corporation led the funding with participation from Nexus Venture Partners and Quona Capital.

Retail

Indian billionaire Mukesh Ambani's retail chain business Reliance Retail bagged $597M in fresh funding from the Abu Dhabi Investment Authority, giving them a 0.59% stake in the business. The transaction values the firm at $100B.

Transportation

On-demand personal rapid transit maker Glydways raised $56M in Series B funding led by New Science Ventures. The ACS Group, Gates Frontier, and Khosla Ventures participated in the funding round.

Quick Hits:

Unlock your perfect customers using BiglySales.com's data solutions and AI emailer.*
Former Moelis & Co. executive Maarten de Jong and former Sun European Partners executive Mark Braganza joined EQT AB as partners. The move will help EQT further bolster its healthcare team.
Pantera Capital's president and managing partner, Jasper Lewitton, has reportedly left the firm. Lewitton's departure marks the third high-profile departure from the firm in just over a year, per Pitchbook.
General Catalyst established a health business spinout called the Health Assurance Transformation Corporation (HATCo). The new division is looking to acquire health systems.
Insurance sector-focused VC firm Viewpoint Ventures closed its debut fund at $150M.
monday.com and BILL drove acquisition, engagement, and retention by adding Cord's SDK to their product. You can, too.*