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| Here’s a look at today’s VC briefing. - OrbiMed Advisors raises three funds worth $4.3B to back healthcare startups
- Endowments larger than $1B posted a median return of 5.6% in the fiscal year ending June 30
- U.K. remains Europe’s top VC destination, ending Q3 with $4.9B VC funding
We interviewed Paul Veradittakit, the managing partner of Pantera Capital, where he talked about the future of blockchain and crypto investing. You can read excerpts from the interview below and watch the entire interview using the link provided. Thank you. Karan
p/karan-chafekar | |
| 1 | | OrbiMed Advisors secured capital commitments worth $4.3B for three new funds to support healthcare startups. $1.86B of the capital is earmarked for OrbiMed's ninth VC fund, $1.71B for its fourth royalties and credit pool, and $751M for its fifth Asia-focused fund. More: - The New York-based firm intends to back 40 to 45 startups from the new funds.
- OrbiMed expects to take larger stakes in firms and will keep aside a more significant chunk of the fund for follow-on investments.
- OrbiMed will back early- to later-stage companies with the VC fund.
- With the royalty and credit vehicle, the firm will provide funding options as an alternative to equity investments, including structured debt capital, in return for a portion of a company's future revenue.
- The firm intends to tap into the rising demand for healthcare in Asia due to a growing middle-class population and aging demographic with the Asia-focused investment vehicle.
Zoom out: - Investors are still keen on backing biotech funds amidst a challenging fundraising environment, as "there is still an appetite to support novel science and new ideas," per investment and wealth management firm William Blair's managing director Kevin Eisele.
- U.S.-based healthcare VC firm had raised funds worth $13.7B by mid-2023.
- At the current pace, healthcare funds will likely match the record-setting tally of $28.3B from 2021, per Silicon Valley Bank.
Q: Will U.S.-based healthcare VC firms cross 2021's record-setting fundraising figure this year? Join the conversation here. |     | |
| 2 | | Endowments and foundations larger than $1B posted a median return of 5.6% in the fiscal year ending June 30, per preliminary analysis done by Cambridge Associates. 
What the numbers say: Returns through VC investments were lower than the gains seen in the stock market, with the MSCI All Country World Index and S&P 500 reporting 17.1% and 19.6% returns in the same period, respectively. The stock market rallied due to the strong fiscal performance of tech giants such as Nvidia and Microsoft, both of which benefited from the surging interest in AI technology. Relevance: Per Cambridge, endowments smaller than $500M posted median returns of 8.8%, as they typically have less exposure to private investments. What happened: Endowments have increased their exposure to VC, nearly doubling their allocation from 7% in 2017 to 14.5% as of Jun. 2022, per the National Association of College and University Business Officers. Yale allocated nearly 23.5% of its $30B endowment in VC in 2021, increasing its allocation by about 10% compared to a decade earlier. In the 12 months ending June 30, Yale and Stanford posted gains of 1.8% and 4.4%, respectively. Meanwhile, due to the dip in startup valuations, the Massachusetts Institute of Technology and Duke University reported a loss of 2.9% and 1%, respectively. | | | |
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| 3 | | We interviewed Paul Veradittakit, the managing partner of Pantera Capital, a blockchain hedge fund and VC firm that manages nearly $3.3B in blockchain-related assets. Paul talked about the future of blockchain and crypto investing. We further dove into the ongoing fundraising challenges faced by crypto startups, the impact of the implosion of FTX, and investment opportunities within the crypto sector. 
Here's a sneak peek into some of the highlights: Despite the recent fallout of several prominent crypto startups and the dip in VC funding, Paul showed optimism about the prospects within the crypto industry. Paul said, "We're more excited than ever in investing in this space. Us and our peers have quite a bit of capital; you know, there were quite a few seed funds that were able to raise during the last bull market and now are deploying capital in this bear market; it is the best time to be investing." While investing in a bear market, Pantera is looking for mission-driven entrepreneurs that can "survive and push through a bear market." In the downturn, investors are investing in crypto infrastructure startups working on financial onramps, developer tooling, and zero-knowledge-proof solutions. Crypto-focused VC firms, including Pantera Capital, are still investing in seed stages. Crypto investors are able to take advantage of the lower valuations. Paul added, "During this time, with valuations being, you know, a bit sort of lower than what we saw in the bull market, I'd say, you know, series A valuations are probably kind of moved to where seed stage valuations were during the bull market." You can read the written transcript of the entire interview here. | | | |
| 4 | | Global VCs invested $4.9B in U.K.-based startups in Q3 2023, per a new report from HSBC Innovation Banking and Dealroom. The quarterly total helped Britain retain its status as the top destination for VC investments in Europe. U.K. startups have bagged about $15B in capital so far this year, about the same as Germany and France combined. More: - U.S. investors were responsible for 37% of the total capital invested in the region in Q3, increasing their contribution from 20% in the previous quarter.
- U.S. investors' capital contribution was higher than domestic investors, which contributed 31% of the total.
- Per the report, U.K. startups are on track to bag nearly $18B in capital by the end of this year.
- While the projected numbers are half of 2022's tally and about a third of 2021's record-setting totals, they are still $1B higher than 2019's numbers.
Zoom out: - The U.K. government is encouraging investments in high-growth companies.
- Earlier this July, it convinced the region's largest pension companies to increase their allocation to high-growth startups, a move that could potentially bring in £50B ($64B) worth of additional investments.
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| 5 | | South Korean AI-chip startup Rebellions is in talks with investors to raise $100M in Series B funding. Rebellions is targeting a valuation of $500M, sources informed Bloomberg. The firm intends to use the proceeds to accelerate the development of its next-generation AI chip, dubbed Rebel. More: - According to sources, the firm is talking with investors in Japan, Hong Kong, Singapore, and Europe and is looking to close the round by the end of this year.
- Rebellions may rope in Samsung to fabricate its chips and take advantage of its 4-nanometer technology.
- The South Korean startup has raised nearly $84M in total funding to date from seed to Series A rounds.
- Notable backers of the firm include KCA Partners, Kakao Ventures, KT Corp., Korea Development Bank, and Pavilion Capital.
Zoom out: - Rebellions is also looking to tap into government funding to help develop the next-generation AI chip.
- The South Korean government launched an 826B won ($615M) initiative to back domestic AI chip designers.
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| 6 | | Today's Funding: Biotech - Aiolos Bio, a biopharma startup developing treatments for respiratory and inflammatory conditions, emerged from stealth mode with a $245M Series A funding round co-led by Atlas Venture, Bain Capital Life Sciences, Forbion, and Sofinnova Investments.
- Novel DNA-based medicines startup Rampart Biosciences raised a $85M Series A funding round led by Forbion. OrbiMed, RA Capital Management, and HealthCap backed the round.
Cybersecurity - Internet threat detection and exposure management systems developer Censys bagged $75M in fresh funding consisting of a $50M Series C round and a $25M debt funding. Decibel Partners, GV, Greylock, and Intel Capital led the equity tranche, while SVB Capital provided the debt facility.
- Managed detection and response systems startup Adlumin closed its SYN Ventures-led Series B round at $70M. The funding round saw participation from First In Ventures, Washington Harbour Partners, and BankTech Ventures.
Drone - Peter Thiel-backed German drone startup Quantum Systems closed its Series B funding round at €63.6M ($67M). HV Capital and DTCP Capital led the funding round, with additional backing from Airbus Ventures, Thiel Ventures, and Project A.
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- Blank check firm Infinite Acquisition Corp. is reportedly planning to close and return capital to sponsors after it failed to find a suitable acquisition target. NBA star Kevin Durant and his business manager Rich Kleiman established the SPAC entity in 2021 and raised $276M from sponsors. The firm is planning to pay out $10.78 per share, representing a 7.8% return over the initial public offering share price of $10 per unit.
- Generative AI search engine startup Perplexity AI is looking to raise nearly $50M in fresh funding at a valuation of $500M, more than thrice its previous valuation of $150M from earlier this March. Institutional Venture Partners LLC is reportedly set to lead the new round, sources informed SiliconAngle.
- Paradigm co-founder Fred Ehrsam is stepping down from the managing partner role. Ehrsam will continue to guide the firm's investing and research teams by staying on as a general partner.
- France is set to introduce a new tax relief provision for angel investments in tech startups as a part of its budget for 2024.
- Identity app itsme acquired multi-factor authentication startup nextAuth for an undisclosed sum.
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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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