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| Here's a look at today's VC briefing. - Khosla Ventures raising three funds worth $3B
- VC dealmaking in Germany dips after two consecutive quarters of growth
- Collective Global launches with $1B in committed assets
We interviewed Nick Adams, the founding partner of Differential Ventures. You can read excerpts from the interview below and watch the interview using the link. Thank you. Karan
p/karan-chafekar | |
| 1 | | OpenAI and DoorDash backer Khosla Ventures is raising three funds worth $3B. The firm is raising a $500M seed fund, a $1.6B flagship fund, and a $900M growth fund. More: - The size of the new flagship fund and growth fund are larger than their predecessors, which closed at $1.4B and $550M, respectively.
- Per the WSJ report, Khosla will invest the capital into research-intensive sectors such as nuclear fusion, humanoid robots, and AI.
- Khosla Ventures expects the fundraising to conclude by the end of this year.
Zoom out: - Khosla Ventures has been able to defy the VC fundraising slump, which has caused several prominent established fund managers, including Founders Fund and Sequoia Capital, to cut back on the sizes of their existing funds.
- Additionally, Tiger Global Management lowered its fundraising target for its upcoming funds.
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| 2 | | VC dealmaking in Germany showed signs of revival after increasing steadily in the first two quarters of this year. However, the trend reversed in Q3 as VC funding deal value and deal count plunged 29% and 18%, respectively, per Pitchbook. 
What the numbers say: In the most recent quarter, German startups inked 213 deals worth €1.5B ($1.63B). Due to the current dip, the annual funding total for 2023 will most likely fall short of last year's figures. Where to see the impact: Early-stage startups raked in 43.75% share of the VC funding in Q3 2023. Due to the VC funding downturn, investors are focusing on early-stage startups rather than late-stage ones, as the former are less impacted by the volatility in public markets. Relevance: Due to the heightened investor interest, median pre-money valuations of early-stage companies continued their upward trajectory, reaching €41.6M ($45.3M) in Q3. Meanwhile, median pre-money valuations of German early-stage startups continued to drop to €24M ($26.1M) in Q3, representing nearly a 90% drop from the peak of €200M ($217.6M) in the first quarter of 2023. The number of active unicorns in Germany increased from 19 in 2022 to 21 in 2023. Defense AI startup Helsing became the latest addition to the unicorn club when it reached a €1.7B ($1.85B) valuation after clinching a €209M ($227.4M) Series B round earlier this year. | | | |
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| 3 | | 
We interviewed Nick Adams, the founding partner of Differential Ventures, a seed-stage VC firm that invests in artificial intelligence, machine learning, the future of engineering and infrastructure, and data management and privacy. Nick talked about evaluating seed-stage startups that might not have MVP or product-market fit, analyzing the founder's potential and grit, and judging the long-term potential of AI technology. Here's a sneak peek into some of the highlights: We asked Nick about what he looks for when evaluating seed-stage startups, to which he replied, "We're looking for a different, I wouldn't just say the TAM or the total addressable markets or serviceable addressable market, but also what's the real friction in that particular segment and problem statement that the founders are working on that can be solved initially." Nick said understanding the founder's grit and reason for building the startup is necessary. He added, "And for us, I think going a step further, especially in the AI and data science space, just having a professional and or academic background is super important. And a lot of times, founders have a very personal connection to a problem as well. And that's sort of like a bonus in a lot of ways." Nick believes AI startups can differentiate from big tech with faster product iteration and stronger community building, as "what big companies are usually focused on is like incremental features functionality to make usability and the stickiness of their solution better." On regulations, Nick feels the big companies are pushing for dramatic oversight to protect their competitive advantage. He believes finessed regulations can help, but too much will stifle innovation. Catch the transcript of the entire interview here. | | | |
| 4 | | Early- and growth-stage VC firm Craft Ventures raised two new funds worth $1.32B. $712M of the capital is earmarked for the fourth early-stage fund, with the remaining $608M for its second growth fund. More: - The firm typically invests in B2B software companies.
- Craft Ventures aims to support portfolio startups with its Executive Briefing Center (EBC) and the Talent team.
- The firm is also opening a new office in New York City's Flatiron District, which will also serve as a workspace for portfolio companies' founders and teams.
- Craft Ventures roped in Michael Robinson and Kevin Gabura, joining the likes of David Sachs, Jeff Fluhr, Brain Murray, Mike Marg, Michael Tam, and others.
- Robinson is tasked with leading the growth practice.
- With the new fund, the firm has more than $3.3B worth of assets under management.
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| 5 | | A new asset management firm, Collective Global, launched today to "reimagine the way premier institutions access venture." Orange County Employees Retirement System (OCERS) and the San Jose Retirement System are the founding investors of Collective Global. Each founding investor has pledged to invest $100M in the newly formed entity. More: - The firm is led by Daniel Adamson and Sheel Tyle as its co-CEOs.
- Collective Global already has $1B in committed assets under management.
- The firm is already in talks to acquire a stake in a VC firm that invests in AI, robotics, and other technology.
- San Jose Retirement Systems's CIO Prabhu Palani said the firm joined as a founding investor due to a "long-standing desire to participate in the upside of VC funds."
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| 6 | | Today's Funding: Biotech - Clinical-stage ophthalmology biotech startup Eyebiotech Limited extended its Series A round with an additional $65M, bringing the total raised under the round to $130M. Bain Capital Life Sciences, Omega Funds, Vertex Ventures HC, SV Health Investors, Jeito Capital, Samsara Biocapital, and MRL Ventures Fund participated in the round.
Crypto - Cryptocurrency exchange and wallet services provider Blockchain.com closed its Series E funding round at $110M. The firm's valuation plunged by more than half compared to its previous $14B valuation from 2022. Kingsway Capital led the round, joined by Baillie Gifford, Lakestar, Lightspeed Venture Partners, and Coinbase Ventures.
Energy - Battery management systems maker Element Energy raised $111M in fresh capital, consisting of $73M in Series B equity and a $38M debt facility. Cohort Ventures and an unnamed clean energy generation company co-led the equity tranche, while Keyframe Capital Partners provided the debt facility.
Fintech - Co-branded credit card issuance company Imprint secured $75M led by Ribbit Capital.
Transportation - Supersonic aircraft startup Boom Supersonic raised an undisclosed sum from Saudi Arabia's NEOM Investment Fund, bringing its total raised to date to $700M.
- Express car wash operator Spark Car Wash bagged $30M in Series B funding led by GoPoint Ventures.
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| 7 | | Quick Hits: - Elevate your Kubernetes skills with this must-read resource for building cloud-native applications. Get your Kubernetes Cookbook today.*
- Relevance Ventures and Skoden Ventures established the Native American Capital and Investment Alliance to increase access to equity and debt capital for Native Americans.
- Transcend Fund closed its second seed fund at $60M. The fund will focus on early-stage gaming and digital entertainment startups.
- Israeli digital investment platform OurCrowd and Thailand-based corporate RISE earmarked $50M toward the Rise OurCrowd Exponential Fund, which aims to invest in early-stage deep technologies across cybersecurity, AI, healthtech, semiconductor, quantum computing, climate-tech, agtech, and foodtech sectors.
- Underline Ventures, Eastern Europe's first solo GP VC fund, reached its target of $20M at the final close of its debut fund. The firm aims to back nearly 20 startups, with individual check sizes averaging $500,000.
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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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