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| Here’s a look at today’s VC briefing. - Funding for digital economy sector in Southeast Asia falls to 2017 levels.
- Global M&A spending slumps as dealmaking dips to decade-low.
- Venture-backed unicorn startup Olive AI to shut operations.
Thank you. Karan
p/karan-chafekar | |
| 1 | | In the first half of 2023, digital economy startups in Southeast Asia raked in $4B in private funding, per a new e-Conomy SEA report published by Temasek and Bain & Company. 564 deals were completed in H1 2023, one-fifth of the 2,697 deals completed in the same time in 2021. At the current rate, funding for the sector is unlikely to match the record-setting fundraising of $27B in 2021. More: - Per the report, "SEA-focused funds have seen significantly lower distributions to paid-in capital compared to other funds that are focused on other regions, suggesting difficulty in raising returns for investors."
- 87% of the respondents surveyed by Bain and Temasek reported difficulties in fundraising, while 88% felt exit opportunities were becoming more difficult.
- Despite this, PE and VC investors in the region have $15.7B worth of dry powder available for deployment.
Zoom out: - Southeast Asia's digital economy reported a 27% CAGR growth in revenue, hitting the $100B mark for the first time in 2023.
- Reuters notes that e-Conomy trimmed its 2025 market size projection from $330B to $295B.
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| 2 | | Global M&A spending slumped to $776.8B in Q3 2023, per Pitchbook. 
What the numbers say: M&A spending dipped by 20% in Q3 after remaining flat for the previous four consecutive quarters. The number of deals has dropped by only 2.5% so far this year. This suggests that while deals are occurring, the average deal values are much smaller than before. Relevance: Corporate acquirers now represent a larger share of activity as sponsor-backed deals wane amid financial difficulties at private equity and venture capital firms. Median debt-to-enterprise value dropped from 50.8% in 2022 to 43.9% in Q3, indicating that acquirers are using a smaller portion of debt to fund leveraged buyouts. What happened: M&A transaction value reached the lowest quarterly total in over a decade in Q3 due to the Federal Reserve's unexpected rate hike and geopolitical tensions in the Middle East. As a result, industry analysts expect the M&A market recovery to be delayed. | | | |
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| 3 | | Pet tech startups raised $558.5M in VC funding in Q3, more than double the $209.1M raised in the same time last year, per Pitchbook data seen by Axios. Investors are optimistic about the pet care industry, which is poised to grow by more than 50%. Even large retailers like Walmart and Amazon see potential in the industry, rolling out veterinary telehealth services. More: - Investment into the sector is poised to increase even further after California Gov. Gavin Newsom greenlighted a bill allowing licensed veterinarians to provide consultation services through video technology.
- Notable startups that raised capital this year include Dutch, which raised a $18M Series B round earlier this month.
- Earlier this year, Airvet bagged $18.2M Series B, Otto secured $43M Series B, and Mixlab raised a $10M Series A extension round.
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| 4 | | AI-powered hospital administrative task automation startup Olive AI is shutting down and selling off its core business units. News of the shutdown comes two after the firm cemented its unicorn status. More: - Waystar is acquiring Olive AI's revenue cycle business, while Humata Health is taking over the hospital tests procedure automation technology.
- Since its founding in 2013, the company had raised $848M in venture capital from investors, most notable of which were Drive Capital, Tiger Global, General Catalyst, Sequoia Capital, GV, Dragoneer Investment Group, and Oak HC/FT.
- Olive achieved a peak valuation of $4B after raising a $400M round led by Vista Equity Partners and Base10 Partners in July 2021.
- It had entered the unicorn club eight months prior when it was valued at $1.5B.
- Troubles at the firm mounted due to rising interest rates and financial woes in the healthcare industry, forcing it to conduct two rounds of layoffs.
- Olive reduced its workforce by 450 in July 2022 and another 215 employees in February 2023.
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| 5 | | Global insurance and asset management firm Generali Group has allocated €250M ($264M) capital to its venture capital arm Generali Ventures, which launched in 2022. Armed with the fresh capital, Generali will enter new markets and look for promising investment opportunities, particularly in the insurtech and fintech sectors. More: - In addition, the firm also plans to invest in funds that back mobility, artificial intelligence, cybersecurity, and healthcare startups.
- "Investment targets include innovative startups, both pre-seed and late stage, with a geographic focus extending to VC funds in Europe and the United States," according to Generali Ventures.
- To date, Generali Ventures has invested in funds launched by insurtech investor Mundi Ventures, early-stage investor SpeedInvest, and B2B software solutions-focused VC firm Dawn.
- Generali Group has already made digital and technological transformation investments worth €1.1B through its "Lifetime 24: Driving Growth" initiative.
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| 6 | | Today's Funding: Biotech - Engine Biosciences, a biotech startup using machine learning to discover and develop precision oncology medicines, extended its Series A funding round with an additional $27M. Polaris Partners led the round with additional support from ClavystBio, Invus, EDBI, Coronet Ventures, and SEEDS Capital.
Cybersecurity - Digital threat detection and response cybersecurity startup Graylog bagged $39M in fresh funding, consisting of $9M in Series C extension funding and a $30M "flex debt" facility. Silver Lake Waterman, Piper Sandler Merchant Banking, and Harbert Growth Partners co-led the round.
Defense - Riot Ventures and the U.S. Innovative Technology Fund led a $200M Series F funding round into defense and aerospace startup Shield AI, valuing the firm at $2.7B. Existing investors Disruptive and Snowpoint Ventures participated in the round, joined by new investor Ark Investment.
Fintech - Saudi Arabian buy-now-pay-later fintech startup Tabby more than doubled its valuation to $1.5B at its latest $200M Series D funding round led by Wellington Management. The round – which comes ahead of its planned IPO listing – saw participation from Bluepool Capital, STV, Mubadala Investment Capital, PayPal Ventures, and Arbor Ventures.
PropTech - Hospitality property manager Kasa Living bagged $70M in fresh funding co-led by Citi Ventures and FirstMark Capital. The firm was able to raise its valuation by 75% to $270M.
Software - Generative AI-powered video documentation startup Guidde raised $15.6M in fresh funding led by Norwest Venture Partners, joined by Entrée Capital, Honeystone Ventures, Crescendo Ventures, and Tiferes Ventures.
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- Indian startups raised $1.3B in VC funding from 107 deals in October 2023, up 5.2% from $1.2B from the same month last year.
- Saudi Arabia's super-city of Neom established its investment fund called Neom Investment Fund to back M&A transactions and VC in tech startups.
- RTW Biotech Opportunities (RTW) is set to acquire Arix Bioscience for $550M, which represents a 63% premium over its net asset value.
- Grupo Bimbo, along with Kamay Ventures, Coca-Cola, and Arcor, are set to increase their capital allocation in LatAm startups.
- Saothair Capital Partners closed its inaugural fund at $125M.
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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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