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| Here's a look at today's VC briefing. - 🚀 Series C and D+ tech startup valuations spike by 54% and 43% QoQ
- 📈 Khosla Ventures increased dealmaking in Q3 as it closes in on new funds
- 💰 Sam Altman was reportedly raising billions for a new AI chip venture before being ousted as OpenAI's CEO
Thank you. Karan
p/karan-chafekar | |
| 1 | | Median valuations of Series C and D+ tech startups increased by 54% and 43% QoQ in Q3 2023, per CB Insights. Median valuations saw a quarter-on-quarter bump across all stages, with late-stage startups witnessing the strongest spike. The valuations increased despite a drop in dealmaking and will likely be unable to match last year's figures by year-end. More: - Late-stage startup deals are expected to touch 436 by the end of this year, which would mark a 39% drop compared to 2022.
- The bump in late-stage valuations suggests that investors are only investing in strong startups, while startups without strong revenue metrics continue to postpone their fundraising to avoid raising a down round.
- Despite the bump, 65% of late-stage deals involving U.S. startups had senior or tiered liquidation structures.
- Median valuations of Series C startups increased from $270M in Q2 to $415M in Q3, while Series D+ startups saw a bump from $0.7B to $1B in the same period.
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| 2 | | Khosla Ventures participated in 22 deals worth $592M in Q3 2023, per Crunchbase. 
What the numbers say: The firm increased its dealmaking in the recent quarter, superseding the deal participation count from the same time last year. In Q3 2023, the firm had participated in 18 VC deals worth $634M. Despite the increased dealmaking, Khosla Ventures' investment pace is far from the peak of Q3 2021, when it participated in 41 startup funding deals. Relevance: Notable rounds in which Khosla Ventures participated this year include Teamshares' $124M Series D round led by QED Investors and Replit's $97.5M Series B round. Khosla co-led a $86.5M Series C round in health startup Viome. Where to see the impact: Khosla Ventures' increased dealmaking pace comes as the firm closes in on three new funds worth $3B. The firm is raising a $500M seed fund, a $1.6B flagship fund, and a $900M growth fund to invest in research-intensive areas such as nuclear fusion, humanoid robots, and AI. | | | |
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| 3 | | Sources informed Bloomberg that Sam Altman was in talks with investors in the Middle East to raise billions for a new tensor processing unit chips venture, bearing codename Tigris. Talks were in the early stages as the new startup was yet to be formed. Currently, the status of the new venture is unknown as Microsoft's CEO Satya Nadella announced in a post on X that Altman will be joining the tech giant to lead its new advanced AI research team along with OpenAI co-founder Greg Brockman and several other high-profile executives. More: - Altman was abruptly ousted as CEO by the board of directors on Friday, along with Brockman.
- The firm had briefly promoted CTO Mira Murati to the interim CEO role.
- On Sunday, the firm confirmed that former Twitch CEO and co-founder Emmett Shear will succeed Murati as the interim CEO.
- Investors reportedly pressured OpenAI's board of directors to bring back Altman as the CEO. However, negotiations failed after the four-person board refused to step down and let him return, sources informed The Verge.
Zoom out: - Microsoft announced its own custom AI chip to train large language models a week ago.
- Microsoft, which made a multi-billion dollar investment reportedly worth $10B in OpenAI earlier this year, was working with the AI startup to refine its Maia AI chip.
- OpenAI's largest investor and other existing backers were reportedly interested in backing Altman's new AI chip venture.
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| 4 | | South Korean technology giant LG Group has armed its corporate venture capital division, LG Technology Ventures, with a new $309M (400B won) fund. The fund will back AI, battery, and mobility startups. More: - LG Group's four units, including LG Energy Solution, LG Uplus, LG CNS, and LG Chem, collectively provided the fresh funding.
- The new fund brings the firm's total assets under management to $773.4M (1T won).
- LG established the CVC division in Silicon Valley in 2018.
- The firm initially provided the division with a 600B won fund.
- To date, the firm has invested nearly 400B won ($309M) in 64 global startups and VC funds, including AI startup Anthropic and corporate chatbot maker Allganize Inc.
- Per Pulse News, over half of the total capital has been invested in AI, biotech, battery tech, and mobility startups.
- Anthropic is the company behind AI chatbot Claude and was started by former employees of OpenAI.
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| 5 | | Cybersecurity-focused VC firm Ballistic Ventures has set a target of $300M for its second fund, per SEC filings seen by TechCrunch. The new fund's target size is the same as its predecessor from May 2022. More: - Kleiner Perkins' general partner, Ted Schlein, co-founded Ballistic Ventures along with Barmak Meftah, Jake Seid, and Roger Thornton.
- The firm typically backs cybersecurity and cyber-related startups in the early stages.
- Ballistic has founded, operated, and funded over 90 cybersecurity startups to date, the most notable of which are AuthMind, Oligo, and Nudge Security.
Zoom out: - VC funding for the cybersecurity sector dropped 14% from $2.8B in Q3 2022 to $2.4B in Q3 2023.
- While funding has dropped, investors remain optimistic about the sector's potential, given the rising number of cyberattacks and advancements in generative AI and cloud deployments.
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| 6 | | Today's Funding: Data - Automated data transformation company VaultSpeed raised a Series A round worth $15.9M. Octopus Ventures led the round, joined by Fortino Capital, PMV, and BNP Paribas Fortis Private Equity.
E-commerce - Dutch supermarket app maker Crisp secured €35M ($38.2M) in Series C funding from Keen Ventures, Target Global, Bookmakers Investments, Timeless Investments, and Strikwerda Investments.
Healthtech - Neurovascular intervention maker Route 92 Medical bagged $31M in Series F funding led by U.S. Venture Partners, Norwest Venture Partners, InnovaHealth Partners, and The Vertical Group.
PropTech - Rental marketplace Dwellsy raked in $11.5M in fresh funding led by Ulu Ventures. The University of Chicago, Frontiers Capital, Heroic Ventures, NJP Ventures, Blackhorn Ventures, Gaingels, and the BCG Angels participated in the round.
Transportation - Sustainable EV motor maker Advanced Electric Machines raised £21M ($26.2M) in Series A led by Legal & General Capital and Barclays Sustainable Impact Capital.
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| 7 | | Quick Hits: - Raising capital? Fundingstack's DB of 200,000 investors is your secret weapon. Use code "Inside" for 30% off x 3 months. Start your trial here and get funded faster.*
- In Q3 2023, VCs invested 38% less capital in Irish startups compared to the same period last year. The dip in VC funding is in stark contrast to the 24% YoY spike seen in the first half of this year, which resulted in investments worth €963M ($1.05B).
- Hana Financial Group established South Korea's first fund-of-funds and armed it with $77.44M (100B won) in capital.
- CerraCap Ventures' managing director, Alex Greenberg, has taken up the economic development advisor role to New Mexico Gov. Michelle Lujan Grisham. Greenberg will be responsible for further developing the startup ecosystem along the state's nine target industry clusters.
- Abrdn's board has rejected CEO Stephen Bird's proposal to offload its £368B ($459.5B) investment arm. Last month, the firm sold off its U.S. PE and VC division, with $4B in assets under management, to HighVista Strategies.
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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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