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| Here's a look at today's VC briefing. - 🚫 Adobe called off Figma acquisition due to regulatory pushback
- 📊 Top private companies will likely hold off their IPO listings until 2025
- 🏛️ The University of Michigan lowered its PE and VC investments by 40% in fiscal year 2023
Thank you. Karan
p/karan-chafekar | |
| 1 | | Adobe scrapped its $20B acquisition of Figma due to regulatory pushback. Both the parties agreed to mutually terminate the deal as they faced pushback from the U.K. Competition and Markets Authority (CMA) and the European Commission, who were concerned that the acquisition would stifle competition and drive up prices for product design services. Figma will receive a $1B termination fee from Adobe. More: - The deal promised a large windfall for Figma's VC backers, including Index Ventures, Greylock Partners, Kleiner Perkins, and Sequoia.
- Figma's $3.8M seed round's lead investor, Index, was reportedly set to rake in a $2.6B return from the transaction.
- The deal was poised to be the largest acquisition of a venture-backed company ever.
- The $20B price offered for Figma represented a third of the total U.S. exit value so far this year, per Pitchbook.
Zoom out: - Increasing regulatory pushback is further dampening the already-depressed M&A market.
- Last Sunday, genetics biotech firm Illumina announced it would sell off the cancer diagnostics testing company Grail, which it acquired for $7.1B in 2021, due to consistent pushback from the European Commission and the Federal Trade Commission.
- Last year, CMA ordered Meta to divest from Giphy, which it acquired for $315M.
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| 2 | | Social media network Reddit, data security firm Rubrik, and fashion brand Skims are a few companies waiting for the IPO window to open, per Pitchbook. 
What happened: Investors expect a large number of IPOs next year, as "a certain number of companies have very complicated cap tables, and they can't raise privately anymore," per Techstars CEO Maelle Gavet. However, Pitchbook reckons that companies that decide to go public next year may have to settle for considerably lower valuations than their last private rounds, a trend seen in recent IPO debutants Instacart and Klaviyo. Industry insiders believe that the larger private companies will likely hold off their IPO listings until 2025 as waiting another year will help them grow into their previous peak valuations. Relevance: Some startups will not have the luxury of postponing their IPO listings as they might have investors with preferential rights that will block new private fundraisings below certain valuation thresholds. Additionally, nearing expiration dates for stock options and restricted stock units, which typically have a 10-year and seven-year tenure respectively, may push companies toward a downround IPO. Where to see the impact: Companies are simultaneously searching for strategic buyers in a bid to get a better deal. Weight management drug maker Carmot announced plans to go public in November while simultaneously having discussions with potential buyer Roche. Carmot ultimately decided to sell itself to Roche for $2.7B. | | | |
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| 3 | | Public documents reviewed by Fortune revealed that the University of Michigan's endowment committed $580M in fresh capital to private equity and venture capital funds in the 12 months ending June 2023. The endowment's capital allocation has dropped by more than 40% compared to the $1B allocated in the 2022 fiscal year. In addition to the reduced commitments, the endowment terminated relationships with nine private managers in the 2023 fiscal year. More: - Despite the decrease in commitments, the endowment still has significant exposure to this asset class, with 40.9% of the endowment's portfolio invested in VC and PE funds as of June 2023.
- The firm has previously invested in funds managed by Sequoia Capital, Andreessen Horowitz, Accel, General Catalyst, and Y Combinator.
- The firm reported a one-year annualized investment return of 0.7% on its PE and VC investment, notably higher than the industry average of -3.4%.
- Its 20-year annualized return for the asset class was 16.7%.
- At the end of June 2023, the University of Michigan's endowment had $17.9B worth of assets under management.
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| 4 | | Pivotal bioVenture Partners secured $389M in capital commitments at the final close of its second fund. The San Francisco-based firm intends to back North American and European startups developing novel medicines. More: - Pivotal's second fund is $89M larger than its predecessor.
- With the new funding, the firm has received capital worth $689M from investors.
- The firm will leverage the capabilities of its parent company, Pivotal Life Sciences, to support companies in the life sciences field.
- Notable portfolio companies include neurology biotech firm Karuna Therapeutics, gene therapy developer Twist Bioscience, AI-powered drugmaker Exscientia, and vaccine developer Vaxcyte.
- This year, the firm participated in Evommune's $50M Series B and Maplight Therapeutics' $225M Series C rounds.
- Pivotal is already backing an undisclosed gene therapy developer with the new fund.
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| 5 | | Turkish VC firm Revo Capital is planning to raise $100M for its third fund. The firm will invest in AI, big data, fintech, health, cloud security, and B2B cloud software startups. 80% of the fund is earmarked for Turkish startups, with the remaining set aside for central and eastern European firms. More: - Revo has previously invested in tech unicorns Getir and Builder.ai.
- Per managing director Cenk Bayrakdar, the firm will primarily back local startups that are building a global presence and having a consistent revenue stream.
- Revo will hold a first close between $50M and $60M in March.
- The third fund has a hard cap of $150M.
- Revo's debut fund closed at $66M in 2013, followed by a second $98M fund in 2020.
Zoom out: - So far this year, Turkish startups have raked in $154M in VC funding, down significantly from the $1.26B raised in 2022.
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| 6 | | Today's Funding: Cybersecurity - Cybersecurity compliance startup Strike Graph bagged $8.5M in fresh funding, bringing its total funding raised to date to $21.4M. BAMCAP Capital Partners led the round, joined by Madrona Venture Group, Information Venture Partners, and Rise of the Rest Fund.
Energy - British energy and utility firm Octopus Energy Group raised $800M in fresh funding from existing investors, including Origin Energy, Tokyo Gas, Al Gore's Generation Asset Management, and the Canada Pension Plan Investment Board. The firm was able to raise its valuation by 60% since the previous fundraising to $7.8B (£6.2B).
Enterprise - Procurement automation startup Pivot bagged €20M ($21.8M) in Series A funding from Visionaries, Emblem, Anamcara, and Oliver Samver.
Fintech - Revenue-based financing platform Unlimitd raised €100M ($109.4M) in fresh funding from Absolute Capital Partners (ACP).
Web3 - Tap Protocol, a startup focussing on developing Bitcoin's capabilities through the Ordinals system, secured $4.2M in fresh funding led by Sora Ventures. Cypher Capital, Rw3, Oak Grove Capital, Petrock Capital, Kosmos Ventures, New Tribe Capital, and Cogitent Ventures participated in the round.
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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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