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| Here's a look at today's VC briefing. - 💰 Investors are raising fresh funds to scoop up discounted startup stakes being sold in the secondary market
- ⏳ Fundraising timeline widened to 15 months in 2023
- 🇸🇦 Saudi Aramco bolstered its VC division with an additional capital of $4B
Thank you. Karan
p/karan-chafekar | |
| 1 | | Investors are raising fresh funds to scoop up discounted startup stakes being sold by early investors in the secondary market due to a lack of exit options. Last week, secondary investor Lexington Partners announced it is raising a new secondary fund to acquire stakes from large-scale investors. The firm raised its fund target from $15B to $23B due to strong demand from limited partners, of which it intends to use $5B for venture capital secondaries and the rest for private equity. More: - Pinegrove Capital Partners, a joint venture between Brookfield Asset Management and Sequoia Heritage, and StepStone are raising billion-dollar funds to invest in venture secondaries.
- SEC filings show that StepStone has already secured $1.25B toward its fund and expects to hold a final close at twice the current number.
- Investors expect IPO listings to increase later this year, but it could be a while before the activity returns to normal.
- Per secondary share exchange platform Forge Global, investors are selling their portfolio stakes at an average discount of 50% compared to its most recent fundraising valuation.
- Secondary share trading volume increased by more than 50% QoQ on Forge Global's platform in Q3 2023.
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| 2 | | The median time taken by venture firms to close their funds widened to 15 months in 2023, the longest it has been in at least a decade, per Pitchbook. 
What the numbers say: The fundraising timeline was 46% larger than in 2022. The fundraising period shortened to a decade-low of 9.3 months in 2022. What happened: In 2023, limited partners started curbing their investments due to the slump in tech stock prices, rising interest rates, and lack of IPO listings. Amidst the fundraising slump, fund managers are trying to entice LPs by granting favorable terms, such as side letters and co-investing rights. The situation is far worse for emerging fund managers, who face even more difficulty raising capital due to a lack of any previous track record of success. Some established fund managers are lowering their fundraising targets rather than extending deadlines. Growth investor Insight Partners slashed its fund size from $20B to $15B in June in light of the changing economic climate. | | | |
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| 3 | | Thomvest Ventures, a VC firm backed by Peter Thomson, secured $250M in capital commitments towards its latest fund. The firm will use the fresh capital to invest in startups in fintech, real estate technology, cybersecurity, cloud, and AI/data infrastructure domains. Thomvest expects to back between 25 and 30 companies with the new fund. More: - The firm also promoted Umesh Padval and Nima Wedlake to the managing director roles.
- Padval will oversee investments into cybersecurity, cloud, and AI/data infrastructure, while Wedlake will lead investments in real estate technology.
- The new fund pushed Thomvest's assets under management over the $750M mark.
- Thomvest will invest between $5M to $15M in early-stage companies and between $7M to $25M in later-stage firms.
- Since its founding in 2017, the firm has made 75 investments, the most notable of which are Blend Labs, Carta, Cohere, LendingClub, SoFi, and Vungle.
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| 4 | | Saudi Arabia's state-run oil company, Saudi Aramco, is bolstering its VC division by injecting an additional $4B into the venture. The fresh capital will more than double Aramco Ventures' capital availability from $3B to $7B. The capital injection highlights Aramco's ambitions to invest in global startups to diversify away from its oil-dependent economy. More: - With the new funding, Aramco will focus on new energy, chemicals and transition materials, diversified industrial businesses, and digital technology startups.
- The firm has already invested in startups working on carbon management to renewable energy and hydrogen.
- Before the recent capital injection, Aramco Ventures managed three funds, each dedicated to a distinct strategic objective.
- The firm had allocated $1.5B toward the Sustainability Fund, which supported startups that could help Aramco achieve its net-zero Scope 1 and Scope 2 emissions target by 2030.
- Another $1B was earmarked for the Prosperity7 Fund, which backed disruptive technologies beyond the energy sector.
- Lastly, the firm had a $500M fund to invest in startups that are strategically important to Aramco.
Zoom out: - Aramco previously allocated $500M to Wa'ed Ventures, a VC firm tasked with developing the nation's startup ecosystem.
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| 5 | | Norwegian VC firm Sandwater closed its inaugural impact fund at €125M ($135.8M). The fund secured more than double its initial target. The firm has already invested 500M NOK (~$47.7M) in 13 late seed to Series B companies. About 900M NOK (~$85.8M) is still available for new investments and follow-on funding for portfolio companies. More: - Limited partners contributing capital to the current fund include the European Investment Fund (EIF), First Swedish National Pension Fund (AP1), LGT, Norwegian climate fund Nysnø, Investinor, and family offices of Canica and Lærdal.
- The firm intends to back climate, energy, and healthcare startups addressing global challenges.
- Sandwater's four verticals for investment are resource efficiency, energy transition, impact enablers, and healthtech.
- Notable startups in its portfolio include humanoid robotics firm 1X, regenerative and sustainable agriculture firm Nofence, battery startup Evyon, and decarbonization firm ClimateView.
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| 6 | | Today's Funding: AI - Japanese AI startup Sakana AI raised $30M in seed funding at a valuation of $200M. Lux Capital led the round, with additional participation from Khosla Ventures, Sony Group Corp., and NTT.
Consumer goods - German phone leasing and refurbishment startup Everphone GmbH raised a €270M ($293M) Series D funding round, which consists of €20M ($21.7M) in equity and a credit facility of €250M ($271.7M). Capnor and Cadence Growth Capital provided the equity tranche, while Citigroup, KfW, and Phoenix Insurance Group provided the debt facility. The firm was valued at about €250M ($272M).
Energy - eFuel company INERATEC closed its Series B funding round at $129M. Piva Capital led the round with additional funding from HG Ventures, TDK Ventures, Copec WIND Ventures, RockCreek, Emerald, and Samsung Ventures. The firm will use the proceeds to scale up eFuel production, with an aim to create 125 million gallons of sustainable eFuel by 2030.
Software - Xyte, a startup that helps OEMs create new subscription-based offerings for their hardware and devices, raised $30M in fresh funding, which includes a $20M Series A round from Intel Corp., Samsung Next, and S Capital, and a $10M venture funding from funds managed by BlackRock. The startup will use the funds to expand the global reach of its servitization platform.
Quantum computing - Quantum computing startup Quantinuum bagged $300M in fresh equity funding led by JPMorgan Chase at a pre-money valuation of $5B. Mitsui, Amgen, and Honeywell participated in the round.
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- Philadelphia-based startups raised $498.5M in VC funding in the last quarter of 2023, down 43.5% from the previous quarter's tally of $866.7M. Throughout 2023, startups in the region raked in $2.43B VC funding, 53.5% lower than in 2022.
- Crypto investor Ego Death Capital is looking to raise $100M in capital for its second fund, which aims to back startups accelerating the Bitcoin ecosystem.
- Early-stage VC firm Delin Ventures closed its latest fund at £46M ($58.2M). The fund will invest in European startups working on the future of work, education, and learning.
- Emma Rodgers and Kaley Sirak Harder joined f7 Ventures as executive-in-residence and chief of staff, respectively.
- MPearlRock, a joint venture formed by The Kroger Co.'s VC division PearlRock Partners and MidOcean Partners, acquired plant-based creamer startup Nutpods 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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