| Here's a look at today's VC briefing. - 🌎 North American VCs find it difficult to succeed in Europe.
- ⬆️ GPs plan to increase management fees due to mounting optimism in the market, per a Dynamo Software survey.
- 🦄 Only 29 early-stage unicorns were minted in 2023.
Thank you. Karan
p/karan-chafekar | |
| 1 | | North American VCs are finding it difficult to succeed in Europe due to the nuanced startup investment market and diverse languages and currencies. Additionally, many foreign VCs are setting up their offices in London, limiting their access to deals since the region has several startup hubs. The startup investment environment has also changed drastically over the last few years, heating up competition for VC deals, especially in the early stages. More: - European VC firm Plural's partner, Sten Tamkivi, said, "Over the last decade, the early-stage investing has shifted way more toward local players; 80% of capital deployed in Europe is European."
- Tamkivi adds that European startups typically opt for foreign investors when planning to expand to the U.S., preferring local investors otherwise.
- Due to the challenges, notable American VC firms like Coatue and OMERs have pulled out of the region.
- Some foreign investors are partnering or merging with local investors to succeed in Europe.
- General Catalyst is merging with seed-stage VC investor La Famiglia to increase access to early-stage deals.
Zoom out: - The number of deals with participation from at least one U.S. investor plummeted by 57% in 2023.
|     | |
| 2 | | What the numbers say: 20% of general partners participating in Dynamo Software's survey plan to increase their firm's management fees in the next 12 months, per Pitchbook. What happened: The number has grown four-fold compared to the 5% of respondents planning to increase their fees at the start of 2023. The bump highlights the mounting optimism about deal-making with fund managers. Fund managers expect market conditions to recover as valuations become reasonable and inflationary and recessionary pressures ease. VC deal terms continue to favor limited partners. However, GPs expect more leverage in negotiating better deal terms if the market conditions improve. 
Relevance: Management fees typically range between 0.1% and 2% of the assets under management, with most private capital funds charging between 1.5% and 2%. Advisory firm Callan's senior vice president Ashley Kahn has not seen an increase in management fees yet but is seeing fewer instances where GPs are offering fee discounts to LPs. | | | |
| 3 | | Out of the overall 95 startups that entered the unicorn club in 2023, only 29 were early-stage startups representing seed, Series A, or Series B firms. The unicorn creation rate for early-stage startups slowed by 62% compared to 2022's tally of 77 and 73% compared to 2021's 107. More: - A third of the early-stage unicorns belonged to the AI sector, as investors are optimistic about the technology's transformative potential.
- AI startups joining the unicorn club included Character.ai, Adept AI, Typeface, Baichun, Helsing, CoreWeave, and Mistral.
- The first four from the group had a valuation of about $1B, Helsing had a valuation of $1.8B, while the latter two had a valuation of $2B.
- Due to the volatile macroeconomic conditions, it is becoming increasingly difficult for early-stage startups to turn into unicorns.
- Investors are asking portfolio companies to curb their rapid growth ambitions and focus on profitability and sustainable growth.
| | | |
| 4 | | Fathom Fund emerged from stealth with $100M in capital commitments towards its debut fund. The firm is looking to back deeptech startups, including microchip and satellite firms, even at pre-revenue stages. In addition to funding, the firm wants to provide technical expertise to startups at the early stages. More: - Houston-based entrepreneurs Paul Sheng and Eric Bielke launched Fathom Fund after witnessing a lack of capital availability for early-stage hard sciences startups.
- The firm will also perform "rigorous technical diligence at an early stage," per Bielke.
- Fathom Fund expects to back 10 to 15 companies through the debut fund.
Zoom out: - Several incubators have emerged in Houston to help scale startups, including the Cannon, the Ion, and Greentown Labs.
- Meanwhile, Mercury Funds has also turned towards scaling startups in Houston.
- The most notable startups from the region in its portfolio include RepeatMD and Brassica Technologies.
| | | |
| A message from our sponsor, Brilliant. |  | | The secret to staying ahead of the curve
Successful people like Elon Musk and Warren Buffett dedicate a few minutes a day to strengthening their minds and learning something new. Why? Sharpening your problem-solving skills can give you a serious edge in everything from your career to investing. That’s why so many people are learning daily on Brilliant, the app for lifelong learners to level up fast with daily bite-sized lessons. On Brilliant, you’ll: - Master the concepts behind cutting-edge topics like AI, data science, and machine learning
- Put it to work ASAP
- Become the next great problem solver
Join 10M+ people getting smarter with a 30-day free trial. And when you’re ready to level up, Inside readers can get a special 20% discount on a premium annual subscription. Try it for free | |
|
| 5 | | Horizon Capital closed its Ukraine-focused fund at the hard cap of $350M. The Horizon Capital Growth Fund IV surpassed the initial target of $250M by 40%. The firm has already backed language learning platform Preply, specialized IT education program firm GoIT, and pharmaceutical digital transformation startup Viseven. More: - The new fund brings the firm's assets under management to $1.6B.
- International financial institutions IFC, EBRD, EIB, DFC, FMO, JICA, Swedfund, Finnfund, WNISEF, and IFU backed the new fund.
- In addition, the fund also received backing from global institutional investors, including Abrdn Private Equity, Blue Earth Capital, and Zero Gap Fund.
Zoom out: - Over the past five years, Horizon has raised $800M from investors to invest in Ukraine and Moldova.
- The firm has backed over 170 companies to date, employing more than 80,000 people in the region.
| | | |
| 6 | | Today's Funding: Cleantech - British clean technology firm Altilium secured $9.43M in Series A funding from SQM Lithium Ventures and other investors.
Data - Data curation startup DatologyAI raised $11.65M in seed funding. The seed round was led by Amplify Partners, with support from Radical Ventures, Conviction Capital, Outset Capital, and Quiet Capital.
Fintech - Copy-trading platform dub raised $17M in seed funding led by Tusk Venture Partners. Robinhood's co-founder Nathan Rodland and Uber CEO Dara Khosrowshahi participated in the round. The round includes a $2M debt facility provided by Silicon Valley Bank.
Healthcare - Clinical trial marketplace Power raised a Series A round worth $12M. Kin Ventures and Contrary led the round, joined by Footwork, AirAngels, Artis Ventures, 20Growth, 14W, Moment, and Otherwise Fund.
Robotics - German robotics startup RobCo bagged $42.5M in Series B funding from Lightspeed Venture Partners, Sequoia Capital, Kindred Capital, and Promus Ventures.
| | | |
| 7 | | Quick Hits: - Discover the trends shaping 2024 and learn how trust will be the key to business success. Shape your strategy and get ahead with this latest report.*
- Atlas Ventures received $4.1M after liquidating 184,501 shares of Dyne Therapeutics at an average price of $22.57. The VC firm still owns 6.6 million shares worth $149.6M.
- Qiming Venture Partners became the latest VC fund to sign the United Nations-supported Principles for Responsible Investment (PRI), joining 5,000 plus investors.
- Blockchain-focused VC firm Maven11 Capital reported $1.43M in returns, up 54%, thanks to the surge in DeFi token prices.
- 16 female founders representing 14 startups joined Spark's latest cohort of its Fellowship program. Startups will receive $100,000 in equity-free grants along with over $1M in perks, including cloud credits, devtools, and analytics.
- Visa and Mastercard have come to a historic $5 billion settlement, marking a pivotal moment for small business owners. If your business accepts Visa/MC, Claim your share today.*
*This is sponsored content. | | | |
| Upcoming Events | | MAR
7 | | Portfolio Diversification - Learn from knowledgable experts on the latest trends in alternative investment assets like private equity, crypto, real estate, and the art market. | | | | | | * This is a sponsored event | | | |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Vibha Chapparike | |
| |
| |
|
| |
Comments
Post a Comment