| Here's a look at today's VC briefing. - 🔺 SEC has proposed a higher threshold for qualifying VC funds
- 📈 VC funding showed a slight uptick in January
- 📉 Crypto investors remain unfazed despite a drop in exit opportunities
Thank you. Karan
p/karan-chafekar | |
| 1 | | The U.S. Securities and Exchange Commission (SEC) proposed increasing the threshold for qualifying venture funds exempt from the definition of "investment company" under the Investment Company Act of 1940 from $10M to $12M. The aggregate capital contributions and uncommitted capital threshold has been increased to keep it in line with inflation. More: - The SEC referred to the Personal Consumption Expenditures Chain-Type Price Index (PCE Index), published by the Department of Commerce, to derive the revised threshold figure.
- The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, signed into law by former President Donald Trump, empowered the SEC to revise the threshold figure once every five years.
- The threshold increase needs to be rounded off to the nearest $1M.
- SEC is inviting public feedback and comments on the proposal for the next 30 days.
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| 2 | | VC invested nearly $22B in global startups in the month of January 2024, per Crunchbase. 
What the numbers say: While VC funding showed a slight uptick from the previous month of December 2023, the funding was still below the monthly average for 2023. Late-stage startups bagged $10B of the funding last month, while early-stage and seed startups secured $9.4B and $2B, respectively. Funding for early and late-stage startups surged compared to the previous month, thanks to large funding rounds for AI, energy, delivery, semiconductor, quantum, and logistics startups. The AI sector alone raked in 10% of the total funding last month. Within the AI sector, funding went to robotics, customer experience, voice synthesis, and AI architecture companies. Relevance: While down rounds continue to prevail, several startups also managed to close up rounds, including fintechs Bilt Rewards and DailyPay, sports entertainment company Minute Media, and AI chip firm Rebellions. Where to see the impact: The recovery of VC funding depends entirely on the IPO market. Without a recovery in IPO listings, startup funding could remain subdued this year. | | | |
| 3 | | The crypto sector reported just 12 exits worth a combined $1B in 2023, a fraction of the $88B exit value generated in 2021, per a Pitchbook report referred by TechCrunch. Despite the lack of exit opportunities, VC investors are unfazed as they have other means of exit rather than relying solely on IPOs and acquisitions. VC investors can exit their crypto sector investments through token sales. More: - Framework Ventures' co-founder Vance Spencer believes the $1B exit value number to be misleading, as VCs consider token sales as their primary source of exits in the crypto industry.
- Spencer adds, "The vast majority of liquidity events in crypto VC will come from tokens, and that's likely much harder to gauge holistically."
- Due to regulatory pushback, the crypto sector IPOs and acquisitions remain closed.
- However, there is a hint of optimism in the air, as crypto prices are rising and key regulatory hurdles have been resolved.
Zoom out: - VC funding for the sector saw a slight surge of 2.5% QoQ in Q4 2023.
- 326 funding deals worth $1.9B closed in Q4.
- However, the enthusiasm might be short-lived as funding dipped by 30% in January 2024 compared to the previous month, per DeFiLlama data cited by BeinCrypto.
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| 4 | | Accolade Partners has secured $1B in capital commitments toward three funds-of-funds. $400M of the capital is allocated to its Growth III LP fund, $131M to its Venture I LP fund, and $505M to its flagship Accolade Partners IX LP fund, which invests in both venture and growth funds. More: - Managing partner Atul Rustgi believes this is the right time to invest as company valuations are reasonable.
- While distributions from growth funds remain consistent, those from venture funds have declined due to a mismatch of valuation expectations between founders and VC firms.
- Last year, the firm also closed a $325M fund to invest in women- and minority-led funds.
- Accolade has previously invested in funds raised by Accel, Andreessen Horowitz, Kleiner Perkins, Lock 8 Partners, Radian Capital, and Shore Capital Partners.
- Most of the new capital will be invested in funds launched by established VC firms.
- The firm invests in one or two new VC funds every year, claims Rustgi.
Zoom out: - Per Pitchbook-NVCA Venture Monitor, the number of venture funds raised in the U.S. fell to a decade-low in 2023, with the year closing out with just 474 venture funds.
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| 5 | | U.S.-based growth equity firm General Atlantic held the final close of its second strategic capital fund at $2.7B. The firm will invest between $150M and $200M in companies with a valuation ranging between $500M and $2B. General Atlantic expects to offer structured financing to companies, including preferred equity, mezzanine debt, and debt with warrants. More: - The Atlantic Park Strategic Capital Fund II fund is about 23% larger than its predecessor, which closed at $2.2B in 2021.
- Initially, the Atlantic Park unit was a joint venture with Iron Park Capital Partners before General Atlantic acquired the latter in April last year.
- The division has since been rebranded to General Atlantic Credit and is led by Tripp Smith.
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| 6 | | Today's Funding: Biotech - Non-opioid pain medicines maker Latigo Biotherapeutics emerged from stealth mode with a $135M Series A round led by Westlake Village BioPartners. 5AM Ventures and Foresite Capital co-led the funding, with additional support from Corner Ventures.
- Oncology biotech startup NextPoint Therapeutics extended its Series B funding round by $42.5M, which brings the total raised under the round to $122.5M. Catalio Capital Management led the new tranche, joined by Arkin Holdings, WTT Investment, MPM BioImpact, Leaps by Bayer, Sanofi Ventures, Invus, and others.
- Sudo Biosciences, a biotech startup developing precision inhibitors for multiple sclerosis, psoriasis, and other severe autoimmune conditions, upsized its Series B round to $147M, with a $30M extension led by Enavate Sciences and TPG. Other participants in the round include Sanofi Ventures, Frazier Life Sciences, Surveyor Capital, Leaps by Bayer, and DDF.
Fintech - Colombian digital payments infrastructure startup Bold secured $50M in Series C funding led by General Atlantic. International Finance Corporation, InQLab, and Amador participated in the round.
Spacetech - Satellite connectivity startup Skylo bagged $37M in equity funding led by Intel Capital and Innovation Endeavors, with additional support from BMW i Ventures, Next47, Samsung Catalyst Fund, and Seraphim Space.
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| 7 | | Quick Hits: - If your business accepted Visa or MC from Jan. 1, 2004, to Jan. 25, 2019, you may be entitled to a share of the historic $5.6 billion settlement.*
- Donald Mackenzie is stepping down from the co-chair position at European PE firm CVC Capital Partners. Mackenzie, who co-founded the firm along with Steve Koltes, will remain with the firm as a board member and an honorary co-chair.
- Sector-agnostic VC firm East Ventures hired Sang Han as a partner for its East Ventures South Korea Fund. The fund, which is in partnership with SV Investment, raised $100M in October 2023.
- Israeli investment firm Greenfield Partners promoted Raz Mangel to the partner role.
- Indian VC firm Capria Ventures is about to launch a $100M fund in the first half of 2024. The fund will support generative AI, fintech, job-tech, and SaaS edtech startups in the nation.
- Conquer any Kubernetes challenge with the Kubernetes Cookbook. Get your copy from DoiT, a global team of cloud experts.*
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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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