| Here's a look at today's VC briefing. - ⏳ VCs eye continuation funds to hold on to portfolio stakes of long-standing startups
- 🧠 Neuralink's first brain implant may fuel VC deal activity for neurotechnology startups, says Pitchbook
- 🚀 Nvidia's startup investments tripled in 2023
Thank you. Karan
p/karan-chafekar | |
| 1 | | An increasing number of VC firms are rolling up portfolio stakes of promising long-standing startups into new continuation funds. Insight Partners moved 32 companies into a new continuation fund and was able to distribute $1.3B in returns to LPs. Last week, Lightspeed announced plans to roll up portfolio stakes in 10 companies worth $1B into a new continuation fund. Lightspeed reportedly has $25B in invested assets, including stakes in Nest, Snap, and Rubrik. More: - Typically used by private equity firms, continuation funds help VCs hold on to portfolio stakes in mature startups that lack immediate exit options through acquisition or IPO.
- Consolidating the stakes in the continuation fund gives limited partners an exit route, allowing them to cash out without pressuring the VC firm into divesting its portfolio stakes.
- VCs are exploring creative strategies such as continuation funds, as an increasing number of startups are postponing their IPO listings to avoid a lower valuation at the public debut.
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| 2 | | Neurotechnology startups raised $1.4B in VC funding from 115 deals in 2023, per Pitchbook. What the numbers say: VC funding in 2023 doubled from the previous year, which saw 127 deals totaling $662.6M. The neurotechnology vertical has bagged more than $8B in total funding to date. VCs have been investing in neurotechnology startups, such as cochlear implants and brain monitoring devices, for years. However, 2023's surge was driven by a new line of startups developing brain interface chips. 
Relevance: Notable funding rounds in the sector that closed last year include Neuralink's $323M funding led by Founder Fund, spinal implants startup Saluda Medical's $150M round, and brain interface chip Paradromics' $150M funding round. While VCs are warming up to investing in neurotechnology startups, these startups tend to be capital intensive, need to obtain regulatory approvals, and have risks associated with the implanting devices in the brain. What happened: Earlier this week, Elon Musk announced on X that his brain computing interface startup Neuralink implanted its device in a human for the first time. While it was not the first neurological implant in the world, the achievement, coupled with Musk's profile, could "fuel both deal activity and reignite ethical debates," per Pitchbook analyst Ali Javaheri. | | | |
| 3 | | Bill Gates-backed Breakthrough Energy Ventures secured $555M in capital commitments toward its Select Fund I, per regulatory filing documents seen by Boston Business Journal. The exact investment scope of the fund is currently unknown. However, Jim Cabot, who leads external affairs at BEV, hinted that the firm is planning an announcement in the next few weeks. More: - Breakthrough Energy Ventures typically backs cleantech startups working on reducing greenhouse gas emissions.
- Last year, it participated in steel production decarbonization startup Boston Metal's $262M late-stage funding round.
- Other notable startups in its portfolio include fusion power plant startup Commonwealth Fusion Systems, plant-based foods firm Motif FoodWorks, green hydrogen electrolyzer producer ElectricHydrogen, green cement maker Solidia, and cargo shipping battery technology firm Fleetzero.
- In October 2023, the firm started raising capital for its third fund, with a target of $1B.
- The fund will invest in startups working on climate innovations in electricity, transportation, manufacturing, buildings, and food and agriculture.
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| 4 | | Nvidia's corporate venture capital division nearly tripled its startup investments in 2023, driven by a strong financial performance for the chipmaker. Per S&P Global, Nvidia's year-on-year investments have surged by 280%. Nvidia's pace starkly contrasts with the tepid investments seen by other tech giants, including Microsoft, Alphabet, and Meta. The Facebook parent has paused its investment activity in 2023. More: - Nvidia participated in 38 funding rounds worth $5B in 2023, 11 of which were AI infrastructure startups.
- In the first nine months of the year, the chipmaker invested $872M in non-affiliated firms.
- In addition to AI startups, Nvidia also backed several healthcare startups.
- The firm has already announced three startup investments in the first month of this year, suggesting that it plans to keep up its pace of investing.
- Nvidia's revenues touched $18.1B in 2023, highlighting the pivotal roles its chips play in advancing AI technology.
- Its stock prices surged by 225% throughout the year.
Zoom out: - Like Nvidia, Amazon and IBM increased their investment pace in 2023 by 100% and 13% YoY, respectively.
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| 5 | | Austrian VC firm Speedinvest raised €350M ($380M) toward its fourth fund, crossing the initial target of €300M ($325M). The firm will invest in European early-stage startups working on deeptech, fintech, health and biotech, marketplaces, climate and industrial tech, and SaaS and infrastructure domains. More: - Institutional investors Aviva, PwC Germany, Bitburger, ODDO BHF, and Abeille Assurance Ventures provided the last €50M ($54M).
- The firm's long-term limited partner, the European Investment Fund, and new investor, Generali, also contributed capital to the new fund.
- Speedinvest has already made a few investments from the fourth fund, including agriculture-focused fintech startup Finres, customer support SaaS platform Surfboard, healthtech startup Fertifa, battery recycling firm Cylib, climate tech startup Neocarbon, and travel tech company Fairlyne.
- The new fund pushed the firm's assets under management over the €1B ($1.08B) mark.
- Besides Europe, the firm has also backed startups across Africa, the Middle East, Latin America, and South Asia.
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| 6 | | Today's Funding: AI - Benchmark and Mayfield Fund provided $30.5M in fresh funding to Sema4.ai, a startup developing AI software to automate repetitive tasks using large language models. Sema4.ai also acquired business task automation startup Robocorp for an undisclosed sum.
Cybersecurity - Location-based identity solutions startup Incognia raked in $31M in Series B funding led by Bessemer Venture Partners. New investor FJ Labs participated in the round along with existing backers Point72, Prosus, and Valor Capital.
Foodtech - Restaurant online ordering, CRM tool, marketing automation, and mobile app generation startup Owner.com bagged $33M in Series B funding at a $200M post-money valuation. Redpoint Ventures and Altman Capital co-led the round, with additional support from Horsley Bridge, Activant Capital, and Transpose Platform Management.
Healthcare - Comprehensive in-house care services provider Accompany Health launched today with $56M Series A funding. Venrock, ARCH Venture Partners, IVP, Granite Capital Management, and Evidenced provided the funding.
Software - Software usage-based billing platform Metronome raised $43M in Series B funding led by NEA. The round saw participation from Andreessen Horowitz and General Catalyst.
Transportation - School transportation service startup Zum raised a Series E round of $140M at a $1.3B valuation. Singaporean sovereign wealth fund GIC led the round, joined by Sequoia Capital and SoftBank Vision Fund 2.
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- Per Pitchbook, the IPO window is expected to reopen this year, with AI and machine learning startups set to take the lead in public listings. The report identifies 10 AI startups likely to go public, including Cerebras, Stripe, Synthego, ThoughtSpot, and Anthropic.
- TruBridge Capital Partners has successfully raised two-thirds of its $750M fundraising target for its latest VC fund of funds, per AltAssets.
- European VC firm Practica Capital held the final close of its third fund at the hard cap of €80M ($86.4M). The firm will invest in early-stage tech startups in Lithuania, Latvia, and Estonia. Initial seed-stage check sizes will be about €3M ($3.24M), with the company willing to invest up to €8M ($8.6M) in promising portfolio companies.
- Ubiquity Ventures raised a $75M third fund to back about 20 early-stage startups creating "software beyond the screen." The firm will invest between $1M and $2M in seed-stage startups.
- VC firm eGateway Capital held the first close of its second fund at $66.7M, against a target of $100M, per SEC filings seen by Business Journals.
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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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