| |
| Here’s your daily VC briefing: - 📉 Venture debt deals for early-stage startups slumped by 39% in 2023.
- 🚀 VC funding for crypto startups surged in Q1 2024.
- 🔎 Investors are eyeing decacorn startups for substantial exits.
Thank you. Karan
p/karan-chafekar | |
| 1 | | Venture debt deals for early-stage slumped by 39% in 2023, ending the year with just 665 transactions, per Pitchbook. Early-stage startups have been facing difficulties securing debt facilities since the implosion of Silicon Valley Bank. The situation is much worse for fintech and consumer tech startups, which have seen a huge drop in valuations. More: - The lack of venture debt facilities for early-stage startups is surprising, given that they showed better resilience in equity funding than later-stage startups.
- This downturn can be attributed to the cautious approach taken by venture debt lenders, as they have to take calculated risks since their payouts are capped, unlike equity investors.
- Additionally, lenders need to carefully assess a startup's ability to return the capital, with seed-stage startups having higher risk profiles.
Zoom out: - Despite losing venture debt market share from 50% to 20%, SVB "continues to do more venture debt lending than any other single institution," claims its head of corporate affairs, Carrie Merritt.
|     | |
| 2 | | So far this quarter, crypto startups have raised $625M from VC investors from 111 deals, higher than the $446.3M secured in Q4 2023, per Crunchbase. 
What the numbers say: Last year, crypto startups bagged $3.6B from 821 deals. Funding dropped by 78% in 2023 compared to 2022's tally of $16.2B. Notable funding rounds from the current quarter include Freechat's $80M Series A, Flowdesk's $50M Series B, and Sygnum's $40.6M funding rounds. The dip can be attributed to the fallout of FTX and the overall slump in VC funding across all sectors. Relevance: With cryptocurrency prices continuing to rise and the SEC's decision to allow U.S. exchange-traded funds to trade digital currencies, investors are looking forward to closing more deals in the sector. In the seven weeks since the SEC's announcement, the top nine leading Bitcoin ETFs have secured about $10B from investors. Where to see the impact: Despite the recent surge in VC funding, Telstra Ventures' general partner Yash Patel cautions, "I don't think you'll see a big uptick in investment this year, but 2025 could be bigger." | | | |
| A message from our sponsor, Deel. |  | | Learn how to make your international HR admin more efficient Building global teams is an effective strategy
for strengthening businesses amidst the ever-changing global economy. Is your company prepared? Deel’s free International Hiring Guide covers cost-effective ways to build the global team that best fits your needs. Inside you’ll explore: - How to find and attract the right talent
- Four unique global hiring strategies
- How to pay your global team
- And more
Download Now | |
|
| 3 | | Investors believe that VC firms need to invest more in decacorn startups, valued at over $10B, to generate substantial returns on investment due to the current economic headwinds. Renegade Partners' investor Quintini said, "If you want to return three times your fund, then a unicorn isn't sufficient." While investors want decacorn startups, they are hard to come by as there are only 34 decacorns currently in the U.S., the most notable of which are SpaceX, Stripe, Juul, and Reddit. More: - Decacorns remain far rarer than unicorns, which have crossed the 1,200 mark thanks to the 787 who joined the club in 2021.
- Despite their allure, even decacorn startups seem to be struggling due to heightened interest rates and inflation.
- Brex, a payments fintech firm last valued at $12.3B, announced two rounds of layoffs in recent years, laying off 11% of the workforce in 2022 and 20% in 2024.
- While the unicorn and decacorn creation count has slowed down, VCs believe the next group will emerge from the AI sector.
| | | |
| 4 | | Data security startup Cyera is in talks with investors to raise between $150M and $200M in fresh funding at a valuation of $1.55B, sources informed Business Insider. The new valuation is triple its last known valuation of $500M from its $100M Series B round led by Accel in June last year. More: - The New York-based startup has raised $160M in total funding to date, including a $56M Series A round led by Accel, with added support from Sequoia, Redpoint, and Cyberstarts.
- Sequoia's former senior steward, Douglas Leone, is on the board of directors of Cyera.
- Cyera has developed an AI-powered platform that uses large language models to help customers manage and secure their data.
- LifeLabs and Mercury Financial are two of its most prominent clients.
| | | |
| 5 | | VC firm Elaia held the first close of its third deeptech seed fund, called DTS3, at €60M ($65.6M). The French VC firm has already secured half the commitments of its target of €120M ($131.3M). The firm expects to back about 40 newly launched B2B deeptech startups and double down on 25 to 40 of them with follow-on funding closer to the seed stage. More: - Elaia expects to close the third fund by early 2025.
- The firm will back computing, industry, and life sciences startups through DTS3, primarily focusing on AI, quantum computing, cybersecurity, AI-driven chemistry and biology, energy, climate tech, and new materials.
- 80% of the fund's capital will be invested in Europe, with the firm free to invest the remaining 20% in global startups.
- The third fund's size is nearly double that of the two previous funds.
- Notable portfolio startups include Aqemia, Alice&Bob, and novel cancer drug biotech Mablink Bioscience.
- It exited Mablink after Eli Lilly acquired it.
| | | |
| 6 | | Today's Funding: AI - Together AI doubled its valuation to $1.25B after raising a $106M funding round led by Salesforce Ventures. Coatue Management, Lux Capital, and Emergence Capital participated in the current round.
Biotech - Tubulis, a biotech startup developing antibody-drug conjugates to treat solid tumors, closed its Series B2 funding round at €128M ($138.8M). EQT Life Sciences and Nextech Invest co-led the round, joined by Frazier Life Sciences, Deep Track Capital, Andera Partners, BioMedPartners, Fund+, Bayern Kapital, and others.
- AI-driven precision medicine biotech startup Zephyr closed its Series A funding round at $111M. Revolution Growth, Eli Lilly, Jeff Skoll, and EPIQ Capital Group provided the funding.
- Clinical-stage genetic medicine firm Lexeo Therapeutics raised $95M in fresh funding co-led by Braidwell and Adage Capital Partners, with additional support from RA Capital Management, Surveyor Capital, Novo Holdings, Invus, Longitude Capital, Omega Funds, and Woodline Partners.
Cybersecurity - Industrial cybersecurity Nozomi Networks raised $100M in Series E funding from Mitsubishi Electric Corp. and Schneider Electric SE.
Spacetech - Interlude, a lunar natural resources startup, emerged from stealth mode today with $18M in seed capital. The firm received $15M in capital through its most recent round, led by Seven Seven Six and supported by other investors, including Aurelia Foundry Fund, Gaingels, Liquid 2 Ventures, and Shasta Ventures.
| | | |
| 7 | | Quick Hits: - Meowtel is where convenience meets quality cat care. Personalized, in-home cat sitting for true cat enthusiasts.*
- New York-based Hivemind Capital Partners is raising a $50M fund to back NFT startups. The firm has already secured commitments for half the target amount.
- Sofinnova Partners is set to successfully exit its investment in portfolio company Amolyt Pharma, which received a $1.05B acquisition offer from AstraZeneca. The transaction includes an upfront purchase price of $800M and another $250M, subject to meeting certain milestones. Sofinnova led Amolyt's $138M Series C round in January 2023.
- Microsoft's former deputy chief technology officer, Lila Tretikov, joined NEA as its partner and head of AI strategy.
- VC firm 8VC hired Karen White as executive partner. She is tasked with nurturing and guiding portfolio startups. White is also set to co-found and lead a new technology emerging from 8VC.
- Jump start DevOps with DoiT & AWS. Accelerate your workloads & release pipelines while increasing automation & reliability. Get started.*
*This is sponsored content. | | | |
| Upcoming Events | | MAR
27 | | Join DTC industry leaders and CEOs at the pivotal virtual roundtable event 'Shaping the Future of DTC in 2024.' | | | | | | * 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