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| Here's your daily VC briefing: - 🔻 LACERA lowered allocation to the VC asset class.
- 📊 CalPERS' board voted to increase allocation to private equity from 13% to 17%.
- ⚠️ Insight Partners and Madrona Ventures will exit Jama Software, which is set to be acquired by Francisco Partners.
Thank you. Karan
p/karan-chafekar | |
| 1 | | The Los Angeles County Employees Retirement Association's (LACERA) board of investments decided to lower the allocation to venture capital and growth equity asset classes from between 15% and 30% to between 5% and 25%, per TechCrunch. Currently, about 10.8% of LACERA's private equity portfolio is allocated to venture capital. More: - LACERA has invested in funds launched by Union Square Ventures, Innovation Endeavors, Storm Ventures, and Primary Venture Partners.
- The move is surprising given that LACERA's VC investments currently have the highest returns among the private equity portfolio, with a Total Value to Paid-In (TVPI) ratio of 2.08x.
- Investment officer Didier Acevedo said the market conditions and the board's need for investment flexibility prompted the adjustment.
- TechCrunch speculates that the move was made to likely free up capital for other investment strategies.
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| 2 | | The California Public Employees' Retirement System (CalPERS) decided to increase allocation to private equity from its portfolio from the current 13% to 17%, per the Financial Times. 
What the numbers say: CalPERS is also increasing its allocation to private credit from 5% to 8%. With the move, CalPERS could potentially increase its private equity and credit market holdings by $34B. At the same time, CalPERS is reducing its exposure to publicly traded stocks and bonds. What happened: Two years ago, the firm admitted it potentially missed out on up to $18B in returns after putting its private equity program on hold for 10 years. The board voted to increase its private equity and credit allocation to improve its returns and has set a 6.8% return target for its next chief investment officer. CalPERS is currently looking for a new chief investment officer after Nicole Musicco abruptly resigned from the post in September. Where to see the impact: While the $490B pension fund is increasing its exposure, it had under-allocated to the asset class by $6.83B compared to its previous target. The pension fund expects the 20-year return on private equity and private credit to be 7.9% and 7.2%, respectively. At the end of June 2023, the firm had posted annualized returns of 11.8% from private equity, 8.9% from public equities, and 2.4% from fixed income. | | | |
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| 3 | | Food, beverage, and snack giant Mondelēz launched its corporate venture arm, SnackFuture Ventures, to double down on growth-stage startups that align with the company's existing categories and markets. Mondelēz will allocate capital for investments through its balance sheet. The firm will invest in startups with at least $20M in annual revenue and are EBITDA positive. Initial check sizes will average around $2M to $3M. More: - Mondelēz has shuttered its innovation hub, SnackFutures, and its accelerator CoLab Program.
- The firm has made a minority investment in chocolate maker Hu Master Holdings through SnackFutures before fully acquiring it for $340M in 2021.
- VP and Global Head of SnackFutures Richie Gray highlighted that the venture model fit the company's vision better than the accelerator.
- Gray added, "We don't operate as a traditional fund; it's really about investing in the right businesses with capabilities and technologies relevant to our portfolio and future."
- Gray believes Mondelēz could get potential acquisition opportunities within three to four years after the initial investments.
- SnackFutures Ventures has already backed two startups, namely a cell culture-based cocoa ingredients producer, Celleste Bio, and Torr Food Tech.
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| 4 | | Insight Partners and Madrona Ventures are set to exit Jama Software, which agreed to be acquired by Francisco Partners for $1.2B. CEO Marc Osofsky will continue to lead the firm despite the change in ownership. More: - The Portland, Ore.-based startup specializes in product development software that helps clients reduce defects, delays, cost overruns, and recalls.
- Jama's software is used by 12.5 million users across the automotive, semiconductor, medical devices, financial services, industrial manufacturing, aerospace, and defense sectors.
- Notable clients include Qualcomm, SpaceX, Amazon Robotics, Eli Lilly, Canon, and Caterpillar.
- Jama received a $200M growth investment from Insight and Madrona in 2018.
- In the five years since the fundraising, Jama tripled its recurring revenue.
Zoom out: - Francisco Partners raised two funds worth $17B in 2022, of which $13.5B was allocated to the Francisco Partners VII fund and $3.3B to the Agility III fund.
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| 5 | | VC funding inflow for Indian startups slumped by 60% from $26B in 2022 to $9.5B in 2023, per the Financial Times. Despite the slump, India maintained its position as Asia-Pacific's second-largest VC and growth funding market, trailing only China. The average deal size contracted from $16M to $11M. More: - Deal volume nearly halved from 1,611 in 2022 to 880 in 2023.
- Only two Indian startups entered the unicorn club in 2023, significantly lower than the 44 unicorns minted in 2021 and 26 in 2022, per Entrackr.
- Indian startups laid off 24,000 employees in 2023, higher than 2022's tally of about 20,000.
- The interest rate hikes announced by the Reserve Bank of India and the introduction of a tax on non-resident angel investors will dampen the funding environment further.
- The RBI increased the benchmark interest rate from 4% in May 2022 to 6.5% in March 2023.
Zoom out: - The VC funding dip for India is surprising, considering that its Nifty 50 Index was up 30% last year, and foreign direct investments have steadily increased.
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| 6 | | Today's Funding: Cybersecurity Cleantech - Ecosystem Integrity Fund led a $20.75M Series B funding round into Poseidon Ocean Systems, a Canadian startup that aims to make fish farming more eco-friendly and mitigate ecosystem damage. InBC and existing investor, Export Development Canada, participated in the round.
- Sealed, a startup making homes energy efficient, raked in $30M in fresh funding led by Keyframe Capital and Cyrus Capital.
Healthcare - Hippocratic AI, a startup building safety-focussed LLM for healthcare, closed its Series A funding round at $53M. The firm was valued at $500M. General Catalyst and Premji Invest led the round, joined by Andreessen Horowitz and SV Angels.
- AI-enabled personalized surgery medtech firm Carlsmed raised $52.5M in Series C funding co-led by B Capital and U.S. Venture Partners.
Transportation - Global mobility fintech firm Moove secured $100M in Series B funding at a $750M valuation. Uber and Mubadala provided the funding.
Note: Inside.com founder and CEO Jason Calacanis is an investor in Uber. | | | |
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Vibha Chapparike | |
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