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| Here’s your daily VC briefing: - 🤝 Saudi Arabia plans to create a $40B AI fund in partnership with Andreessen Horowitz
- 🔻 Global M&A transactions in the AI sector dipped by 31% last year
- 💰 Eduardo Saverin’s VC firm B Capital Group closed its Opportunities Fund II at $750M
Thank you. Karan
p/karan-chafekar | |
| 1 | | The Saudi Arabian government plans to establish a $40B fund to capitalize on the AI sector boom, sources informed The New York Times. Representatives from the Public Investment Fund met with Andreessen Horowitz over the past weeks to discuss a potential partnership with the Silicon Valley-based VC firm. More: - If successful, the fund could be the second-largest VC fund, only eclipsed by SoftBank's Vision Fund, and the largest AI-focused fund in the world.
- Saudi Arabian investors invested $45B into SoftBank's $100B Vision Fund.
- The new fund highlights Saudi Arabia's ambition to diversify from its oil-based business.
- The fund will likely be launched in the second half of 2024.
Zoom out: - The Public Investment Fund has assets worth more than $900B under management.
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| 2 | | In 2023, there were 190 global M&A transactions involving AI startups, per Crunchbase. 
What the numbers say: Global M&A transactions in the AI sector slumped by 31% compared to 2022's tally of 276. In Q4 2023, dealmaking hit the slowest pace since Q1 2019, with just 39 deals announced in the last three months of the year. Relevance: Data storage and management firm Databricks' $1.3B acquisition of MosaicML last June was the largest M&A transaction in the sector. Other notable acquisitions include Thomson Reuters' $650M purchase of AI legal research technology firm Casetext and Travelers Insurance's $435M acquisition of Corvus Insurance, which uses AI to predict and prevent cyber risks. So far this year, 43 M&A deals have been completed, including Veradigm's acquisition of ScienceIO for $140M. What happened: M&A transactions declined last year despite the mounting interest in the AI sector. Buyers might have stayed away due to the rocketing valuations of AI startups. | | | |
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| 3 | | IVP secured $1.6B in capital commitments from investors for its 18th fund, per Fortune. The firm intends to back high-growth startups, especially ones in the AI sector. More: - The firm is undeterred by the recent down cycle in the VC sector and remains focused on the company's adage: Stick to the strategy, even in a downturn, and that's how you stay alive.
- IVP believes that startups with strong fundamentals, clear vision, and efficient operations can attract funding and accelerate growth, while the overfunded ones will struggle.
- The firm advises startups to aim for long-term sustainable growth and operational efficiency.
- Notable investments include Snapchat, Netflix, Crowdstrike, Perplexity AI, Glean, Twitter, Jasper, Grammarly, Discord, Coinbase, GitHub, Klarna, and Care.com.
- Last August, IVP opened an office in London, led by general partner Eric Liaw and re-joining partner Alex Lim.
Zoom out: - The firm's founder, Reid Dennis, passed away last week at 98.
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| 4 | | Facebook co-founder Eduardo Saverin's VC firm B Capital Group closed its Opportunities Fund II at $750M. The new fund is nearly twice the size of its predecessor, which closed at $415M in 2020. The latest fund aims to back healthcare, technology, and climate technology startups across the U.S. and Asia. More: - The firm roped in Boston Consulting Group to guide portfolio companies and accelerate their growth.
- B Capital's latest fund made its first investment in June 2023, doubling down on existing portfolio contract intelligence company Icertis.
Zoom out: - Saverin co-founded B Capital Group along with investor Howard Morgan and former Bain Capital executive Raj Ganguly in 2016.
- The firm has about $6B worth of assets under management.
- Last year, the firm closed its Growth III Fund at $1.2B.
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| 5 | | Israeli VC firms raised fresh funds worth $1.52B in 2023, down 73% YoY, per Calcalist. The number of funds announced also dropped by 66%. VC fundraising seems to be on the rebound this year, with investors already bagging capital worth $1B. Israeli VC firms have $10B in dry powder available for deployment, of which $2.38B is earmarked for new investments and $7.7B for follow-on funding rounds into existing portfolio companies. More: - VC fundraising was the lowest since 2015.
- Three funds, namely Qumra Capital IV, TLV Partners V, and Viola Growth IV, accounted for about 51% of the total capital raised last year.
- Local institutional investors' capital allocation for high-tech startups dipped by 70% from $486M in 2022 to $143M in 2023.
- Several notable funds have been raised in 2024, including a $500M fund by Team8, $250M by Red Dot Capital, and $106M by Ibex Investors.
Zoom out: - Israel has about 226 VC funds with an estimated cumulative assets under management worth $29B.
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| 6 | | Today's Funding: Biotech - Engrail Therapeutics raised $157M in Series B funding to further advance its neuropsychiatric treatment through clinical development stages. F-Prime Capital, Forbion, and Norwest Venture Partners co-led the latest funding round, joined by RiverVest Venture Partners, Red Tree Venture Capital, Ysios Capital, Longwood Fund, Eight Roads Ventures, and Pivotal Life Sciences.
Foodtech - Food delivery startup raked in $700M in fresh funding from investors through SAFE notes. New Enterprise Associates, GV, and Dragoneer Investment Group participated in the funding round.
Fintech Healthcare - Round13 Capital led a $33M Series B funding round into PocketHealth Inc., a startup exploring the use of AI in healthcare. Deloitte Ventures and Samsung Next participated in the round along with existing investors Radical Ventures and Questa Capital.
- Wearable medical ultrasound technology developer Flosonics Medical secured $20M in Series C funding led by New Leaf Venture Partners. Previous investors Arboretum Ventures, Genesys Capital, and iGan Partners joined the funding round.
Media and entertainment - Audio platform Pocket FM raised $103M in Series D funding at a valuation of $750M. Lightspeed Ventures led the round, with additional support from Stepstone Group.
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| 7 | | Quick Hits: - Sign up for real-time, easy-to-understand business credit alerts and get the insights you need to help you reach your business goals.*
- King River Capital, Immutable, and Polygon Labs earmarked $100M for a new Inevitable Games Fund that aims to back early-stage Web3 gaming startups.
- Diagnostic testing services healthtech startup Gene Solutions plans to raise $70M this year to fuel its Southeast Asia expansion plans.
- Former JPMorgan Chase banker Ryan Holsheimer is launching a new VC firm, Admiralty Capital Group. The early-stage startups-focused firm plans to raise capital for its debut fund by the end of June and start investing by the third quarter.
- Kaya Founders secured over $18M from investors towards its two latest funds, which aim to back 30 to 40 early-stage startups across the Philippines and Southeast Asia.
- Gülsah Wilke took up the role of partner and head of the German office at DN Capital, a Calif.-based early-stage VC firm.
- Visa and Mastercard have reached a groundbreaking $5 billion settlement, reshaping the landscape of financial transactions as we know it.*
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Christopher Hachey | |
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