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| Here’s your daily VC briefing: - 🔀 GGV announced two separate brands after splitting the U.S. and Asia business
- 🚀 IPOs are picking up in the U.S. as the valuation spread narrows
- 🎯 Cognition Labs is eyeing a six-fold jump in valuation at the upcoming funding round
Thank you. Karan
p/karan-chafekar | |
| 1 | | VC firm GGV Capital rebranded the Asia operations unit to Granite Asia and the U.S. business to Notable Capital. The firm renounced the GGV Capital brand, instead adopting two new identities. The split, announced six months ago, can be attributed to the rising geopolitical tensions between the U.S. and China. More: - Jenny Lee and GGV's former managing director Jixun Foo will lead the Asian business, while GGV's co-founder Hans Tung and Jeff Richards will lead the U.S. entity.
- Granite Asia will invest across China, Japan, South Asia, Australia, and Southeast Asia, whereas Notable Capital will invest in the U.S., Europe, and Latin America.
- GGV Capital's $9.2B assets under management were split between the two entities, with a portfolio worth $5B going to Granite Asia and $4.2B to Notable Capital.
- Fresh from the split, Granite Asia is planning to raise capital from investors for its private debt fund.
Zoom out: - GGV followed in the footsteps of Sequoia Capital, which split the company into three separate entities last year.
- The U.S. team kept the Sequoia Capital name, while Sequoia India & Southeast Asia rebranded to Peak XV Partners and Sequoia China rebranded to HongShan.
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| 2 | | The recent string of successful IPOs in the U.S., including Reddit and Astera Labs, suggests there is a pent-up appetite from investors for new stocks. 
What happened: Class V Group's co-founder, Lise Buyer, believes investors are eager for new stocks as long as they are priced appropriately. The revival of the IPO market is down to the bid-ask spread in valuations. The bid-ask spread had widened in 2022 but is gradually narrowing now, indicating a favorable environment for IPOs. Buyer believes companies must first prove themselves "and then six months from now go out and do another offering at a higher valuation." What the numbers say: Reddit debuted at a valuation of $6.4B, which is much lower than its peak valuation of $10B from 2021. Share prices of Reddit surged by 48% on the first day of trading, suggesting that the social media company could have priced the shares at a higher price. The same is true for Astera, which saw a 72% uptick in stock prices on the first trading day. Astera debuted at a valuation of $5.5B, which is nearly twice its last private valuation of $3.15B from 2022. Both Reddit and Astera listed less than 12% of its shares. | | | |
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| 3 | | According to a recent survey conducted by Kauffman Fellows, 53% of venture capital firms expect to increase their investments this year compared to 2023. Only 6% of respondents anticipate a reduction in capital deployment from 2023 levels, per Axios. Established fund managers are more inclined to increase capital deployment than emerging managers. More: - The cautious investment stance observed by VCs over the last two years due to economic uncertainty seems to be receding.
- Additionally, established fund managers are more optimistic (52%) about the prospects of raising new funds in 2024 than emerging ones (49%).
- VCs believe investments from institutional investors, such as pension funds, insurance companies endowments, foundations, and family offices, will decline this year.
- Meanwhile, VCs expect sovereign wealth funds to ramp up their capital deployment.
- The exit environment is expected to remain challenging this year, with VCs turning more towards the secondary market for liquidity to make up for the lack of IPOs.
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| 4 | | Venture capital firms are embracing new AI tools to identify and evaluate promising startup investment opportunities and streamline research. The pace of AI adoption has increased due to the availability of generative AI tools. VCs are leveraging AI tools to build dashboards, analyze large datasets, and assess investment opportunities. Despite the advancements, AI tools need human intervention to make investment decisions, communicate with founders, and write term sheets. More: - Sierra Ventures developed an AI tool in-house that categorizes the metrics for potential investment opportunities into green, yellow, or red signals.
- The tool helped the company identify an investment opportunity in an older healthcare software startup, which it would have otherwise overlooked.
- Amplify Partners uses AI to speed up research and extract relevant information from large documents.
Zoom out: - The U.S. SEC has warned firms to ensure the accuracy of claims made by AI tools.
- Gurbir S. Grewal, the director of the SEC's division of enforcement, said, "If you claim to use AI in your investment processes, you need to ensure that your representations are not false or misleading."
- Two investment advisory firms recently agreed to pay $400,000 in civil penalties for making false and misleading claims about their purported use of AI.
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| 5 | | Cognition Labs, a startup developing a generative AI tool to help developers write code, is in talks with investors to raise fresh funding at a valuation of $2B. The new valuation represents a six-fold jump over its most recent $350M valuation from a few weeks ago when it raised $21M in fresh funding in a deal led by Founders Fund. More: - Founders Fund is reportedly planning to participate in the new round.
- The AI startup recently turned down equity financing at a $1B valuation, per the WSJ report.
- Cognition Labs initially started out as a crypto company but pivoted to AI after the launch of new generative AI solutions.
- Earlier this month, the firm announced its AI coding tool, Devin, which can autonomously complete complex coding tasks.
Zoom out: - Cognition Labs is aiming for a similar leap in valuation as other AI startups, namely French AI model developer Mistral, which hit a $2B valuation after a seven-fold jump in valuation.
- Some investors remain skeptical about the surging valuation, fearing that the industry might be headed for another bubble.
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| 6 | | Today's Funding: Energy - Lightshift Energy, formerly known as Delorean Power, bagged $100M in fresh funding from Greenbacker Capital Management. $20M of the funding was in the form of growth equity, with the remaining 80% earmarked for capital expenditure and operations.
Healthcare - Cardiovascular medical device company Protembis GmbH closed its Series B funding round at €30M ($32.3M). Segulah Medical Acceleration, XGEN Venture, and TechVision Fund co-led the funding round.
- Pediatric, anxiety, and OCD treatment InStride Health secured $30M in Series B funding led by General Catalyst. Other investors participating in the round include .406 Ventures, Valtruis, Mass General Brigham Ventures, and Hopelab Foundation.
- Nurse staffing and pharmacy referral startup Float Health raked in $10M in Series A funding. Canvas Ventures led the round with additional support from Wave Capital, Y Combinator, Burst Capital, and Also Capital.
Proptech - Furnished rental apartments provider Blueground raised $45M in Series D funding. Susquehanna Private Equity Investments led the round, with additional support from WestCap. The startup also raised a debt facility from Barclays, Morgan Stanley, Deutsche Bank, and HSBC.
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| 7 | | Quick Hits: - This company built an ice cream robot that can lower costs and increase profits for ice cream stores. Learn more about investing.*
- Pre-seed investments-focused VC firm Ascend promoted Jen Haller to the partner role. Haller joined Ascend in Jan. 2022 as a chief of staff. In the new role, she is tasked with offering guidance to portfolio startups, managing operations, and fostering community engagement.
- Panasonic allocated ~$53.9M (4.5B INR) to its CVC division, Panasonic Kurashi Visionary Fund. The fund expects to invest in startups across India, Japan, and Europe working on fostering innovation and solving global social challenges.
- Sam Bankman-Fried, the founder of bankrupt crypto-exchange FTX, was sentenced to 25 years in prison last week. He was convicted on seven criminal charges, including two counts of fraud and five counts of conspiracy.
- Visa and Mastercard have come to a historic $5 billion settlement, marking a pivotal moment for business owners. Claim your share today!*
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Karan Chafekar | |
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