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| Here’s your daily VC briefing: - 💰 Late-stage startups are raising smaller follow-on rounds so far this year
- 🔻 Fintech funding continued to slide in Q1 2024, plummeting by 16% QoQ
- 📝 Shasta Ventures is seeking approval from LPs for a continuation fund
Thank you. Karan
p/karan-chafekar | |
| 1 | | A Crunchbase analysis showed that late-stage startups are raising smaller follow-on rounds so far this year. The latest trend contradicts the expectation of escalating round sizes with each subsequent financing. More than half of the companies reported raising less in their latest financing compared to their previous venture series round More: - Per Crunchbase, about 15 American startups raised Series E or Series F funding rounds this year.
- Animal-free dairy proteins maker Perfect Day's recent $90M Series E round was less than a third of its $350M Series D round from 2021.
- Only five of the 15 companies raised a larger follow-on round, including security testing platform Bugcrowd's $102M Series E financing and cybersecurity asset inventory platform Axonius' $200M Series E extension round.
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| 2 | | Fintech funding continued to slide in Q1 2024 despite growth in the broader venture funding sector, per CB Insights' State of Fintech Q1'24 Report. 
What the numbers say: In Q1 2024, funding for the fintech sector slumped by 16% QoQ to $7.3B. While the deal value declined, the number of deals increased by 15% in the same period, indicating that investors are writing smaller checks. In the same period, the overall venture capital sector witnessed an 11% growth in deal value. Relevance: The average deal size in fintech was down 18% YTD compared to full-year 2023, touching $11M in the first three months of this year. The fintech sector saw 12 mega deals of more than $100M, bagging 26% of the total share of capital. British challenger bank Monzo's $431M Series I round was the largest deal in the quarter. What happened: About 20% of the capital went to mid- and late-stage rounds, up from 18% in the full year 2023. Funding increased by 22% QoQ in Europe, ending Q1 at $2.2B. Meanwhile, funding declined 11% QoQ to $3.3B in the U.S. | | | |
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| 3 | | Oil and gas giant Chevron has committed $500M to the third fund launched by its VC arm. The Future Energy Fund III will invest in renewable energy technologies, industrial decarbonization, emerging mobility, energy decentralization, and circular carbon economy. More: - In addition, the firm will invest in startups working on novel low-carbon fuels, advanced materials, and transforming carbon into higher-value products.
- The VC division will write initial checks ranging from $1M to $5M in Series A to Series C startups.
- Chevron Technology Ventures aims to help the parent company diversify its business and bag opportunities in emerging technologies.
- The VC firm debuted its first future fund in 2018 and followed it up with a $400M second fund in 2021.
- To date, the firm has backed 30 startups, including carbon capture startup Carbon Clean, fusion startup Zap, and EV charging firm ChargePoint.
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| 4 | | Shasta Ventures is seeking approval from its limited partners to roll up the existing portfolio stakes into a new continuation fund. The VC firm needs approval from at least two-thirds of the LPs to go ahead with the new fund. The valuation of the continuation vehicle is expected to be about $562M, or 65% of its portfolio valuation from 2023 Q3. More: - Investors have the option to sell or roll up their stake in the continuation fund.
- StepStone has offered to purchase any equity stakes being sold by existing LPs and will contribute additional capital for follow-on investments.
- The VC firm has been unsuccessful in raising capital for its sixth fund amidst a tough fundraising environment and a lack of exit options.
- Shasta has proposed a management fee of 1% annually for the new fund with an upper cap of $5M per year.
- The aggregate fees for the fund are $15M, with about $10M in transaction costs.
- The new fund is expected to have a base carried interest of 10%, which could reach up to 25% based on performance.
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| 5 | | Wellington Management closed its first climate tech-focused fund, called Climate Innovation Fund, at $385M. The fund aims to back Series B to Series D-stage startups developing software, data, AI, and hardware technologies to mitigate climate change. Wellington expects to back about 15 to 20 startups, primarily across North America and Europe. More: - Wellington will invest in startups specializing in smart buildings, energy transition, mobility, agriculture, and industrial automation.
- The Boston-based investment firm has already backed circular economy service Trove Recommerce, energy data provider Arcadia, electrical panel startup Span, mushroom and protein-based food products maker Meati, robotics startup Amp Robotics, and energy analytics provider Orennia.
- The global investment firm has about $1.1T worth of assets under management.
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| 6 | | Today's Funding: Agtech - AI-powered precision agricultural spraying products maker Greeneye Technology bagged $20M in fresh funding led by Deep Insight. Other investors participating in the round include Syngenta Group Ventures, JVP, Orbia Ventures, and Iron Nation.
Biopharma - Obesity and metabolic disease medicines maker Metsera emerged from stealth mode with a $290M Series A funding round led by ARCH Venture Partners and Population Health Partners. Other investors participating in the round include F-Prime Capital, GV, Mubadala Capital, Newpath Partners, and SoftBank Vision Fund 2.
Fintech - Spend management fintech startup Ramp extended its Series D funding round with an additional capital of $150M. The firm achieved a post-money valuation of $7.65B. Khosla Ventures and Founders Fund co-led the round, with additional backing from Sequoia Capital, Greylock, 8VC, Thrive Capital, General Catalyst, D1 Capital, and others.
Foodtech - German grocery delivery startup Flink raised €100M ($106M) in fresh funding led by existing backers Rewe Group, Bond, Northzone, and Cherry Ventures.
Logistics Manufacturing - Magnus Metals, a startup pioneering additive manufacturing for metal alloys, secured $74M in Series B funding co-led by Entree Capital and Target Global. Investors participating in the round include Caterpillar Ventures, Tal Ventures, Deep Insight Ventures, Lumir Ventures, Discount Capital, Next Gear Fund, and others.
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- SpaceX alums Tom Ochinero and Achal Upadhyaya launched a new venture firm called Interlagos Capital along with Sequoia's top finance leader Spencer Hemphill, per filing documents seen by TechCrunch.
- Wiz is set to acquire cloud security startup Lacework for a price of $150M to $200M, which represents a steep drop over its peak post-money valuation of $8.3B.
- VC firm Canaan expanded its biopharma-focused funds by an additional $100M. The firm has raised about $1B worth of funds since 2023.
- Underscore VC closed its third fund at $58M, slightly above its initial target of $50M.
- Norwegian sovereign wealth fund Government Pension Fund Global reported a $110B (1.21T kroner) profit in the first quarter of this year.
- Buoyant Ventures hired Cultivian Sandbox's former vice president, Alex Behar, as its principal investor.
- Investors are pressuring grocery delivery startup Getir to cut its losses, prompting the Turkish startup to consider selling off assets and exiting non-core markets.
- Pattern released a 30-page insights report for beauty brands selling on Amazon.*
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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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