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| Here’s your daily VC briefing: - 🐌 Pitchbook forecasts a slow annual growth rate of 2.9% for VC fundraising through 2028
- 🚀 AI sector startup valuations outpaced other verticals, with median early-stage valuations touching $70M
- 📉 Global insurtech startup funding slumped by 18% QoQ in Q1 2024
Thank you. Karan
p/karan-chafekar | |
| 1 | | Pitchbook expects VC fundraising to match the recent highs only after 2028, as it anticipates a modest annual growth rate of 2.9% through 2028. The expected growth rate for VC fundraising is less than half that of other private capital strategies, including private equity, private debt, and real asset funds. This year, VCs are expected to raise less than $200B in capital towards funds, 48% less compared to the record high of 2021. More: - The fundraising outlook is dependent upon a recovery in startup valuations.
- If valuations fail to recover, the assets under management held by VC firms could plateau over the next five years.
- Pitchbook expects the AUM to grow to $5.6T through 2028 under the best-case scenario and to $4.6T under the base-case scenario.
- In Q3 2023, VC fund performance was at -4.7%.
- While some established VCs continue to raise billion-dollar vehicles, emerging managers are struggling to win over LPs.
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| 2 | | Median pre-money valuations for early-stage and late-stage startups in the AI sector surged to $70M and $100M, respectively, per Pitchbook's Q1 2024 U.S. VC Valuations Report. 
What the numbers say: The valuations of AI startups have outpaced all other verticals, as many are struggling to raise capital. About 24.7% of all deals in other sectors were flat or down rounds. Relevance: AI-powered search engine Perplexity secured $62.7M at a $1.04B valuation, whereas AI cloud computing firm Lambda raised a $320M Series C funding round at a $1.5B valuation. What happened: AI has displaced fintech from the top spot in median pre-money valuations due to the rising hype about the sector and the shift in interest rates. The surge in investor interest towards the AI sector has created attractive opportunities in other sectors, including fintech, where competition for deals is comparatively lower. 186 Ventures' managing partner Giuseppe Stuto believes that firms are rushing into AI startup deals without understanding the underlying business. | | | |
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| 3 | | VC firms invested $0.9B in insurtech startups in Q1 2024, per CB Insights. Funding for the sector reached its lowest quarterly level since 2018. While overall funding dipped, the median deal sizes increased by 19% from $4.2M in 2023 to $5M, indicating that investors are investing heavily in potential opportunities but inking fewer deals. More: - Median early-stage deal sizes have increased to $3.2M so far this year.
- The funding dip impacted P&C startups within the insurtech sector the most, with funding plummeting by 25% QoQ.
- No mega deals of more than $100M were completed in Q1 2024 for the first time since 2018.
- The most notable deals to close in Q1 were pricing platform Hyperexponential's $73M Series B funding round and embedded insurer ELEMENT's $54M Series C round.
- M&A activity declined from 13 in Q4 2023 to five in Q1 2024.
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| 4 | | Crypto investment fund Polychain Capital began distributing 44% of the Polychain Venture Fund II to investors this week, sources informed Bloomberg. Earlier this year, the firm paid out half of the value of its first fund to investors. More: - Former Coinbase executive Olaf Carlson-Wee founded Polychain Capital in 2016 and leads it as its CEO.
- Polychain raised $175M for its first fund in 2018 and $300M for the second in 2019.
- The San Francisco, Calif.-based firm has about $6.7B worth of assets under management.
- It held the first close of its fourth fund at $200M in July 2023.
Zoom out: - Polychain's competitors Pantera Capital and Paradigm are raising a $1B and $850M fund, respectively.
- GSR's co-founder and president Rich Rosenblum believes distributions are a good way for funds to show "that they do have liquidity to return capital, and not just an ability to demonstrate mark-ups in illiquid positions."
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| 5 | | Social commerce platform Meesho raised $275M in fresh funding, per securities filing documents seen by TechCrunch. According to sources, Meesho was valued at $3.9B at the latest round, about $1B less than its peak valuation of $4.9B from 2021. The new round is part of a larger financing round, which could increase to $500M and will likely include secondary transactions. More: - The firm has raised more than $1.2B in total funding to date from Meta, Fidelity, Peak XV, Prosus Ventures, B Capital, and SoftBank.
- Last year, WestBridge Capital purchased Meesho shares from the firm's early-backer Venture Highway.
- The Indian startup has 150M transacting users and a gross merchandise value (GMV) of over $5B.
- Meesho's platform has about 120M listings from 440,000 annual transacting sellers.
- Meesho's average order value is typically below $4.2 (350 rupees), well below the industry average of $12 (1,000 rupees).
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| 6 | | Today's Funding: Biotech - Immune-mediated diseases-focused biotech startup Attovia Therapeutics bagged $105M in Series B funding led by Goldman Sachs Alternatives. Other investors participating in the round include Cormorant Asset Management, Nextech Ventures, Redmile Group, EcoR1 Capital, Logos Capital, Frazier Life Sciences, venBio, and Illumina Ventures.
- ArkeaBio, a startup developing vaccines to reduce methane emissions from livestock, raised $26.5M in Series A funding led by Breakthrough Energy Ventures and joined by Grantham Foundation, AgriZeroNZ, Rabo Ventures, Overview Capital, and others.
- Medical smart endoscopes maker MedInTech Inc. raised a Series B investment of $14.6M from Atinum Investment, FuturePlay, and Smilegate Investment.
Fintech - Financial accounting software maker Canopy secured $35M in fresh funding led by Ten Coves Capital and Ankona Capital. Pelion Venture Partners, Tenaya Capital, and NewView Capital backed the funding round.
Marketplace - Diamond and gemstone marketplace startup Nivoda raked in $30M in Series B funding led by Avenir Growth Capital. Headline, Abstract Ventures, and Canaan Ventures supported the funding round.
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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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 | JobsOhio exists to help companies and their people thrive and make Ohio your competitive advantage. | |
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