| Here’s your daily VC briefing: - 💰 StepStone raised a $3.3B fund to buy discounted stakes in existing VC funds
- 🚫 13% of fund managers are not planning to raise new funds, per a Pitchbook survey
- 💵 Cisco Investments launched a $1B AI investment fund
Thank you. Karan
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| 1 | | StepStone Group, a U.S. private capital firm, closed a $3.3B fund to scoop up discounted stakes in existing venture capital funds. The new fund is 25% larger than its predecessor, which was already the industry's largest. The fundraising comes at an opportune time, as many investors who poured record amounts into venture capital during the low-interest rate environment are now to dilute their holdings amid a dearth of IPOs and acquisitions. More: - This liquidity crunch has created opportunities for firms like StepStone to purchase fund stakes at significant discounts, averaging around 30% below net asset value over the past two years, per partner Brian Borton.
- Another StepStone partner, John Avirett, highlighted the "massive and growing" market opportunity, with over $1T stuck in mature venture funds as exit routes remain limited.
- The latest fund will enable StepStone to buy stakes from pension funds, sovereign wealth investors, family offices, and individuals.
- StepStone recently acquired stakes in funds managed by Andreessen Horowitz, Tiger Global, DST Global, Insight Partners, Lightspeed Partners, and Thrive Capital, according to securities filings seen by Techcrunch.
- Additionally, the company has also made direct startup investments, acquiring stakes in U.K. digital bank startup Monzo.
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| 2 | | 13% of venture general partners (GPs) indicate they do not plan to raise another fund, according to PitchBook's recent VC Tech Survey. 
What the numbers say: This figure has doubled from the previous survey in H1 2023, when only 6% expressed no intention to raise additional funds. The fundraising difficulties stem from a pullback by limited partners (LPs), who have become increasingly cautious about overexposure to the asset class. In mid-2023, nearly half (44%) of the surveyed venture firms had postponed their fundraising plans due to the hesitancy shown by LPs. Relevance: The VC funding pullback has disproportionately impacted emerging managers, particularly those who entered the venture space in 2019 or 2020, when the LP market was more favorable. Many of these firms are struggling to raise second funds without significant cash distributions to LPs, as exits have been relatively slow in the first half of 2024. Approximately 38% of venture capital firms disappeared from dealmaking in 2023. This challenging environment has driven increased activity in the secondaries venture market, with a quarter of GP respondents becoming "more active" in this space to demonstrate returns to investors. Despite these headwinds, GPs remain optimistic about the 2023 and 2024 vintages, expecting them to be the strongest vintage return years since 2019. | | | |
| 3 | | A federal appeals court has ruled against Fearless Fund, upholding a preliminary injunction on the firm's Strivers Grant program. Last August, the American Alliance for Equal Rights (AAER) challenged the grant, which awards funding to businesses owned by Black women, arguing that it discriminates against non-Black women founders. More: - The court ruling states that the Strivers Grant likely violated the Civil Rights Act of 1866, which prohibits the use of race in contracts.
- Fearless Fund, an Atlanta-based VC firm, vowed to continue fighting the lawsuit and potentially take it to trial.
- The new decision overturned a federal district court ruling that ruled in favor of Fearless Fund, claiming that the grant is protected under the First Amendment since it was a charitable donation.
- The firm's lawyer, Alphonso David, expressed disappointment with the ruling, stating that it halts private charitable support for racial or ethnic groups for the first time in over 150 years.
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| 4 | | Cisco Investments, the corporate venture capital arm of Cisco, has launched a $1B AI investment fund to support the startup ecosystem and drive the development of generative AI and large language models (LLMs). Beyond the financial commitment, Cisco aims to collaborate and co-innovate with portfolio companies, positioning itself as an "agnostic provider and platform player in AI." Cisco has already committed $200M to the fund out of the $1B. More: - Cisco has already backed several high-profile AI recently, including French generative AI startup Mistral AI, security-focused LLM developer Cohere, and data-centric AI application training and validation tools provider Scale AI.
- Cisco's investment strategy targets companies addressing customer needs, solving complex technical challenges, and having strong teams and cultural fit.
- The latest fund positions Cisco to capitalize on the burgeoning AI market, estimated to reach $137B by 2030, up from $20.9B this year.
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| 5 | | Investment firm WndrCo secured about $460M in capital commitments towards its first venture capital fund. The capital is spread across new Seed and Venture funds targeting startups in areas such as the future of work, consumer technology, cybersecurity, and developer infrastructure. More: - Former chairman of Walt Disney Studios and co-founder of DreamWorks SKG Jeffrey Katzenberg and New Enterprise Associates' principal Sujay Jaswa are the founding partners of WndrCo.
- The firm, which manages $1.3B in assets across its Build, Venture, and Seed strategies, aims to back founders reshaping industries and cracking important problems.
- WndrCo typically acquires a majority controlling stake in underappreciated tech startups and transforms them into category leaders.
- Its portfolio includes companies like Robinhood, 1Password, Airtable, Databricks, Quince, Socket, Twelve Labs, and Figma.
- WndrCo typically invests about $500,000 in 15 seed-stage startups every year.
- With the new fund, the firm has already backed three startups, including generative AI platform Writer and marketing technology startup Alembic.
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| 6 | | Today's Funding: Biotech - Biotech startup Vilya raised a Series A funding round of $71M. ARCH Venture Partners led the round, with additional support from NVentures, Menlo Ventures, Madrona, Lifeforce Capital, and Altitude Life Science Ventures.
Blockchain - Modular blockchain base layer firm Avail closed its Series A funding round at $43M. Altos Ventures, Alliance DAO, Hashkey, Elixir Capital, Spark Digital Capital, and RW3 Ventures participated in the funding round.
Energy Fintech - Cross-border payments technology firm Nium secured a $50M Series E funding round at a post-money valuation of $1.4B. Investors participating in the round include BOND, NewView Capital, and Tribe Capital. The current financing was a down round that represents a 30% discount over Nium's previous valuation of $2B.
Healthcare - AI-powered virtual physical therapy startup Sword Health bagged $30M in fresh funding from new and existing investors, including Khosla Ventures, at a valuation of $3B. Sword Health's valuation surged by 50% compared to its $2B valuation at its Series D round in 2021. In addition to the primary round, the company also facilitated a $100M secondary transaction that allowed employees and early investors to dilute their holdings.
Software - Content management system software developer Storyblok closed its Series C funding round at $80M. Brighton Park Capital led the round, with additional support from HV Capital, Mubadala Capital, 3VC, and firstminute capital.
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| 7 | | Quick Hits: - Join industry's leading AI conference - free passes available! Register Now! Passes are selling quickly.*
- VCs invested $777M in crypto startups in the month of May, 17% less compared to the preceding month's tally. In May, blockchain infrastructure startups bagged $630M, representing 81% of the total funding invested in the sector.
- Life sciences-focused VC firm Brandon Capital secured $180M in capital commitments towards its sixth fund, which aims to back early-stage startups across Australia and New Zealand.
- Strategic advisory firm Hakluyt & Co.'s venture capital arm, Hakluyt Capital, crossed the $50M target for its debut VC fund. Limited partners contributing capital to the fund include Abu Dhabi sovereign wealth fund Mubadala Investment, RIT Capital Partners, Blackstone executive David Blitzer, and billionaire Yuri Milner. Initial check sizes will range between $2M to $5M.
- Chris Scullin left Bain Capital to take up the principal role at Norwest Venture Partners. He is tasked with leading the firm's growth equity team, focusing primarily on software, data, and tech services. Scullin's appointment comes just two months after Norwest closed its 17th fund at $3B.
*This is sponsored content | | | |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Karan Chafekar | |
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