| Hey Insiders, Today we are taking a look at why Sequoia downsized two funds, why M12 is liquidating portfolio stakes in secondary markets, and Surf Air's direct listing. We have also rounded up the top late-stage funding rounds of this week. I hope you enjoy today's edition! Karan
p/karan-chafekar | |
| 1 | | Sequoia Capital downsized two of its recent funds due to a downturn in the VC market. The Silicon Valley-based VC firm lowered its crypto fund from $585M to $200M. Additionally, it halved its ecosystem fund from $900M to $450M. Sequoia told FT, "We made these changes to sharpen our focus on seed-stage opportunities and to provide liquidity to our limited partners." More: - Sequoia made the decision in March and returned the additional capital back to its limited partners.
- The decision comes amid lower returns from VC funds, with several investors anticipating further markdowns.
- The firm wrote off its entire $150M investment in FTX when the cryptocurrency exchange declared bankruptcy late last year.
- Sequoia is facing criticism over its 2021 decision to restructure all its sub-funds under a single fund structure that would have supposedly allowed it to amplify its gains by holding onto public stocks of portfolio companies long after their public debuts.
Zoom out: - This is the latest restructuring change since Sequoia split off its Chinese and Southeast Asian investment divisions into independent units in early June.
- Sequoia has seen many high-profile departures in recent times, including longtime partner Michael Moritz who is leaving to focus on its independent wealth management business Sequoia Heritage.
- Earlier this week, it laid off one-third of its talent team.
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| 2 | | 
VCs deployed $829.4M in late-stage and beyond global startups between July 22 and July 28, per Crunchbase data. The energy sector raked in 38% of the funding this week. The biotech, AI, and analytics sectors nabbed 30%, 11%, and 7% of the financing, respectively. Here are the top five largest rounds announced this week: - Chinese solar panel maker Astronergy nabbed $280M (2B yuan) in Series C funding.
- Palo Alto, Calif.-based biopharmaceutical startup Kriya Therapeutics extended its Series C funding round with $150M in additional funding, bringing the total raised under the round to $430M. Patient Square Capital led the funding round.
- AI-powered neurovascular, cardiac, and vascular diseases diagnostics and treatment platform RapidAI secured $75M in Series C funding led by Vista Equity Partners.
- Closed-circuit camera systems startup Solink nabbed $60M in fresh funding. The Series C round was led by Goldman Sachs and also included Omers Ventures and BDC IT Ventures.
- San Francisco, Calif.-based bioengineering startup Ossium Health nabbed $52M Series C funding led by CPMG. Vivo Capital, First Round Capital, Manta Ray Ventures, Alumni Ventures, and others joined the fundraiser.
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| 3 | | Microsoft's venture arm M12 is reportedly liquidating its stakes in some portfolio startups on secondary exchanges, sources told Business Insider. Some of the transactions are occurring at a 30% to 70% discount over their most recent valuations. A Microsoft spokesperson confirmed it had offloaded stakes in less than 10 portfolio startups in the fiscal year 2023. More: - M12 has deployed over $1B in capital since its formation and has 100 startups in its portfolio, including aerospace startup Vertical Aerospace and cloud company CloudSimple.
- While M12 liquidated the portfolio stakes at significant discounts, it did not report big losses.
- M12's spokesperson added, "Company valuations are not trading at their 2021 valuations, but M12 still profited."
- Due to the market dip, the firm changed its business model from a traditional VC focused on maximizing return on investment to a corporate venture fund that will make investments that strengthen the parent group's ecosystem.
Zoom out: - M12's peer Tiger Global is also liquidating its portfolio stakes in secondary markets.
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| 4 | | Surf Air Mobility held a direct listing of its shares on the New York Stock Exchange. Shares of the venture-backed aviation startup opened at $5, one-fourth of its reference price of $20. Share prices plunged to $3.15 by the close of the trading day, down 84% over the reference price. More: - Despite the dip, investors welcomed Surf Air's listing, hoping it would thaw the frozen IPO market.
- ff Venture Capital's founding partner John Frankel said, "The broadening of the market gives us comfort that the bear market might be behind us, and with it the broadening interest in public markets for high growth private companies."
- Ernst & Young's U.S. VC leader Jeffery Grabow expressed skepticism, saying that the market is still muted from a VC perspective.
- Surf Air posted a $20.6M loss in the first quarter of this year.
- The firm canceled its SPAC merger with Tuscan Holdings Corp. II in 2022, which would have been worth $1.4B.
Zoom out: - 68 companies held their IPO listings in the first half of this year, up 26% YoY.
- Dealogic data shows that the second quarter of 2021 holds the record for the highest amount raised through IPO listings in the U.S. when 115 IPOs saw companies rake in $44B.
- IPO listings have dipped consistently every quarter since, hitting a low of 10 IPO listings worth $1.4B in Q4 2022.
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| 5 | | British VC firm A/O PropTech held the first close of its second fund at €100M ($110M), against a target of €250M ($275M). The firm is looking to back startups across the U.K., Europe, and North America. More: - The firm expects to write checks averaging between €3M ($3.3M) and €8M ($8.8M) in seed to Series B stage startups.
- A/O PropTech will primarily invest in supply chain, materials manufacturing, building operations and management, decarbonization, electrification, digitization, automation, AI, and big data management startups across the real estate and construction sectors.
- With the capital raised so far under Fund II, the firm has already backed home energy assessment startup Enter and an undisclosed startup developing a software platform to solve skilled labor shortages.
- The firm backed 22 startups through its previous fund, including SPAN, Satellite Vu, PassiveLogic, 011H, and Plentific.
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| 6 | | Today's Funding: Advertising - Digital out-of-home (DOOH) advertising startup Beeyond Media closed its seed round with $10M in funding led by RAU Capital's Ricardo Uribe.
Energy - Solar startup Bright raised $31.5M in Series C funding led by the Danish SDG Investment Fund.
Fintech - Effectiv, a fraud detection platform for financial institutions, secured an additional $4.5M in seed funding led by Better Tomorrow Ventures with support from Accel. The round brings the total raised under the seed round to $9M.
Healthcare - Surgical navigation platform Proprio secured $43M Series B from Wheelhouse Capital, DCVC, Bold Capital Partners, and others.
- Pet telehealth startup Airvet nabbed $18.2M in Series B funding led by Mountain Group Partners.
- British remote patient monitoring startup Entia nabbed £16M ($20.6M) in Series A funding co-led by BGF and Parkwalk.
- Family caregiver app Helpful raised $7.5M in seed funding from Redesign Health.
Information Technology - Managed IT services and cloud computing startup Visual Edge IT secured $40M from Encina Private Credit and funds managed by Ares Management.
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| 7 | | Quick Hits: - Don't miss your chance to invest in Virtuix, one of the fastest-growing startups in the booming gaming market. Invest by 8/10.*
- A new report from crypto VC fund Lattice shows that only 5% of crypto startups that secured funding in 2021 managed to achieve product-market fit. 70% of the projects are still stuck in development while another 20% have shut down completely.
- Battery Ventures promoted Danel Dayan and Max-Julian Kaye to principal roles. Additionally, Becca Jones was promoted to the vice-president role.
- Nikhil Gahrotra is set to depart Apollo Global Management for CVC Capital Partners. Gahrotra currently holds the partner title at Apollo, which he joined in 2016.
- Molten Ventures, formerly known as Draper Esprit, launched a new €50M ($55M) fund to back Irish startups.
- Say goodbye to inflammation, joint pain, dry eyes, and discomfort by adding this Antarctic "supernutrient" to your diet.*
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Eduardo Garcia | |
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