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| Hey Insiders, Here are the latest stories: - European VCs turn to secondary markets due to lack of exit opportunities
- Character.ai eyes fresh funding at $5B valuation
- Mercury Fund raises $160M fifth fund
We have also rounded up the top late-stage funding rounds this week. If you find this newsletter useful, please share it with your friends and colleagues. Thank you. Karan
p/karan-chafekar | |
| 1 | | European venture capitalists are turning to secondary markets due to the lack of exit opportunities. In the first half of 2023, there were 443 exits in Europe, down from 612 compared to the same period a year ago. More: - VCs have a growing pressure to distribute returns to limited partners, which is causing them to take whichever exit option is available, such as selling stakes on the secondary markets.
- However, European VCs are having trouble liquidating stakes in the secondary market due to the difference in the bid-ask spread.
- Investors and founders are still holding on to previous valuations despite a drop in median valuations for equity rounds in Europe.
- Investors fear that selling at a lower valuation will set the benchmark for future rounds.
- Siena Secondary Fund general partner Rain Tamm said, "Buyers want a deeper discount, but sellers are still anchored even though valuations for 2021 don't really make sense anymore. It's rather difficult to know what the company's worth if there have been less primary rounds, so we've found that valuations have been difficult to agree on."
- While the majority of the secondary transactions occur at a discount to the previous equity round, shares of the best-performing companies are selling at a premium.
Q: Should investors compromise and accept lower valuations in secondary transactions, or should they wait for more favorable deals in the future? Join the conversation here. |     | |
| 2 | | VCs deployed $1B in late-stage and beyond global startups this week between Sept. 23 and 29, per Crunchbase data. Artificial intelligence startups raked in 44% of the funding this week. Biotech, transportation, and hospitality startups nabbed 26%, 6%, and 6% of the financing, respectively. 
Here are the top five largest rounds announced this week: - AI chip startup Enflame bagged 2B yuan ($274M) in Series D funding from funds backed by Shanghai International Group with additional support from Tencent, Meitu, SummitView Capital, Redpoint China Ventures, YTI Capital, and Hundreds Capital.
- Avalyn Pharma Inc., a biotech startup developing targeted inhalation therapies for pulmonary diseases, closed its Series C funding round at $175M. Perceptive Xontogeny Venture Funds, SR One, and Eventide Asset Management co-led the new funding round.
- Market intelligence and search platform AlphaSense's valuation touched the $2.5B mark with its $150M Series E funding round led by BOND. Alphabet's CapitalG, Viking Global Investors, and Goldman Sachs participated in the round.
- Medical device maker MitrAssist raised $100M in Series C funding led by Centurium Capital and 6 Dimensions Capital.
- Verlinvest led a $59M Series C funding round into the digital hospitality brand NUMA Group. Cape Capital, Headline, Cherry Ventures, DN Capital, and Soravia participated in the round.
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| 3 | | AI chatbot startup Character.ai is talking with investors to raise fresh funding at a valuation between $5B and $6B, per Bloomberg. The firm had initially set its sights on a valuation as high as $10B, two sources informed Bloomberg. The firm's new valuation target is significantly more than its $1B valuation when it raised $150M from investors earlier this year. More: - Character.ai offers AI chatbots that can impersonate characters and famous personalities.
- The company was founded by former Google employees Noam Shazeer and Daniel De Freitas.
- A spokesperson for the company said that the firm had achieved significant milestones since raising the previous equity round.
Zoom out: - Due to the surging computing and research costs for AI startups, investors are beginning to believe that strategic partners such as large technology corporations may be a better fit for startups in the field than traditional VCs.
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| 4 | | Mercury Fund, formerly known as DFJ Mercury, secured $160M in capital commitments toward its fifth fund, making it the largest fund in its history. The fifth fund crossed its initial target of $150M. Mercury will invest in SaaS and data platforms through the new fund. More: - Mercury's portfolio consists of 50 companies, which collectively have an enterprise value of over $9B.
- Due to the performance of its previous funds, the company was able to expedite the fundraising process and cross its target.
- The firm has already backed seven startups with the new fund, including patient engagement and fintech platform RepeatMD.
- Other startups backed by the new fund include community engagement polling platform Polco, AI-powered process automation startup MSPbots, and financial infrastructure technology company Brassica.
- The firm will make between 18 to 20 investments overall with the new fund.
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| 5 | | Cloud computing startup CoreWeave is facilitating a stake sale for existing employees at a valuation of $7B, sources informed Bloomberg. Fidelity Investments has reportedly agreed to acquire $500M worth of employee-owned shares. Other institutional investors looking to grab stakes in CoreWeave include JPMorgan Asset Management and Goanna Capital. More: - The startup provides Nvidia graphic card-powered data centers to clients to run AI applications.
- It started out as an ethereum mining firm.
- CoreWeave predicts it will rake in $1.5B in revenue in 2024.
- Last month, the firm secured a $2.3B debt facility from Magnetar Capital, Blackstone Tactical Opportunities, Coatue, DigitalBridge Credit, BlackRock, Pimco, and Carlyle Group.
- This year alone, the company raised $421M in equity funding from investors, including Nvidia.
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| 6 | | Today's Funding: DevOps - No-code website building platform Framer bagged $27M in Series C funding led by Pigment and Meritech Capital. Existing backers Accel and Atomico participated in the funding round.
Enterprise - Career development VR platform Transfr secured $40M in fresh funding. ABS Capital led the Series C round, with participation from JPMorgan Chase Impact Finance, Akkadian Ventures, Spring Tide Capital, Firework Ventures, and Album.
Fintech - British mortgage platform Perenna received a $52M equity investment led by Silverstripe Investment Management.
- U.K.-based fintech firm Traydstream nabbed $21M in Series B funding led by Pivot Investment Partners and e& Capital.
Transportation - Vehicle mileage reimbursement software maker Cardata raised a $100M growth round led by Wavecrest Growth Partners, with additional support from MassMutual Ventures.
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| 7 | | Quick Hits: - No-code development is here to stay, according to industry experts. Gartner predicts 80% of technology products will be built by those who are not IT professionals by 2024.*
- U.S. investors, including VC, PE, hedge funds, and banks, are requesting the government to provide clarity on the new executive order issued by President Joe Biden that limits new U.S. investments in Chinese technologies in semiconductors, AI, and quantum technology.
- TXV Partners is looking to raise a new $500M fund to invest in late-stage technology startups in the sports and consumer-healthcare sectors. The fund has an upper limit of $750M.
- WestBridge Capital is looking to purchase stakes owned by Venture Highway and other investors in Indian social commerce startup Meesho through the secondary market.
- Jasper AI, a generative AI platform for marketing and brand content, slashed its internal 409A valuation by 20% after lowering revenue expectations. The firm was last valued at $1.5B.
- NEXT WEEK in LA, redefine development at DockerCon! Use DCHALF for 50% off in-person registration, or participate online for free. Come learn with us!*
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Term of the Day Minimum viable product (MVP): A minimum viable product (MVP) is an early functioning model of a new product that can be presented to early adopters and investors. Question of the Week Do you share details about your salary with your coworkers? Join the conversation |
INSIDE VENTURE CAPITAL LEADERBOARD (30 DAYS) |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Aaron Crutchfield | |
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