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| Hey Insiders, Here are the latest stories: - OpenAI eyeing $80B-$90B valuation at upcoming share sale
- 11% of VC deals have been down rounds
- True Light Capital raises $3.3B fund
If you find this newsletter useful, please share it with your friends and colleagues. Thank you. Karan
p/karan-chafekar | |
| 1 | | ChatGPT maker OpenAI is eyeing a valuation between $80B and $90B at its upcoming share sale transaction. The firm is not issuing any new shares to raise additional capital, instead allowing existing employees to sell their holdings. If successful in achieving the targeted valuation, OpenAI would be considered the third most highly valued global startup, behind only Elon Musk's SpaceX and Tiktok owner Bytedance. More: - The firm expects to rake in $1B in revenue this year, a figure that could turn into several billions by 2024.
- The targeted price is more than double OpenAI's roughly $30B valuation from earlier this year when Microsoft invested billions of dollars in the firm for a 49% stake.
- The new valuation would give Microsoft an on-paper profit.
- Because OpenAI wishes to retain Microsoft as a minority investor, the company will not be able to purchase additional shares in the upcoming transaction.
Q: Are the rapidly increasing valuations of AI startups pointing towards an impending AI bubble? Join the conversation here. |     | |
| 2 | | So far this year, nearly 11% of VC deals have been down rounds, per Pitchbook. 
What the numbers say: Pitchbook data shows that 144 of the 1,325 VC deals completed in the U.S. were down rounds. However, Pitchbook reckons that the actual conditions might be worse than the data suggests, as several startups often delay the reporting of down rounds or do not disclose them publicly at all. Sapphire Ventures managing partner Rajeev Dham said, "My prediction is this time next year, Q2 and Q3 of next year, is when you're going to see a lot more [down rounds]." Relevance: Nevertheless, the down rounds share is still a long way off from the previous troughs. 58% of VC rounds were down rounds after the dot-com bust, and 36% were down rounds after the 2008 housing market crash. Last month, finance automation specialist Ramp took a 30% valuation cut while raising $300M in fresh funding led by Thrive Capital and Sands Capital. Where to see the impact: Startups in sectors, especially fintech, cloud, and enterprise SaaS, that were able to secure funding at high revenue multiples during 2020 and 2021 are the ones that are most likely to see massive valuation markdowns. The only exception at the moment is generative AI, where venture capitalists are heavily betting due to recent buzz. | | | |
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| 3 | | Temasek-backed investment firm True Light Capital Pte. Ltd closed its first flagship fund at $3.3B. The True Light Fund I will invest in life sciences, technology, consumer, industrials, and business services sectors across the Greater China region. True Light will invest in private equity, public equity, and venture funds. More: - True Light Capital is wholly owned by Singapore's sovereign fund, Temasek.
- CEO Yeo Chee Kian said, "True Light is positive about China's long-term fundamentals and outlook, and we continue to see attractive investment opportunities aligned with the four long-term structural trends of digitization, longer lifespans, sustainable living, and future of consumption."
Zoom out: - Temasek is one of the top 10 investors in the world and has nearly $278.6B worth of assets under management.
- 22% of its portfolio companies are based in China.
- Temasek's Yibing Wu said there are attractive opportunities in China, especially in advanced manufacturing and energy transition.
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| 4 | | Investors are enthusiastic about IPO listings and shrugged off the dip in share prices of two recently listed firms, Arm Holdings and Instacart. Sidley Austin LLP's partner Frank Rahmani said, "The ultimate success of the IPO is not determined by the trading and closing price of the shares on the first few days following the IPO." Instead, investors' appetite for IPO listings is demonstrated by the level of stock subscriptions. More: - Arm's $5.3B listing, Instacart's $660M offering, and Klaviyo's $576M IPO were oversubscribed by 12, 23, and 30 times, respectively.
- While share prices of Arm and Instacart have dropped 18% and 10% from their respective debut prices, share prices of Klaviyo have steadily climbed.
- Yesterday, Instacart's share price dipped below its listing price of $30 per piece to $28.71.
- The heavy demand for the recent listings was due to their track record of profitability.
- Footwear maker Birkenstock Holdings and cloud and data security startup Rubrik are planning to list soon.
- Meanwhile, healthcare services provider BrightSpring Health Services Inc. confidentially refiled for an IPO, looking to potentially raise $1B in the last quarter of this year.
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| 5 | | Multi-stage VC firm Enza Capital secured $58M in capital commitments for two funds. The new funds will invest in startups "organizing the offline online" and "digitizing key African industries." More: - The firm is still investing from its debut early-stage fund launched in 2019.
- Enza has backed 31 companies across Kenya, Uganda, Nigeria, Ghana, Ivory Coast, Senegal, Egypt, and South Africa.
- The firm primarily backed fintech, logistics, human capital, and climate tech startups through its first fund.
- Notable portfolio startups include climate tech startup Guidewheel, fintech Shara, fintech Djamo, and insurtech Turaco.
- The firm typically writes checks ranging from $250,000 to $5M.
- However, the firm can also write checks up to $20M from its evergreen late-stage investment vehicle.
- Enza has pledged to allocate 10% of its carry pool back to founders.
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| 6 | | Today's Funding: Biotech - AI-powered drug discovery and product development biotech Evozyne closed its Series B funding round at $81M. Fidelity Management & Research and OrbiMed co-led the funding round, supported by NVentures, Paragon Biosciences, and Valor Equity Partners.
Fintech - Wealth management firm Farther doubled its valuation to $131M after raising a $31M Series B round from Lightspeed Venture Partners, Bessemer Venture Partners, Cota Capital, Khosla Ventures, and others.
Healthcare - Doceree, a healthcare professional pragmatic messaging platform, raised $35M in Series B funding led by Creaegis, with additional backing from Eight Roads Ventures and F-Prime Capital.
Network security - Nord Security, the parent company of VPN service NordVPN, raised $100M in fresh funding at a $3B valuation. Warburg Pincus led the round with participation from Novator Ventures and Burda Principal Investments.
SaaS - 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.
Transportation - EV boat startup Arc bagged $70M in Series B funding from Eclipse, Andreessen Horowitz, Lowercarbon Capital, Abstract Ventures, and Menlo 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.*
- A dozen VC firms, including Bain Capital Ventures, General Catalyst, Lux Capital, Mayfield, and IVP, are working along with the U.S. Commerce Department to develop guidelines for VCs and their portfolio companies in the AI sector. The regulations are aimed at making "responsible AI," by setting internal governance processes, mitigating risk, protecting privacy, and prioritizing security.
- Western Technology Investment is looking to raise a $600M venture debt fund.
- Kyber Knight Capital to invest its $120M fund into pre-seed and seed-stage technology startups in the gaming sector.
- Identity and access management startup ProofID acquired identity governance and administration solution Regatta Solutions Group for an undisclosed sum.
- 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 Backorders: Backorders refer to orders placed for products that are currently out of stock. 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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