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| Here's a look at today's VC briefing. - 🏥 Medtech VC funding surges 14% QoQ as deal count dips
- 📶 VCs are getting larger ownership stakes due to the funding dip
- 💻 Tola Capital raises $230M fund to invest in AI-powered enterprise software
Thank you. Karan
p/karan-chafekar | |
| 1 | | VCs invested $3.2B in medtech startups in Q3 2023, up 14.1% compared to the previous quarter, per Axios. While deal value increased, deal count dropped 10.1% QoQ to 187 in Q3. Deal value increased despite a dip in deal volume, suggesting that investors are prioritizing the most promising investments. More: - The biggest medtech deals to close in the recent quarter include Elon Musk's brain computing interface startup Neuralink's $280M Series D round led by Founders Fund, surgical robotics firm CMR Surgical's $165M, and cancer diagnostic startup Harbinger Health's $140M Series B funding round.
- Pitchbook analyst Aaron DeGagne said, "Exit opportunities remain few and far between as the IPO market remains shut and potential acquirers continue to prioritize improving their own cost structures."
Zoom out: - PE deals in the sector dropped 3.3% compared to the same period last year.
- PE investors invested $280M in growth deals, down 70% YoY.
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| 2 | | Venture capital investors are gaining larger ownership stakes in startups due to decreased funding availability. 
What the numbers say: According to Pitchbook, median equity stakes held by VCs in U.S. growth-stage startups have risen to 14.9% in Q3 2023, up from 11.3% in 2021. The funding dip has shifted the deal terms and leverage to investors, who can now get larger ownership stakes with the same check size as before. Median equity stake ownership in early-stage startups has remained consistent and has not seen a larger jump as growth-stage startups. Relevance: Owning larger equity stakes helps VCs maximize their returns on exit. Additionally, having a larger stake can help investors exert control over the startup's decisions. Investors with larger ownership shares could even be eligible for board seats. | | | |
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| 3 | | Tola Capital has secured capital commitments worth $230M for its third fund. The fund will invest in seed and early-stage startups making AI-powered enterprise software. The firm has set aside half of the fund's capital for follow-on investments. More: - Tola Capital has raised funds worth $688M to date, including the newest fund.
- The firm aims to invest in 25 to 30 global startups with the third fund.
- Individual check size will range from $1M to $4M for seed-stage startups and $5M to $15M for Series A and B startups.
- Tola Capital has already backed eight startups with the new fund, including Arcus, ESG Flo, Fetcher, Holistic AI, Langsafe, and Zilla.
Zoom out: - The global AI software market is expected to bring in $792M in revenue in 2025.
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| 4 | | New York-based fertility startup Kindbody is looking to raise $50M by the end of this year. The firm is reportedly struggling with higher-than-expected operating losses and high cash burn. Kindbody hopes to maintain its previous valuation of $1.8B in the upcoming round. More: - A spokesperson from the firm dismissed speculations that it had larger-than-expected losses, saying that revisions to annual forecasts were customary.
- The firm revised its annual revenue forecast for 2023 from $240M to $186M.
- Kindbody initially expected to be profitable on an EBITDA basis in 2023. However, the firm has now pushed forward its profitability timeline to mid-2024.
- Per documents seen by Bloomberg, the firm is losing roughly $7M each month and has already spent $60M so far this year.
- Only six of its 33 clinics are profitable.
- Since its founding in 2018, the firm has raised more than $300M in funding from investors and celebrities, including Gwyneth Paltrow, Chelsea Clinton, and Gabrielle Union.
- Kindbody is searching for a replacement for CEO Annbeth Eschbach.
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| 5 | | Invest-NL and the European Investment Fund (EIF) launched a €200M ($218.7M) Dutch Future Fund II to invest in VC funds in the nation. The fund will invest in 10 to 12 VC funds that back startups working on energy transition, deep tech, circular economy, and agrifood sectors. More: - EIF hopes the new fund will mobilize €400M ($437.5M) investment capital from investors.
- Invest-NL and the EIF launched Dutch Future Fund I in October 2020 with an initial commitment of €150M ($164M).
- DFF I has invested €848M ($927.5M) to date in 20 Dutch funds.
- Funds backed by DFF I have invested €1.1B ($1.2B) in 73 Dutch startups, including Crisp, QuantWare, Fourthline, and E-magy.
Zoom out: - Invest-NL is an implementation partner for the European Commission's InvestEU program, which has earmarked up to €350M ($382.8M) for sustainable and innovative investments.
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| 6 | | Today's Funding: AI - Generative AI startup Together AI closed its Series A funding round at $102.5M. Kleiner Perkins led the round with additional support from Nvidia, Emergence Capital, NEA, Prosperity 7, Greycroft, and 137 Ventures.
Crypto - Wormhole, a crypto project that spun out from Jump Crypto, bagged $225M in fresh funding from Jump, Brevan Howard, Coinbase Ventures, Multicoin Capital, and Arrington Capital. The firm was valued at $2.5B in the current round.
Data - French manufacturing data software company Briancube bagged €83M ($90.8M) in growth equity investment led by Scottish Equity Partners and Bpifrance.
Fashion - British sportswear brand Castore raised £145M ($184M) in fresh funding at a £950M ($1.2B) valuation. Raine Group led the round, joined by Hanaco Ventures and Felix Capital.
Fintech - Cross-border payments startup Paysend raised $65M in funding from Mastercard, Infravia Growth Capital, One Peak, and Hermes GPE Innovation Fund.
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| 7 | | Quick Hits: - Competitors are killing your efficiency. Read how Greenhouse gained $85mil in revenue from reps who used Klue over non-Klue users.*
- Sequoia Capital has separated the IT systems and back-end functions from its Chinese and Indian entities ahead of schedule. Sequoia confirmed it was splitting up into three independent units earlier this year. The Chinese division rebranded to HongShan, while the Indian division took up the Peak XV Partners name.
- OpenAI's biggest shareholder, Microsoft, is set to join the board of directors as a non-voting observer, recently reinstated CEO Sam Altman informed employees.
- Healthcare investment firm Revelation Partners appointed Andrew Olson as partner, CFO, and COO. Olson was previously the CFO at SVB Capital.
- Noname Security's former chief product officer, Hila Zigman, joined Israeli VC firm Cyberstarts as a general partner.
*This is sponsored content. | | | |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Aaron Crutchfield | |
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