Inside Venture Capital

For December 29, 2023

Here's a look at today's VC briefing.

🏠 Proptech funding slumped by 42.4% YoY in 2023
🌎 Global late-stage startups raked in $42.2B through mega funding rounds of $100M+
🤝 F5 Collective backs California's diversity disclosure bill

Thank you.

VCs invested $11.38B in proptech startups in 2023, per a report published by the Center for Real Estate Technology and Innovation (CRETI). Funding for the sector has slumped by 42.38% compared to $19.75B invested in 2022.

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2023's tally is 64.44% lower than the record high of $32B in 2021.
Per CRETI, the slump can be attributed to "a broader market correction and a return to pre-pandemic investment levels."
The report notes that investors are only investing in startups that demonstrate clear value, sustainability, and a path to profitability.
The sharp decline suggests that some startups may not have delivered on the initial promise and lofty returns.

Throughout 2023, headlines in the venture capital space were dominated by two major themes: economic volatility and a noticeable slump in venture funding. Despite the volatility, VCs invested $42.2B into late-stage and beyond global startups through mega funding rounds of more than $100M, per Crunchbase data. Fintech startups raked in 21% of the funding this year. Biotech, AI, and battery startups nabbed 12%, 10%, and 7% of the financing, respectively.

Here are the top five largest rounds announced this year:

Digital payments startup Stripe raised $6.5B in Series I funding at a $50B valuation. The funding was provided by GIC, Goldman Sachs, Temasek, Andreessen Horowitz, Founders Fund, General Catalyst, MSD Partners, Thrive Capital, and others.
AI-powered parking platform Metropolis raised $1.7B in fresh funding consisting of $1.05B in Series C equity funding and $650M in debt. Eldridge Capital and 3L Capital co-led the latest funding, with BDT & MSD Partners' affiliated credit funds, Vista Credit Partners, Temasek, Slow Ventures, and Assembly Ventures participating in the round.
Battery recycling startup Redwood Materials achieved a $5.25B post-money valuation at its latest $1B Series D funding round. Goldman Sachs Asset Management, Capricorn's Technology Impact Fund, and funds managed by T. Rowe Price Associates co-led the funding round.
French low-carbon battery manufacturer Verkor secured €2B ($2.1B) in Series C funding to launch its gigafactory. The funding includes a €500M ($534M) loan from EIB and €650M ($694M) in subsidies given by the French government.
Data analytics and AI software developer Databricks secured over $500M in Series I funding at a valuation of $43B. T. Rowe Price, Morgan Stanley, Fidelity, and Franklin Templeton participated in the round.

Australian VC firm F5 Collective sponsored the upcoming California bill (SB 54) that will require VCs to disclose the diversity of founders they are backing from March 1, 2025, onward. F5's rationale for supporting the bill was to set a precedent and "a framework to then take to the rest of the world," per CEO Tracey Warren.

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The firm is currently investing out of a $5M proof of concept fund, which it has used to back eight women-led startups across the Asia-Pacific region.
F5 plans to raise a $100M Fund 2 in mid-2024, which should help it take strides towards its aim of investing in 1,000 female founders in the APAC region by 2030.
The fund is just one aspect of its five-pillar strategy, which also includes initiatives such as empowering women to be angel investors, facilitating pilots and use cases for women-led startups, and advocating for policy changes.

Zoom out:

Solely women-founded and led startups in Australia raked in 1% of the total funding in 2022.
Funding for startups with at least one female founder dropped from 21% in 2021 to 10% in 2022.

Safar Partners is looking to raise $300M for its third fund, per regulatory filings seen by Business Journals. The filing has not listed any confirmed investors. The firm primarily invests in AI, robotics, life sciences, cleantech, and advanced materials startups launched by MIT, Harvard University, and the University of Rochester graduates.

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The target amount for the latest fund is larger than its predecessor, which closed at $237M last year.
Notable startups in the company's portfolio include beauty startup Seaspire Skincare, industrial wastewater recycling unicorn startup Gradient Corp., and SoftBank Vision Fund 2-backed robotics startup RightHand Robotics.
In 2021, the firm participated in Commonwealth Fusion System's $1.8B Series B round, investing about $100M into the fusion-energy startup.

St. Bonaventure University alum Chuck O'Neill launched a VC firm named after his alma mater. The St. Bona Venture Fund will run as a for-profit organization that is independent of the university but will share a portion of the profits with the university. The fund will invest in startups launched by St. Bonaventure alumni.

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St. Bona Venture intends to raise a $10M Fund I by the end of June next year.
The firm will back about 15 to 20 early-stage startups over the next three years.
Individual check sizes will average $200,000.
Investments are likely to start by January 2025.
The firm will back startups in health and healthcare services, IT services, transportation, and women-led businesses in the Western New York and Rochester/Finger Lakes regions.

Today's Funding:

Agtech

Precision farming solution startup Fasal raised $12M (1B INR) Series A round from British International Investment, TDK Ventures, ITI Growth Opportunities Fund, Navam Capital, Aureolis Ventures, and others.

Blockchain

Crypto financial reporting startup TRES bagged $11M in Series A funding from Faction Ventures, Boldstart Ventures, and New Form Capital.
Decentralized storage platform Cumulus Encrypted Storage System raked in $8M in fresh funding from HTX Ventures, Infinity Ventures Crypto, DWF Labs, Mentha Partners, Vespertine Capital, Web3 Foundation, and others.
BRC20.com, a startup building infrastructure for Bitcoin-based tokens, raised $1.5M in fresh funding led by UTXO Management.

Software

Application lifecycle management software maker Ketryx raised $14M in Series A funding led by Lightspeed Venture Partners, with participation from MIT's E14 Fund and Ubiquity Ventures.

Quick Hits:

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All female founders raked in 2.1% of the total VC funding this year, per Pitchbook data reviewed by CNBC. VC funding share for startups with at least one male and one female founder increased from 16.5% in 2022 to 21.7% in 2023.
VC funding for Pacific Northwest startup slumped by 60% YoY in 2023, per GeekWire. No new unicorn startup has emerged from the region this year.
Portland Caribbean Fund III held the first close at $100M, of which $25M was provided by the European Investment Bank.
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