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| Here's a look at today's VC briefing. - 🚀 VCs eye growth in AI data centers, local LLMs, domain-specific foundation models
- 🌳 18 new climate-focused funds have bagged $3.2B from investors this year.
- 🌎 SoftBank expects LatAm investments to increase this year.
Thank you. Karan
p/karan-chafekar | |
| 1 | | VCs believe AI data centers, local large language models (LLMs), and domain-specific foundation models will serve as a catalyst for long-term growth in the AI and machine learning sector. VCs are focusing on these three niche fields after deal activity for the AI and ML sector plunged by 19% in 2023, per a Pitchbook report. The deal count fell more sharply than the deal value, which dropped from $96.6B in 2022 to $90.6B in 2023. More: - Generative AI startups alone raked in $6B of the funding in Q4 2023 through 194 transactions.
- Horizontal platforms touched a record high of $33B across the entire year, while investments in vertical applications plummeted.
- Out of the three new areas of focus, AI data centers have the most potential for breakout growth as such data centers will be able to maximize the efficiency of high-performance servers, storage, networking, and specialized accelerators.
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| 2 | | 18 new climate-focused funds have closed so far this year, bagging $3.2B in capital commitments from investors, per Axios. 
What the numbers say: The current tally aligns with 16 funds worth $4.1B raised throughout Q1 2023. The climate tech industry has been somewhat insulated from the 40% YoY dip in the global VC sector. Relevance: ArcTern Ventures, Voyager Ventures, Equal Ventures, and Overture Climate VC have collectively raised about $670M towards climate-focused funds this year. What happened: While VC firms have faced headwinds in raising capital for new funds, climate-focused funds have been able to get commitments from investors thanks to the green incentives launched by the government and the ESG mandates that corporates must adhere to. Pension funds, university endowments, family offices, and other limited partners have to meet certain green mandates. Additionally, federal agencies have started implementing the initiatives laid out under the 2022 Inflation Reduction Act. | | | |
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| 3 | | SoftBank Latin America Funds' managing partner Juan Franck expects investments to pick up pace in Latin America this year as startup valuations drop to reasonable levels. The firm already witnessed a surge in activity in the second half of last year as the bid-ask valuation spread between investors and startups narrowed. The LatAm investment division made seven investments last year after looking at more than 100 investment opportunities. More: - The Japanese investment firm raised a $5B fund dedicated to Latin America and later upped its commitment by committing another $3B.
- By the end of last year, SoftBank's Latin American division had committed $7.8B to startups.
- The fair value of its investments rose by $600M to $6.3B at the end of Dec. 2023.
- Notable Latin American startups in its portfolio include Nu Holdings, Gympass, Kavak, and Rappi.
- The firm exited its investment in fintech firm Pismo (acquired by Visa for $1B), Avenue Holding Cayman (bought by Itau Unibanco Holding), and Mexican payment firm Yaydoo SAPI de CV (acquired by PayStand).
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| 4 | | Payment processing services startup Stripe and some of its investors purchased $1B worth of stock liquidated by current and former employees. The fintech startup cemented its valuation of $65B at the stock sale transaction. Investors Sequoia Capital and Goldman Sachs's growth equity fund participated in the transaction. More: - While the valuation is 30% higher than its previous figure of $50B from its $6.5B Series I round a year ago, it is still lower than its peak valuation of $95B in 2021.
- The employee-stock sale deal will have calmed down investors and employees wanting to cash out their equity stakes and ease the pressure to go public.
- Per the WSJ, Stripe might delay its IPO listing until at least 2025 to avoid a lower valuation.
- The firm also facilitated a similar deal last March, allowing investors to buy stock worth $6.5B from employees.
- Andreessen Horowitz and Temasek had participated in the round.
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| 5 | | Banco Santander SA is set to acquire a 33% stake in Spanish VC firm Seaya. Financial details of the transaction were not disclosed. In addition, Santander will also become an investor in Seaya's €300M ($325M) climate-tech-focused Andromeda fund, a fund that launched in 2022 to accelerate the energy transition and sustainability in Spain. More: - Seaya has about €650M ($704M) worth of assets under management through five VC funds.
- Notable unicorn startups in its portfolio include ride-hailing firm Cabify, EV charging network firm Wallbox, and delivery app Glovo.
Zoom out: - Seaya has two other active investment vehicles besides Andromeda.
- The Andromeda fund launched with a €100M ($108M) commitment from the ICO Next Tech Fund.
- The fund has reportedly already secured commitments worth €200M ($216.8M).
- Other limited partners in the fund include Iberdrola and Nortia Capital.
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| 6 | | Today's Funding: AI - AI-powered image generation tool Ideogram secured a Series A funding of $80M. Andreessen Horowitz led the round, joined by Index Ventures, Redpoint Ventures, Pear VC, and SV Angel.
Application - Creator monetization platform Passes raked in $40M in Series A funding. Bond Capital led the round with additional support from Abstract Ventures' Ramtin Naimi, Crossbeam Ventures founder Michael Ovitz, and SKIMS founders Emma and Jens Grede.
Blockchain - Blockchain technology startup Avail raised a $27M seed funding round led by Founders Fund and Dragonfly Capital. Other participants in the round include SevenX, Figment, and Nomad Capital.
Fintech - Corporate treasury management fintech startup Embat raised $16M in Series A funding led by Creandum. Existing investors Samaipata, 4Founders, and Venture Friends participated in the round.
Healthcare - ARCH Venture Partners, Polaris Partners, and Exor Ventures co-led a $26M funding round into Matter Neuroscience, a startup that aims to offer personalized insights to cure unhappiness.
- Redi Health, a startup offering digital pharma support to patients suffering from chronic conditions, closed its Series B round at $14M. Blue Heron Capital led the round, with additional backing from North Coast Ventures, Refinery Ventures, Mutual Capital Partners, Rev1 Ventures, and M25.
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| 7 | | Quick Hits: - Business Owners who took Visa or Mastercard from Jan. 1, 2004, to Jan. 25, 2019, apply to see if you are entitled to a portion of a $5.6 billion payout.*
- Amazon is broadening the focus of its $1B Industrial Innovation Fund to include startups combining AI and robotics. The fund has already backed 12 startups with the fund, including robotic arm maker Mantis Robotics.
- Chipotle doubled the size of its venture fund by adding another $50M to the pool. The fund will continue to invest in supply chain, agriculture, restaurant innovation, and automation startups. Part of the capital will help Chipotle double down on portfolio startups Local Line and Hyphen.
- Blockchain-focused VC firm Theta Capital launched its fourth fund to invest in core blockchain infrastructure startups at the earliest stages. The firm expects to raise $200M by the final close in July 2024.
- Uncover the trends shaping the business landscape in 2024. From building trust to leveraging tech, our report shares crucial developments for success.*
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Vibha Chapparike | |
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