Inside Venture Capital

For April 29, 2024

Here’s your daily VC briefing:

💰 General Catalyst is looking to raise a $6B fund to back tech startups
📈 AI funding witnessed a modest uptick in Q1 2024
🎯 Jafco eyes 200% gain for SV7 fund as more portfolio companies go abroad

Thank you.

General Catalyst is reportedly in the process of raising $6B towards its latest fund, sources informed the Financial Times. The fund, expected to close as early as next month, will back tech startups across the defense, space, climate, fintech, and healthcare sectors. The fund will primarily focus on startups in the U.S., Europe, and India.

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General Catalyst counts payments firm Stripe, social media company Snap, and French AI firm Mistral as its most prominent investments to date.
Last year, the firm merged with European investor La Famiglia and is about to partner with Indian VC firm Venture Highway.
The VC firm's latest fund comes amidst an ongoing fundraising drought.
Last year, the total capital raised for new funds by U.S. VCs halved to $81B, per Pitchbook.
This year's fundraising activity is predicted to be the weakest since 2015.

VC invested $12.2B in AI startups through 1,166 deals, per Crunchbase.

What the numbers say: The AI sector witnessed a modest 4% uptick in VC funding compared to the $11.7B invested in Q4 2023. Funding was 25% lower compared to the $16.3B seen in Q1 2023. Three rounds closed above the $320M mark, with one round closing at $1B. Chinese AI startup Moonshot AI bagged more than $1B in VC funding in Q1. Other notable rounds to close in the quarter include AI-powered robotics firm Figure's $675M funding round and AI-driven text-to-video converter MiniMax's $600M Series B round.

Relevance: While valuation multiples for the sector have stabilized, investors are still willing to pay a premium for AI firms. Despite the heightened investor interest, some startups in the sector have had to reduce its workforce considering the prevailing economic conditions. AI startup Stability AI laid off 10% of its staff while generative AI presentation firm Tome reduced its workforce by 20%.

VC funding for digital health startups surged by 48% QoQ in Q1 2024, ending the quarter with $3.7B, per a new report published by CB Insights. Majority of the funding went to biotech and AI-driven startups in the sector. Despite the surge in Q1 2024, funding was still down 12% compared to Q1 2023 and 63% compared to Q1 2022.

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While deal value surged, the deal count dropped to the lowest level since 2014.
Average deal sizes have increased from $11.9M in 2023 to $16.4M in 2024.
The resurgence in deal size was driven by an increase in mega deals of more than $100M.
Seven mega deals closed in the recent quarter, with cancer detection biotech startup Freenome bagging the largest round.

Japan's oldest VC firm Jafco Group Co. is expecting a 200% return for its SV7 fund as several portfolio startups have expanded operations in foreign nations. The firm expects the fund's value to cross the paid-in capital by 2.5 times. The early-stage VC firm also plans to launch a new $640M fund next year.

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Portfolio startup Astroscale Holdings is expected to cement its unicorn status and cross the $1B valuation mark soon.
Jafco has backed 4,100 startups to date and has about $2.9B (466B yen) worth of assets under management.
By Oct. 2023, Japan had only seven unicorn startups, per the Japan Venture Capital Association.
Japanese Prime Minister Fumio Kishida has introduced several reforms with the aim to create about 100 unicorn startups by 2027.

VC firm Norskenn22 plans to invest in 20 African startups by the end of 2025, per Bloomberg. The firm has already backed six African startups so far, including South African neobank firm Tyme Group. Norskenn22 has three more investments already lined up.

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The VC firm secured $205M in capital commitments towards its Africa-focused fund last year, which aimed to back "lean-tech solutions," including software, web-based platforms, and artificial intelligence.
The fund is a joint initiative between Northzone Ventures' partner Hans Otterling and Niklas Adalberth's Norrsken Foundation.
Norskenn22 has backed startups across South Africa, Nigeria, Kenya, and Egypt.
Per the African Private Capital Association, VC funding inflows into African startups slumped by 31% YoY in 2023 to $4.5B due to rising inflation and weakening local currencies.

Today's Funding:

Biotech

Molecular diagnostics startup Variantyx raised $36M in fresh funding from Peregrine Ventures, Pitango HealthTech, New Era Capital Partners, and Bosch Ventures.
4P Pharma, a French startup developing curated therapies for untreated serious diseases, bagged €15M ($16.1M) in fresh funding from investors.
British orthobiologics startup Locate Bio raised £9.2M ($11.5M) in fresh funding led by Mercia Ventures and Business Growth Fund.

Healthcare

Amae Health, a healthcare startup offering care for patients with severe mental illness, raked in $15M in Series A funding led by Quiet Capital. Other participants in the funding round include Healthier Capital, Baszucki Group, Bling Capital, 8VC, Virtue, and Able Partners.

Martech

Marketing automation solutions developer Indigitall closed its Series A funding round at €6M ($6.44M). Data Point Capital led the round, with additional support from GoHub Ventures and Adara Ventures.

Quick Hits:

Early-stage VC firm Flourish Ventures hired Ravi Kaushik as the head of Asia investments. Kaushik is tasked with leading the firm's fintech investments in India and Southeast Asia. Last year, the firm closed a new $350M fund, bringing its total assets under management to $850M.
The OpenAI Startup Fund quietly raised $15M from investors, per SEC filing documents seen by TechCrunch. The VC firm, which is technically separate from AI firm OpenAI, typically invests in AI-powered startups in the edtech, law, and life sciences sectors.
Indian investment firm Oister Global launched a new $52.7M (4.4B rupees) fund to back early, growth, and late-stage startups in the nation. The fund has a greenshoe option of $22.7M (1.9B rupees).
VC funding for Irish startups plummeted by 80% YoY to $34.1M in Q1 2024, per a new KPMG report cited by The Irish Times.