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The official channel of V3V Ventures. We share updates on our investments, portfolio companies, and fund activities. Buy Ads: @JamesCookTg (this is our only account).
🌐 Industrial Robots Leading Key Industries in 2024
➡️ Industrial robots are taking over, with the medical field leading at 27.3%, followed by 19.6% in domestic services — mainly driven by robot vacuums.
❓ Which industry will see the biggest robot adoption by 2025? Share your thoughts in the comments
🔍 Crucial Lessons from a VC Portfolio Failure: A Story of Mistakes and Growth
🖥 In the high-stakes world of venture capital, our failures often teach us more than our successes. Recently, Sammy Abdullah from Blossom Street Ventures shared a candid analysis of their investment in Take The Interview, a portfolio company that ultimately failed. This story offers invaluable insights for all of us in the VC community.
➡️ The tale begins with a critical oversight: cash inefficiency. When Blossom Street invested, the company was burning through $170k monthly while only generating $60k in MRR. That's a staggering burn rate of nearly $3 for every $1 of revenue. Today, Abdullah admits they wouldn't even consider a company burning more than $0.50 for every $1 of MRR. It's a stark reminder that sustainable growth should always trump rapid cash burn.
➡️ As the story unfolded, churn became a significant issue. Net dollar retention fell from a healthy 100%+ to a concerning 85%+. Instead of looking inward and addressing potential problems with their product or processes, the company fell into the trap of blaming external factors. This misstep highlights the crucial need for constant self-assessment and the willingness to pivot when necessary.
👀 Perhaps one of the most painful lessons came from the company's reluctance to make necessary layoffs. In an attempt to preserve culture, they tried to "grow out of the burn" instead of cutting expenses. It's a poignant reminder that there's no culture to preserve if the company doesn't survive. Sometimes, tough decisions need to be made early to ensure long-term viability.
➡️ The departure of a cofounder should have been a wake-up call, but the board didn't dig deep enough into the underlying issues. This oversight underscores the importance of treating major events as opportunities for thorough reevaluation. As VCs, we need to implement regular, honest assessments of our portfolio companies' direction and leadership.
➡️ In a last-ditch effort, the struggling company merged with a similarly weak peer. Predictably, this move failed to solve the underlying issues. It serves as a stark reminder that recognizing when to cut losses is a crucial skill in our industry. Sometimes, the best solution might be an orderly wind-down or sale of assets rather than prolonging the inevitable.
🛡 These experiences underscore the critical importance of rigorous financial discipline, constant self-assessment, swift action in the face of challenges, and thorough board oversight. As we move forward in our investment journeys, let's carry these lessons with us. They serve as a reminder that in the world of startups and VC, complacency is the enemy of success.
Fellow VCs, our role isn't just to provide capital, but to be active partners in building sustainable, successful businesses. Let's use these insights to sharpen our investment theses and guide our portfolio companies towards better outcomes.
🗣️ Asia's Venture Capital Scene Hits Turbulence: Q3 2024 Insights
➡️ Venture capital in Asia has hit a significant roadblock, with Q3 2024 marking the lowest funding total in nearly a decade. According to recent Crunchbase data, total venture dollars flowing into Asia-based startups plummeted to $13.2 billion, a figure not seen since Q1 2015.
➡️ This represents a concerning trend, with a 13% decline from the previous quarter and a staggering 44% drop compared to the same period last year. The number of deals has also taken a hit, with only 1,509 announced in Q3 — an 8% decrease from Q2 and a 23% fall from last year.
➡️ Even the much-hyped AI sector couldn't salvage the situation, with AI-related startups in Asia raising a mere $2.1 billion, down 20% from Q2. Late-stage growth rounds were particularly hard hit, totaling only $5.8 billion — the lowest since before 2015.
➡️ China's ongoing venture slide is a major factor in Asia's funding woes, with Chinese startups raising only $6 billion in Q3 — a 61% nosedive from Q3 last year. Israel's startup scene is also struggling amidst regional conflicts.
🟢 However, it's not all doom and gloom. Japan emerges as a bright spot, with Japanese startups securing $1.3 billion, a remarkable 95% increase from Q2 and 58% up from last year.
As we navigate these choppy waters, it's clear that the Asian venture capital landscape is undergoing significant changes. For investors and startups alike, adaptability and resilience will be key in the coming months. Stay tuned for more updates on this evolving situation.
🌐 Global Venture Capital Faces Headwinds in Q3 2024
➡️ The venture capital landscape continues to navigate choppy waters as we move through 2024. The latest Pitchbook/NVCA Venture Monitor report paints a sobering picture of the global VC scene in Q3, confirming that 2024 is shaping up to be another challenging year for investments and exits.
➡️ Across the board, the numbers tell a story of contraction. Deal volumes, average deal sizes, VC fundraising, and exit values are all down compared to previous quarters. No region seems to have escaped this downturn, with the US, Europe, Asia, and Latin America all feeling the pinch.
➡️ In the US, Q3 saw the first quarter-over-quarter decline in dealmaking in a year, with just 3,777 VC investment deals completed. This figure harks back to pre-2021 levels, signaling a significant cooling of the market. The public listings market remains particularly frigid, with only 10 companies braving IPOs in the US during Q3.
➡️ Despite these challenges, there are glimmers of hope. The Federal Reserve's rate cut in September could potentially ease borrowing costs and relieve pressure on public markets, potentially paving the way for more IPOs in the future. Additionally, while deal sizes have shrunk, stronger companies are still securing larger investments to help them weather the storm.
🟩 As we look ahead to the final quarter of 2024, it's clear that venture capitalists and startups alike will need to stay nimble and resilient. While the current climate presents challenges, it also offers opportunities for those who can adapt and innovate in the face of adversity.
To all the VCs out there: stay vigilant, keep an eye on emerging trends, and remember that some of the most successful companies were born in tough economic times. The tide will turn eventually, and those who are prepared will be best positioned to ride the next wave of innovation and growth.
🗣️ Venture Capital Pulse: AI Surges, Traditional Sectors Struggle
➡️ The venture capital landscape is experiencing a stark dichotomy, with AI-related deals driving significant growth while traditional sectors face mounting challenges. AI funding reached a record $23.2B in Q2, surging 59% quarter-over-quarter, showcasing investors' robust enthusiasm for this transformative technology. However, the broader picture reveals cautionary signs, with the median step-up between series at only 1.2x for Series D+ rounds, barely above 2023's decade-low.
➡️ Notable trends include a 27% increase in enterprise fintech funding and record-breaking investments in quantum startups, which have raised nearly $1.4 billion so far this year — almost double the $777 million raised in all of 2023. Conversely, supply chain startup funding is on pace for a stunning 79% drop from the all-time high set in 2021.
➡️ Major deals like Anduril's $1.5B round at a $14B valuation and Groq's $640M Series D at $2.8B valuation underscore the selective nature of current investments. Meanwhile, the rise of flat and down rounds to a decade-high of 28% signals increasing scrutiny and valuation pressures across the board.
➡️ The industry is also seeing a shift towards "concentration in quality", where large deals, particularly in AI and AI-enabled sectors, are attracting most of the funding. This trend is squeezing late-stage VCs unless they have massive newly raised funds to participate in these high-valuation rounds.
🟥 Interestingly, the time between funding rounds for VC-backed startups has reached a record 19 months in Q2'24, indicating a more cautious approach from investors and potentially longer paths to exit for startups.
In this dynamic environment, success hinges on balancing innovation with prudence. VCs must adapt their strategies, focusing on thorough due diligence and sustainable growth to navigate the evolving venture capital ecosystem effectively.
🗣️ Hydrogen Energy Startups: The Next Big Thing in Green Tech Investments
➡️ The hydrogen energy sector is experiencing a remarkable surge in venture capital interest, defying the global slowdown in startup investments. In 2024, hydrogen-focused startups have already secured over $1.4 billion in equity funding across 23 companies, showcasing the industry's robust growth and investor confidence.
➡️ Standout deals include ZeroAvia's impressive $150 million Series C extension for their innovative hydrogen-powered airplane engines, and Koloma's groundbreaking $246 million Series B for identifying and commercializing geologic hydrogen resources. These investments highlight the diverse applications of hydrogen technology, from aviation to resource extraction.
➡️ China continues to dominate the hydrogen landscape, leading in electrolyzer manufacturing and installed capacity. Chinese startups like LONGi Hydrogen Energy, Sunshine Hydrogen, and Zhongke Qingneng have all secured significant funding rounds. However, the trend is truly global, with Australian firm Hysata raising $110 million for their electrolyzer technology, and numerous U.S. companies attracting substantial investments.
🟪 Government support is playing a crucial role in accelerating the sector's growth. The U.S. Department of Energy's recent announcement of $750 million in funding for 52 hydrogen-related projects underscores the public sector's commitment to fostering innovation in clean energy.
➡️ While the public markets remain challenging for hydrogen companies, as evidenced by Hyzon Motors' recent struggles, private investors continue to show unwavering enthusiasm for the space. The current focus on private funding suggests that we may not see many hydrogen startups going public in the near term, but it also indicates a strong belief in the long-term potential of these technologies.
The hydrogen energy sector presents a unique opportunity for venture capitalists seeking high-growth potential in the green tech space. With strong private investor interest, government support, and a wide range of applications from transportation to industrial processes, hydrogen startups are positioning themselves as key players in the future of clean energy.
As the world increasingly focuses on decarbonization, early investments in this sector could yield significant returns. However, VCs should remain cautious and conduct thorough due diligence, as the path to profitability and public market success may still be challenging for some players in this emerging field.
🌐 August 2024: Eight New Entrants to the Unicorn Club
➡️ August 2024 saw the addition of eight new companies to the Crunchbase Unicorn Board, collectively adding $25 billion in value. Six of these new unicorns are based in the U.S., with one each from China and India.
➡️ The most notable entrant was Huawei's smart car subsidiary, Yinwang Smart Technology, valued at $16 billion. This represents the second-largest valuation for a newly minted unicorn in 2024, surpassed only by xAI's $24 billion valuation in May.
🖥 Key sectors represented in this month's unicorn cohort include:
➖ Transportation: Yinwang Smart Technology (China) and Ather Energy (India)
➖ Web3: Story Protocol (U.S.)
➖ AI: Codeium and DevRev (both U.S.)
➖ Privacy and Security: Kiteworks (U.S.)
➖ AgTech: Agrovision (U.S.)
➖ Real Estate: EliseAI (U.S.)
🔹 Of particular interest is World Labs, an AI startup founded by Fei-Fei Li, which reached unicorn status in July with a $1 billion valuation mere months after its founding.
➡️ For venture capitalists, these developments indicate continued strong appetite for innovative, high-growth companies across diverse sectors. The emergence of unicorns in fields ranging from AI and Web3 to AgTech and transportation suggests a broad spectrum of investment opportunities.
As 2024 progresses, these new unicorns may represent potential high-value exit opportunities. The rapid ascent of companies like World Labs also highlights the accelerated growth trajectories possible in the current market, particularly in the AI sector.
🟢 AI Safety Steals the Show in This Week's VC Funding
➡️ As the dust settled from the long holiday weekend, the venture capital world roared back to life with some eye-popping funding rounds. The clear headliner? A whopping $1 billion raise by Safe Superintelligence, an AI safety startup that's barely three months old. This massive investment, led by heavyweights Andreessen Horowitz and Sequoia Capital, values the company at a cool $5 billion. It's a clear signal that concerns about AI risks are translating into serious financial bets.
➡️ But AI wasn't the only star of the show. Biotech continued its strong run, with Arsenal Biosciences securing $325 million for its innovative T-cell therapies, while eGenesis pulled in $191 million to advance its work on engineered organs. Not to be outdone, Circle Pharma nabbed $90 million for its macrocycle therapeutics development.
➡️ In a nod to the growing importance of sustainable energy, battery tech company 24M Technologies charged up with an $87 million round, reaching a $1.3 billion valuation. Across the Pacific, Japan's Sakana AI made waves with a $100 million raise, showcasing global interest in novel AI approaches.
What does this all mean for VCs? The message is clear: transformative technologies, especially those addressing major challenges like AI safety and medical breakthroughs, are still commanding big dollars. As we head into the final quarter of 2024, keep your eyes peeled for opportunities in AI safety, cutting-edge biotech, and clean energy solutions. These sectors aren't just drawing funding — they're shaping our future.
🌐 Late-Stage VC Investments: Higher Probability of Returns, Lower Risk of Loss
➡️ Pitchbook's "VC Returns by Series" reports reveal a striking contrast between general VC funds and late-stage (Series C+) investments. The data shows that late-stage funds are nearly three times more likely to provide returns to investors compared to VC funds in general. While 76% of all VC funds fail to return capital (MOIC<1), only 32% of Series C+ investments face this issue. Moreover, 68% of Series C+ investments return >1x, compared to just 24% for all VC funds. The chances of achieving 1-5x returns in Series C+ are 4.7 times higher than in general VC investing (56% vs. 12%). However, the potential for extreme returns (20x+) diminishes significantly in later stages.
➡️ The return distribution for general VC resembles a power function, indicating higher risk and potential for outlier returns. In contrast, Series C+ returns more closely follow a normal distribution, suggesting more predictable outcomes. This data highlights the trade-off between risk and reward in different stages of VC investing. Early-stage investments offer the potential for astronomical returns but come with a higher risk of loss. Late-stage investments provide more consistent returns but limit the possibility of extreme gains.
For VC's, these findings emphasize the importance of a balanced portfolio strategy. Consider allocating a portion of your investments to late-stage opportunities for more reliable returns, while maintaining early-stage investments for potential outsized gains. Understanding these dynamics can help optimize your risk-reward profile and improve overall fund performance.
🌐 AI Coding Startups Magic and Codeium Secure Mega-Rounds, Signaling Hot Market
➡️ The AI coding sector is experiencing a surge in venture funding, with two major deals announced this week. Magic raised $320 million from investors including Eric Schmidt and Sequoia Capital, bringing its total funding to over $465 million. Codeium secured $150 million in a Series C round led by General Catalyst. These deals are part of a larger trend, with at least nine AI coding companies raising significant rounds in the past year.
➡️ The rapid succession of funding rounds for many of these startups, often just months apart, indicates strong investor confidence in the sector. The appeal lies in AI's potential to address longstanding challenges in software development, including high costs, time constraints, and talent shortages.
➡️ The AI coding sector presents a compelling investment opportunity, addressing critical pain points in software development. However, the rapid pace of funding and potentially inflated valuations warrant caution. VCs should focus on differentiating factors among startups, such as unique AI models, enterprise adoption, or integration capabilities.
Given the quick succession of rounds, it's crucial to assess long-term sustainability and potential for market leadership. While the opportunity is significant, VCs should be prepared for potential market consolidation as the sector matures. Careful due diligence on technical capabilities and real-world impact will be key to identifying the most promising investments in this competitive landscape.
🟢 Menlo Ventures Launches $100M AI Fund in Partnership with Anthropic
➡️ Menlo Ventures, a leading Silicon Valley VC firm, has announced a new $100 million AI-dedicated fund named Anthology, in partnership with generative AI startup Anthropic. The fund aims to invest in early-stage AI startups, offering not just capital but also access to Anthropic's technology and expertise. Startups in the fund will receive $25,000 in free credits for Anthropic's models and access to quarterly demo days with Anthropic leadership.
➡️ This move comes as AI investment has surged, with global funding doubling year-over-year in the past quarter. Menlo Ventures, already an investor in Anthropic and other notable AI companies like Pinecone and Typeface, sees this partnership as a way to strengthen its position in the competitive AI investment landscape.
This Menlo-Anthropic partnership signals a trend towards ecosystem-specific AI funds, offering more than just capital. It highlights the value of strategic tech partnerships in the competitive AI landscape. Consider similar collaborations to provide added value to portfolio companies. The surge in AI funding emphasizes the need for a strong AI investment thesis and potentially dedicated AI-focused funds.
🟢 Codeium Secures $150M, Reaches Unicorn Status in AI-Powered Coding Assistant Race
➡️ Codeium, a competitor to GitHub Copilot in the AI-powered coding assistant space, has raised $150 million in a Series C round led by General Catalyst, valuing the company at $1.25 billion. Founded in 2021, Codeium has quickly gained traction, boasting over 700,000 users and 1,000 enterprise customers including Anduril, Zillow, and Dell.
➡️ The platform offers AI-generated coding suggestions for about 70 programming languages and integrates with popular development environments. Codeium differentiates itself by offering a self-hosted option for privacy-conscious clients and claims to have addressed issues like data privacy, code licensing, and AI hallucinations that plague similar tools. The company plans to expand its team from 80 to 120 by 2025 as it competes in a market projected to be worth $27.17 billion by 2032.
➡️ Codeium's rapid growth and unicorn valuation highlight the immense potential in the AI-powered coding assistant market. For VCs, this represents a significant opportunity in a sector that's quickly becoming essential for software development.
The company's focus on enterprise solutions, data privacy, and addressing common AI pitfalls positions it well for continued growth. However, competition is fierce, with established players like GitHub Copilot dominating the market. VCs should consider the long-term sustainability of such tools and their potential to reshape the software development landscape when evaluating investment opportunities in this space.
🟢 Mercately Raises $2.6M to Revolutionize WhatsApp E-commerce in LatAm
➡️ Mercately, a Latin American startup, has raised a $2.6 million seed round to enhance its B2B software that enables brands to sell directly through WhatsApp. The company, which is already profitable with $1.5 million in annual revenue, integrates with platforms like Stripe and HubSpot, using AI agents to facilitate sales processes within WhatsApp. Founded in 2022, Mercately now serves over 1,000 companies across 20 countries.
➡️ The funding round, led by Inventus Capital Partners and SVQuad, will be used to hire more AI engineers and expand into Brazil and the U.S. markets. Mercately's growth has been supported by its participation in Techstars and Meta's "Future of Business Messaging Platform" program, which helped attract investors despite the challenges of raising capital in Latin America.
➡️ Mercately's success highlights the growing potential of WhatsApp-based e-commerce in Latin America and potentially other markets. For VCs, this represents an opportunity to invest in startups that are leveraging existing consumer behaviors and popular platforms to create innovative business solutions. The company's profitability and rapid growth demonstrate the market demand for such services.
As WhatsApp commerce continues to evolve, early investors in this space could see significant returns. However, VCs should also consider the potential competition from larger tech companies and the need for startups to differentiate and expand their offerings to maintain their market position.
🗣️ European Private Capital Hits €1.15 Trillion Milestone in 2023
➡️ Invest Europe reports that European private equity and venture capital under management reached a record €1.15 trillion in 2023, marking a 9% increase from the previous year. This growth represents a doubling of capital since 2017 and the tenth consecutive year of expansion. The industry now boasts €744 billion invested in European businesses, with €410 billion in dry powder ready for new investments.
➡️ Buyout firms manage the largest share at €443 billion, while venture capital and growth capital sectors show significant strength. Pension funds remain the largest source of uncalled commitments at 27%. The UK & Ireland lead in regional distribution, accounting for about 50% of capital under management and dry powder.
This milestone underscores the robust health and growing importance of private capital in Europe's economic landscape. For VCs, the increasing dry powder presents vast opportunities for investment in innovation, sustainability, and business transformation.
As the industry continues to align with policy objectives and investor demands, VCs should consider how to strategically position themselves to capitalize on this growth and contribute to Europe's economic competitiveness.
🗣️ Young NYC VCs Reveal Hot Investment Trends for 2024
➡️ Twenty-something investors in New York City are reshaping the venture landscape with fresh perspectives on emerging trends. Women's health remains a key focus, with the "femtech" market expected to reach $3 billion by 2024. AI is driving significant interest, but with a nuanced approach. Investors are exploring AI applications in social rehabilitation, mental health, and business efficiency.
➡️ The care economy, enterprise climate solutions, and consumer-focused AI tools are also gaining traction. However, young VCs are cautious about circular commerce, free apps, and premature AI infrastructure optimization. They emphasize the importance of sound business models and sustainable funding strategies in the AI sector.
As the investment landscape evolves, it's crucial to balance enthusiasm for emerging trends with disciplined analysis. While AI and women's health offer significant opportunities, be wary of inflated valuations and unsustainable funding strategies. Focus on backing founders with scalable business models and technologies that address real-world needs.
🌐 Active VCs Buck the Trend: Q3 2024 Dealmaking Heats Up
💎 Despite the global startup funding slowdown, the most active venture investors actually ramped up their dealmaking in Q3 2024. This surprising trend offers a glimmer of hope in an otherwise challenging market.
➡️ Y Combinator, Andreessen Horowitz, and General Catalyst led the charge, significantly increasing their post-seed investments. Y Combinator, traditionally known for seed rounds, has been expanding its later-stage support, particularly for AI-focused startups from recent cohorts.
➡️ Andreessen Horowitz and General Catalyst tied for the top spot in leading post-seed rounds, showcasing their continued bullishness on promising startups. General Catalyst, in particular, flexed its financial muscle by leading or co-leading rounds collectively valued at over $500 million, including substantial investments in AI and defense tech companies.
➡️ The AI boom continues to drive investment, with many top deals going to AI-related startups. This trend is particularly evident in the portfolios of leading VCs, reflecting the ongoing enthusiasm for AI technologies across various sectors.
👀 Interestingly, U.S.-based investors dominated the rankings of most active and highest-value dealmakers. This aligns with the relative resilience of North American venture investment compared to global averages, largely fueled by mega-rounds in AI companies.
🔤At the seed stage, while reported deal counts contracted for top investors like Techstars, Y Combinator, and Antler, their rankings remained stable. This fluctuation is typical due to the nature of seed deal reporting and doesn't necessarily indicate a downward trend.
🟢 As we look ahead, the key question is whether regions that have experienced weaker funding in recent quarters will see a rebound. Such a shift could bring more geographically diverse investors into the top rankings.
For founders and fellow VCs, this data suggests that while overall funding may be tight, active investors are still eagerly seeking promising opportunities, particularly in cutting-edge sectors like AI. It's a reminder that even in challenging times, innovation and strong business models continue to attract capital.
🌐 Cybersecurity Funding Takes a Hit: What's Next for Investors?
💡 Did the cybersecurity funding bubble just burst?
🔴 After a strong Q2, venture funding for cybersecurity startups dropped 51% in Q3, falling to $2.1 billion. Deal flow also hit its lowest level since 2013, with only 116 announced rounds. This sharp decline follows a global trend of slowdowns in venture markets.
❓ What changed?
🔴 The lack of big funding rounds played a major role. In Q2, we saw ten $100M+ rounds, including Wiz’s $1B deal. In contrast, Q3 had just four smaller rounds, the biggest being Kiteworks’ $456M raise. Investors, however, remain optimistic.
Despite the downturn, experts like Thomvest Ventures’ Umesh Padval believe valuations are healthy, and new cyber architectures show promise, particularly in the AI space. Some investors are even betting Q4 could bring bigger rounds that were delayed over the summer.
💎 V3V Ventures — Innovating for a Decentralized Tomorrow
At V3V Ventures, we are on a mission to reshape the landscape of WEB3 world and decentralized technologies. Our journey is defined by strategic investments and impactful partnerships, all aimed at driving the future of digital assets.
➡️ One of our most significant moves this year was acquiring Metaverse.sg for $3 million back in February. This acquisition shows our belief in the NFT market's potential and resilience. Metaverse.sg is not just a platform. Mostly, it’s a hub of innovation in the crypto space, and we are excited to contribute to its growth and evolution.
➡️ Our efforts don't stop there. In our quest to become a leader in the crypto and startup ecosystem, we’ve invested over $100k in Telegram Ads this year alone. This initiative has positioned us at the forefront of the conversation surrounding blockchain and decentralized finance, allowing us to reach a wider audience and provide essential insights into the digital asset landscape.
We are also thrilled to announce a $500k investment in @major. This collaboration is all about enhancing knowledge sharing across various channels, including @venture for startup insights, @trading for essential trading strategies, @startups for innovative SaaS ideas, and @ether for the latest cryptocurrency news. Together, we aim to empower users with the information they need to thrive in the evolving world of digital assets.
As we continue on this exciting journey, our focus remains on supporting and nurturing the next wave of innovators in the blockchain space. We are committed to creating a decentralized future that benefits everyone involved.
🌐 Global VC and Startup Ecosystem Rankings 2024: Top Cities to Watch
➡️ The latest global rankings for venture capital (VC) and startup ecosystems have been released, with key insights into which cities lead the way. According to Pitchbook’s VC Ecosystem Rankings, San Francisco holds the top spot as the best city for venture capital, followed by New York, Beijing, and Shanghai. These cities have consistently performed well due to strong access to investors, resources, and established infrastructure.
➡️ However, comparing these rankings with others, like StartupGenome’s Global Startup Ecosystem Ranking and StartupBlink’s 2024 Global Startup Ecosystem Index, reveals some interesting discrepancies. For instance, StartupGenome ranks Silicon Valley (San Francisco) at number one but includes Tel Aviv and Singapore, cities absent from the top of the Pitchbook VC ranking. This highlights how some cities might be more favorable for startups due to their innovation potential and entrepreneurial environment, even if they aren't top-tier VC hubs.
➡️ When focusing on startup ecosystems, cities like London, Tel Aviv, and Tokyo emerge as key players, offering a dynamic landscape for early-stage companies to thrive. Interestingly, while Chinese cities like Beijing and Shanghai dominate the VC space, they don’t hold the same position in startup ecosystems, where innovation ecosystems like Tokyo and Singapore are more prevalent.
➡️ A standout feature of the StartupBlink ranking is its inclusion of growth dynamics. Cities like Bangalore and New Delhi have made significant leaps in recent years, climbing the ranks and positioning themselves as future global leaders. Bangalore, for instance, moved from 14th place in 2020 to 8th in 2024, and New Delhi climbed from 15th to 11th in the same period. Other cities like Washington DC and Shenzhen have also shown notable progress.
The 2024 rankings show that while traditional powerhouses like San Francisco and New York remain dominant in both VC and startup ecosystems, the landscape is evolving. Cities like Beijing and Shanghai excel in VC funding but lag in startup ecosystems, whereas innovation hubs like Singapore, Tel Aviv, and Tokyo are thriving despite lower VC rankings. This highlights the diversification of the global startup scene, where factors beyond venture capital access drive success.
🌐 Venture Capital Landscape: A Glimpse into the Current Market
➡️ Venture capital is showing signs of recovery, with expanding deal counts and increasing valuations. However, a closer look reveals that AI deals and delayed fundraising are inflating these figures. The median step-up between series is only 1.2x for Series D+, barely above 2023's decade-low. Flat and down rounds have reached a decade-high of 28%.
📎 Key trends:
➖ Enterprise fintech funding up 27% in Q2
➖ Infosec deals at highest since Q3 2022
➖ Quantum startups raised $1.4B YTD, nearly double 2023's total
➖ Supply chain startup funding on track for 79% drop from 2021 peak
➖ AI funding hit record $23.2B in Q2, up 59% QoQ
Notable deals include Anduril's $1.5B round at $14B valuation and Groq's $640M Series D at $2.8B valuation.
❗️ The current venture landscape is a complex tapestry of challenges and opportunities. While AI and select sectors are thriving, other areas face significant headwinds. Venture capitalists should remain vigilant, focusing on AI-enabled startups across various sectors, as well as high-growth areas like cybersecurity, defense tech, climate solutions, and quantum computing. However, caution is warranted regarding inflated valuations, and VCs should prepare for potentially longer holding periods. In this climate, diversification and thorough due diligence are more crucial than ever.
The key to success lies in staying agile, adapting strategies as market conditions evolve, and prioritizing value creation and sustainable growth over short-term gains. This dynamic environment demands a balanced approach, blending innovation with prudence to navigate the evolving venture capital ecosystem effectively.
🗣️ VC Funding Trends: Biotech and AI Lead in Mid-September 2024
➡️ The week of September 7-13, 2024, saw a continuation of strong funding trends in biotech and artificial intelligence, with these sectors dominating the top funding rounds. This pattern underscores the ongoing investor confidence in transformative technologies, particularly those with potential for significant societal impact.
➡️ Biotech maintained its momentum with Candid Therapeutics securing the week's largest round at $370 million for its T-cell engager antibodies. This substantial launch capital reflects the enduring appeal of novel therapeutic approaches in the healthcare sector. The biotech trend was further reinforced by Superluminal Medicines' $120 million Series A and Inflammatix's $57 million Series E, both leveraging AI in their respective fields.
➡️ Artificial intelligence continued to attract major investments, with Glean raising $260 million in a Series E round, doubling its valuation to $4.6 billion in just seven months. This rapid valuation growth highlights the market's bullish outlook on AI-enhanced productivity tools. World Labs, co-founded by AI pioneer Fei-Fei Li, also made waves with a $230 million raise, achieving unicorn status and further cementing the importance of spatial intelligence in AI development.
➡️ Notably, the week saw diversification beyond traditional tech sectors. Defense technology gained prominence with Second Front Systems securing $70 million, while autonomous vehicle company Forterra raised $75 million. This spread of investments suggests a broadening of the VC landscape, with increased attention on sectors critical to national security and transportation innovation.
➡️ Fintech and digital health maintained their presence in the funding landscape, albeit with more modest rounds. Finally's $50 million Series B for accounting automation and SpectraWave's $50 million for medical imaging illustrate continued investor interest in these sectors, though at a scaled-back level compared to the mega-rounds in AI and biotech.
On the international front, Belgian biotech firm PanTera's $103 million Series A stands out, indicating that the biotech funding boom extends beyond U.S. borders.
This week's funding patterns reveal a VC ecosystem increasingly focused on deep tech and transformative technologies. While AI and biotech continue to lead, the emergence of significant investments in defense tech and autonomous vehicles suggests a diversifying investment strategy among VCs, potentially driven by geopolitical considerations and the quest for the next breakthrough technology.
🗣️ August's Top VC Players: Who's Still Writing Checks?
➡️ As the summer heat lingered, the VC world seemed to take a collective breath in August. Funding slowed across the board, but a few intrepid investors kept the deals flowing, albeit at a more leisurely pace.
➡️ Leading the pack was Alumni Ventures, barely breaking double digits with 10 deals. They caught our eye with a $40 million Series B for Cents, a startup tackling the unglamorous but essential world of laundry business management. Who knew dirty clothes could be so lucrative?
➡️ Hot on their heels, Andreessen Horowitz and General Catalyst tied for second place with 9 deals each. A16z continued its consistent streak, notably leading an $80 million round for Story Protocol, a blockchain play for IP management valued at a whopping $2.25 billion. Meanwhile, General Catalyst bet big on AI, leading a $150 million round for Codeium, an AI coding assistant now joining the unicorn club.
➡️ Khosla Ventures rounded out the top four, picking up the pace with 7 deals after a couple of quiet months. They co-led a $100 million round for DevRev, pushing the AI customer support startup into unicorn territory.
🟢 Despite the overall slowdown, some big checks were still being written. Founders Fund and Sands Capital made waves co-leading Anduril Industries' eye-popping $1.5 billion Series F, valuing the company at $14 billion.
For VCs, August's trends suggest that while the pace may have slowed, appetite for transformative tech remains strong. AI continues to dominate, but don't overlook niche sectors like laundry tech or industrial manufacturing — sometimes the most unassuming markets hide the biggest opportunities. As we head into fall, keep an eye on how these slower summer months might shape investment strategies for the rest of the year.
🗣️ Venture Funding Hits 2024 Low in August, AI Remains Hot
➡️ Global venture funding cooled off in August 2024, reaching $18 billion — the lowest monthly total this year. This marks a 36% decrease from July and a 23% drop year-over-year. North American companies dominated, securing 66% of global funding, while European startups saw their share dip to a yearly low of 7%.
➡️ Despite the overall slowdown, AI continues to attract significant investment, capturing 24% of total funding ($4.3 billion). Notable deals include Anduril's $1.5 billion Series F and Groq's $640 million round. Healthcare and biotech followed as the second-largest sector.
➡️ The IPO market remains sluggish, with M&A activity also below expectations. However, some large acquisitions, like Google's $2.5 billion purchase of Character.ai, indicate potential for future exit opportunities.
While August showed a funding dip, this aligns with historical patterns and may not indicate a long-term trend. AI's growing share of investments (1 in 4 dollars in 2024 vs 1 in 10 in 2022) presents significant opportunities. VCs should stay alert for cyclical trends and potential upticks in Q4.
The concentration of funding in North America suggests a possible need for geographical diversification. With IPOs slow, consider alternative exit strategies and prepare portfolio companies for a potentially extended private market stay. Keep an eye on AI, healthcare, and defense tech for promising investments in the coming months.
🟢 OpenAI's Soaring Valuation: A $100 Billion AI Powerhouse
➡️ Recent reports indicate that OpenAI is in talks to raise a new funding round at a valuation exceeding $100 billion, with potential investors including Thrive Capital, Microsoft, Nvidia, and Apple. This valuation isn't just speculation; secondary market activity already reflects investors' willingness to value OpenAI at this level. Securities trader Rainmaker Securities has seen bids valuing OpenAI up to $143 billion, while Caplight estimates its worth at over $111 billion based on secondary activity and past funding rounds.
➡️ The rapid rise in OpenAI's valuation is attributed to its explosive revenue growth, going from zero to billions in just a few years. Despite high cash burn rates, the company is projected to reach $2 billion in annual recurring revenue by year-end. Industry experts suggest that while the $100 billion valuation may seem steep, it could be a bargain if OpenAI fulfills its potential.
➡️ This valuation surge is expected to have ripple effects across the AI industry, potentially boosting valuations for competitors like Anthropic, Cohere, and Hugging Face. The intense investor interest in OpenAI reflects both the company's technological leadership and the broader excitement surrounding AI's future potential.
For venture capitalists and tech investors, OpenAI's skyrocketing valuation underscores the immense potential and perceived value of cutting-edge AI technologies. While the valuation may seem astronomical, it reflects the market's belief in AI's transformative power and OpenAI's leading position in the field. This development may signal a new era of AI-driven valuations and investment opportunities across the tech sector.
🗣️ VCs' AI Frenzy Fuels Premium-Priced SPV Market
➡️ Venture capitalists are increasingly buying into each other's Special Purpose Vehicles (SPVs) at premium prices, particularly for AI startups like Anthropic and xAI. Some SPVs are selling at 30% higher than the last fundraising round or tender offer. This trend allows smaller VCs to access hot AI startups they might otherwise miss out on. However, buying SPV shares comes with risks: less insight into company financials, no direct voting rights, and potential for lower returns if the company doesn't grow significantly. This emerging practice is seen as a potential sign of an AI investment bubble.
➡️ The premium-priced SPV trend in AI investing presents both opportunities and risks. While it offers access to coveted AI startups, VCs should carefully consider the limitations of SPV ownership versus direct shares. The high premiums demand exceptional growth to justify the investment, which may not materialize in an increasingly frothy AI market.
VCs should balance their eagerness to participate in AI deals with thorough due diligence and realistic growth projections. This trend also underscores the importance of building direct relationships with promising AI startups early on to secure more favorable investment terms and avoid paying premiums later.
🗣️ The Long Road to Profitability: Tech Startups' Post-IPO Journey
➡️ A new analysis reveals that many of today's most valuable tech companies took several years to achieve profitability after going public. Companies like Uber, Palo Alto Networks, and Shopify waited 5, 6, and 5 years respectively to report their first annual profits after IPO. Some exceptions, like Tesla and Salesforce, took even longer (10 and 13 years) but maintained high valuations due to strong brands and growth potential.
➡️ The study highlights that investors are often willing to tolerate losses if companies show significant revenue growth and market potential. This trend has implications for the current backlog of tech unicorns considering IPOs, suggesting they may need to demonstrate a clear path to profitability within a few years of going public to attract and retain investors.
➡️ This analysis provides valuable insights for VCs considering late-stage investments or preparing portfolio companies for IPOs. The data suggests that while immediate profitability isn't necessary for a successful public offering, companies should have a clear strategy to achieve profitability within a reasonable timeframe post-IPO. VCs should focus on companies with strong revenue growth and market potential, as these factors can sustain investor confidence even during unprofitable years.
However, the tolerance for extended unprofitability may be waning, especially for less exceptional companies. VCs should work with their portfolio companies to develop realistic profitability timelines and ensure they have the financial runway to reach this milestone after going public.
🗣️ 2024's Top 50 Insurtech Innovators Reshaping the Insurance Landscape
➡️ CB Insights has released its third annual Insurtech 50 list, showcasing the world's most promising private insurtech companies. The 2024 cohort features 50 companies split between 23 tech vendors and 27 insurers and intermediaries. These startups have collectively raised $5.6 billion in equity funding, with $1 billion secured in 2024 alone.
➡️ The list highlights a diverse range of innovations, from AI assistants to embedded insurance platforms, with 40% of winners being early-stage companies. The global nature of insurtech innovation is evident, with over a dozen countries represented across Asia, Australia, Europe, and North America. These companies have established more than 500 business relationships since 2020, partnering with industry giants like Swiss Re and Tokio Marine.
➡️ The 2024 Insurtech 50 list underscores the continued dynamism and potential of the insurtech sector. For VCs, this presents a rich landscape of investment opportunities across various sub-sectors and geographies. The strong funding figures and numerous partnerships indicate growing market validation.
However, with 40% of winners being early-stage, there's still ample room for early investment in potentially disruptive technologies. VCs should pay close attention to emerging trends like climate risk solutions, AI-driven operations, and embedded insurance platforms, as these areas show significant promise for reshaping the insurance industry.
🌐 Chinese Startup Funding Hits Decade-Low Amid Geopolitical Tensions
➡️ Venture funding to Chinese startups has plummeted to its lowest point in a decade, with Q2 2024 seeing only $7.4 billion invested, a 42% drop from Q1. The country is on track for its weakest year since 2014, with early-stage funding particularly hard hit, falling to $2.5 billion in Q2. Growth rounds have also declined, though not as dramatically.
➡️ Even AI investments, which have boosted other markets, have not significantly improved the situation. This downturn is attributed to rising U.S.—China tensions, regulatory uncertainties, and changing investor sentiments. The decline in Chinese venture funding could have broader implications for the Asian tech ecosystem, potentially stalling innovation across the region.
This sharp decline in Chinese startup funding presents both challenges and opportunities for VCs. While the market is facing significant headwinds, it may create openings for contrarian investors willing to navigate the complex geopolitical landscape. VCs should carefully assess the long-term implications of this trend on global tech innovation and consider diversifying their Asian investments beyond China.
🟢 Palico Revolutionizes LP-Led Secondaries Market with FINRA Approval
➡️ Palico has become the first FINRA-approved company to facilitate online LP-led secondaries deals. This breakthrough allows for end-to-end transactions on an electronic trading system, potentially transforming the traditionally opaque and broker-dominated market. Palico's marketplace enables LPs to sell fund stakes directly to buyers, with transactions starting as low as $1 million.
➡️ This development is particularly significant for smaller LPs often overlooked by traditional brokers. The platform's launch comes at a time when venture secondaries are booming, driven by extended private company holding periods and LPs' need for liquidity. Palico's innovation addresses the growing demand in the LP-led secondaries market, offering a more accessible and cost-effective solution for a wider range of investors.
This development signals a shift towards greater transparency and accessibility in the secondaries market. For VCs, it presents new opportunities to manage portfolios more dynamically and potentially access a broader range of LP investments.
Consider how this platform could impact your fund's liquidity strategies and LP relationships, and watch for similar innovations that may further reshape the venture capital ecosystem.
🌐 US Venture Funding Rebounds: AI Drives Growth in 2024
➡️ After a slowdown in 2023, US venture funding is showing signs of recovery in 2024. Median round sizes for seed through Series C funding have increased, with seed and Series A rounds surpassing 2021-2022 levels. AI is a major driver, with funding doubling in Q2 2024. Investors note higher valuations, especially in AI and security sectors.
➡️ While Series B and C rounds remain below 2021 peaks, they're trending upward. The time between seed and Series A rounds has extended, leading to more mature companies seeking Series A funding. Despite the overall uptick, valuations vary significantly across sectors.
As the market rebounds, opportunities abound, particularly in AI. However, due diligence remains crucial. The extended time between rounds may offer better-prepared companies for investment, but also demands higher valuations. Stay alert to sector-specific trends and be prepared for increased competition in hot areas like AI and security.