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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).
💡 Accel has a fresh $650M to back European early-stage startups
#VentureNews
🎥 Early-stage rounds continue to account for the majority of investments in the European startup market, and on Tuesday one of the biggest firms in the region announced a new fund to bolster that trend. Accel has raised $650 million to back startups from seed to Series A across the U.K., the Continent and Israel.
Accel has invested in more than 200 startups in the region to date, making it one of the more prolific VCs in this market.
🎥 One of the recurring laments you hear in Europe is that even if the region produces exceptional talent and ideas, companies on the continent are challenged when it comes to scaling.
🎥 In the years since those investments, Accel’s bet has been that the growth of startups in Europe has been strong enough to grow the pot of money that it’s raising to back them. Notably, the $650 million announced Tuesday is the same size as the firm’s early-stage fund in the U.S. (announced December 2023).
“The European tech scene has really come of age,” said Harry Nelis, a longtime partner at Accel in London. Current investments include cybersecurity firms Cyera and Oasis, the care home marketplace Lottie, and the buzzy AI video startup Synthesia, among many others.
🌐 The Vector Computer Company
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💻 Vector computers simplify many kinds of data into vectors - the language of AI systems - and push them into your vector database. As Spark has become the system for transforming large volumes of data in BI & AI training, the vector computer manages the data pipelines to feed models, optimizing them for a purpose or user.
Combining text & structured data in an LLM workflow the right way is difficult. It requires a new software infrastructure layer: a vector computer. Combining text & structured data in an LLM workflow the right way is difficult. It requires a new software infrastructure layer: a vector computer.
📈 Unicorn-rich VC Wesley Chan owes his success to a Craigslist job washing lab beakers
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⭐️ Over the course of his career in venture capital, he’s invested in over 20 unicorns, including AngelList, Dialpad, Ring, Rocket Lawyer and Sourcegraph. Five of those went on to become decacorns: Canva, Flexport, Guild Education, Plaid and Robinhood. Chan’s was the first check into most of those.
⭐️ After working at Google in its early days as an engineer, he became an investor. His venture capital pedigree started at Google Ventures and continued to Felicis Ventures. Now as the co-founder and managing partner of FPV Ventures, he leads the two-year-old firm’s $450 million venture capital fund with co-founder Pegah Ebrahimi.
His story started before he was born, when his family migrated to the U.S. from Hong Kong in the 1970s.
“They came here with no money, and in fact, growing up they didn’t have any money,” Chan said. “It’s just really fascinating to watch that journey. That they would leave a place where they didn’t speak a word of English and — they still don’t speak English very well — and build a new life because they felt that that was what was necessary.”
💡 State of Private Markets: Q1 2024.
Carta report on the VC market in the USA in 1Q 2024.
💫 For the sake of form, the total VC market is $16.3B, dynamics +1% to QoQ and -64% YoY (by the number of transactions -29% QoQ and -46%(~) YoY);
⬜️ Share of downrounds in Q1 2024: 23% (highest);
⬜️ Midstage has grown: Series B from $4.0B to $4.2B, and Series C from $2.0B to $4.6B QoQ;
⬜️ Early and Late continue to fall and stay at the bottom;
⬜️ Scores dropped everywhere except for Seed;
⬜️ 42% of all priced rounds were bridges (the highest proportion on Series A is 43%);
🚛 Source
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🆔 Deal Dive: How (Re)vive grew 10x last year by helping retailers recycle and sell returned items
🤝 The fashion industry has a huge problem: Despite many returned items being unworn or undamaged, a lot, if not the majority, end up in the trash. An estimated 9.5 billion pounds of returns ended up in landfills in 2022 alone, according to data from return logistics software company Optoro.
(Re)vive takes in products that retailers have deemed too damaged to sell and fixes them up — whether that means washing them, reattaching a button, or lint-rolling off some dog hair. The items are then sold through various channels, and (Re)vive’s data platform helps retailers monitor and manage their waste.
📈 Billionaire Groupon founder Eric Lefkofsky is back with another IPO: AI health tech Tempus
🔒 Eric Lefkofsky knows the public listing rodeo well and is about to enter it for a fourth time. The serial entrepreneur, whose net worth is estimated at nearly $4 billion, has already taken three businesses he’s founded public.
🔒 Today he’s the founder of Tempus, a genomic testing and data analysis company preparing to IPO. But he’s best known as the co-founder of daily deals pioneer Groupon, which went public at a valuation of nearly $13 billion in 2011, in one of that year’s most high-profile debuts.
Groupon’s IPO and post-IPO years were infamously troubled, though the public listings of his other two companies — InnerWorkings in 2006 and Echo Global Logistics in 2009 — didn’t raise significant flags for investors and did well for Lefkofsky. InnerWorkings, a supply chain startup he founded in 2001, sold to private equity in 2021 for a fraction of its IPO market cap.
🍔 The ranking of cities with the best startup ecosystems in the world according to Pitchbook.
😵 The list was compiled using data from the past six years (up to Q2 20 23), including venture capital volume, the number of venture deals, and the financial volume of exits.
🍔 Europe lags significantly behind, while Beijing and Shanghai are closely catching up to the leading American ecosystems.
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🍔 Avendus, India’s top venture advisor, confirms it’s looking to raise a $350 million fund
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🤖 Avendus, the top investment bank for venture deals in India, confirmed on Wednesday it is looking to raise up to $350 million for its new private equity fund. The new fund, called Future Leaders Fund III, will enable the Mumbai-headquartered firm to write larger checks and maintain a meaningful position in the startups it backs, said its managing partner Ritesh Chandra in an interview with TechCrunch.
A regular fixture in most growth-stage deals in India, Avendus has established itself as the largest venture advisor for startups in the country. It provided services in over 30 deals last year, including merger and acquisition transactions, according to Venture Intelligence, a private market insight platform.
💬 A venture capital firm looks back on changing norms, from board seats to backing rival startups
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🔗 Last month, one of the Bay Area’s better-known early-stage venture capital firms, Uncork Capital, marked its 20th anniversary with a party in a renovated church in San Francisco’s SoMa neighborhood, where 420 guests showed up to help the firm to celebrate, trade tips, and share war stories.
There’s no question the venture scene has changed meaningfully since Uncork got its start. When firm founder Jeff Clavier launched the firm, he was mostly using his savings to write six-figure checks to founders. Now Clavier and his contemporaries, including Josh Kopelman of First Round Capital and Aydin Senkut of Felicis, collectively oversee billions of dollars in assets.
🍔 Quarterly AI Funding Amounts
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🤖 According to a recent Crunchbase report, AI talent is still concentrated in several regions of the world. This has led to a skew in the volume of venture financing to startups in these regions.
San Francisco topped the list, as expected: the number of talented professionals and the amount of venture capital here are second to none. In addition, the headquarters of many of the largest startups in the field of artificial intelligence are located here.
💡 From Plaid to Figma, here are the startups that are likely — or definitely — not having IPOs this year
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💫Last year’s investor dreams of a strong 2024 IPO pipeline have faded, if not fully disappeared, as we approach the halfway point of the year.2024 delivered four venture-backed tech IPOs, Reddit, Astera Labs, Ibotta and Rubrik, in March and April, which made it seem like this year could spur the momentum investors had hoped for in 2023.
But secondary investors and IPO lawyers recently told TechCrunch that despite these four successes, macro conditions like the upcoming presidential election and elevated interest rates, means the IPO market won’t fully reopen until 2025.
💼The Fastest Growing Category of Venture Investment in 2024
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🎁 The fastest growing category of US venture investment in 2024 is AI. Venture capitalists have invested $18.3 billion through the first four months of the year.
At this pace, we should expect AI startups to raise about $55b in 2024
AI startups now command more than 20% share of all US venture dollars across categories, including healthcare, biotech, & software. In the preceding eight years, that number was about 8% per year. But after the launch of ChatGPT in 2022, there’s a marked inflection point.
⭐️Harlem Capital is raising a $150 million fund
Harlem Capital is raising a $150 million fund, according to documents filed with the SEC.
🏃♂️ If raised, this new fund, the firm’s third, would be its largest to date. In 2021, Harlem Capital raised an oversubscribed $134 million, much more than the $40 million it raised for its inaugural fund in 2019.
The firm was founded in 2015 with the goal of backing diverse founders. Its second fund focused on early-stage post-product companies from all sectors but with a particular focus on consumer and enterprise tech. The firm currently has $174 million in assets under management, according to Pitchbook, and has made more than 80 investments since its inception, with 12 exits. Investments include Propense.ai, the fintech Poolit, and the e-commerce platform Gander.
💡Massive Acquisitions in Software Startups
In the last decade, the total number of venture backed software M&A by count has remained relatively constant. The black line shows the linear trend across US venture backed companies with disclosed values of $50m or more. 🚀
💫The average & median counts by year total 58 & 55 respectively.
If there are any increases, they tend to be in the bigger acquisitions of $500 million or more - although the sample size there is sufficiently small to conclude the trend is significant. 🚀
💫Nevertheless, there are huge differences between the total value created by software M&A annually. The least productive year produced $3.25b in M&A value and the most productive $59.7b, a 18.4x swing.
🚀Alchemist’s latest batch puts AI to work as accelerator expands to Tokyo, Doha
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🔎Alchemist Accelerator has a new pile of AI-forward companies demoing their wares today, if you care to watch, and the program itself is making some international moves into Tokyo and Doha. Read on for our picks of the batch.
💫Chatting with Alchemist CEO and founder Ravi Belani ahead of demo day about this cohort, it was clear that ambitions for AI startups have contracted, and that’s not a bad thing.
🌐“The cost of building a basic LLM is prohibitively high; you get into the hundreds of millions of dollars just to get it out. The question is, as a startup, how do you compete?” Belani said. “VCs don’t want wrappers around LLMs. We’re looking for companies where there’s a vertical play, where they own the end user and there’s a network effect and lock-in over time.”
© One Line of Code Can Wipe a Billion Rows : Investing in Tobiko
➡️ A short SQL statement can delete a table, reformat date into the US format, or compute the average quota attainment by account executive by region over a company’s history.
➡️ As data has become a critical component of analytics & production systems, data engineers require more sophisticated tools to manage their data transformations. Tobiko is that solution.
At small scale this may not seem important. But for Harness, this innovation saved 30-40% of their cloud data warehouse spend & reduced model build time by 80%. DreamHaven, a gaming company, found Databricks’s Delta Live Tables 3.5x more expensive than Tobiko to run the same pipelines.
⭐️ WndrCo officially gets into venture capital with fresh $460M across two funds
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⭐️ WndrCo, the holding company and technology investment firm started by founding partners Sujay Jaswa and Jeffrey Katzenberg, raised its first venture capital fund, closing on over $460 million in capital commitments.
⭐️Katzenberg is well-known for being the former chairman of Walt Disney Studios and co-founder of DreamWorks SKG. Jaswa was a principal at New Enterprise Associates before joining Dropbox as one of the company’s early employees.
We profiled the 8-year-old company in 2022 after we noticed how many times WndrCo’s name was associated with venture capital deals in a short period of time. “The common thread across everything is that we’re really looking for founders that we think have a chance of cracking an important problem,” Jaswa told TechCrunch at the time.
🔠 Is the Software Market in Trouble?
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🔠Last week, public software markets suffered significant compression. MongoDB fell 24%; UIPath fell 36% ; Salesforce fell 15% ; Workday was down 11%. Weaker revenue projections tend to cause sell-offs.
❗️These large drops aren’t unprecedented. In 2016, valuations fell 57%. Is it different this time?
Growth rates have changed meaningfully. The 25th, 50th, & 75th percentiles for public growth rates have halved in the last 18-24 months. The grey bar indicates Covid ending & marks the beginning of the slide.
💼 VC firm Antler’s CEO says Asia presents ‘biggest opportunity’ in the world for growth
🎁 Asia’s startup ecosystem hasn’t been doing well in the past couple years, as everything from geopolitics to higher interest rates affected investors’ willingness to write checks. Many venture firms have exited China, which used to be the continent’s biggest venture market.
Though there hasn’t been a huge decline in the number of fundraising rounds, the rounds have shrunk — investors are no longer spending as much as they used to. Still, some investors are bullish on the continent’s potential, setting up global strategies as they seek fund-returning investments.
💻 VCs are selling shares of hot AI companies like Anthropic and xAI to small investors in a wild SPV market
⏺ VCs are clamoring to invest in hot AI companies, willing to pay exorbitant share prices for coveted spots on their cap tables. Even so, most aren’t able to get into such deals at all. Yet, small, unknown investors, including family offices and high-net-worth individuals, have found their own way to get shares of the hottest private startups like Anthropic, Groq, OpenAI, Perplexity, and Elon Musk’s X.ai makers of Grok.
They are using Special Purpose Vehicles where multiple parties pool their money to share an allocation of a single company. SPVs are generally formed by investors who have direct access to the shares of these startups and then turn around and sell a part of their allocation to external backers, often charging significant fees while retaining some profit share (known as carry).
💫 The AI Trust Fall?
🚀 We don’t think this way about coworkers’ spreadsheets. But we will probably think this way about AI & this will very likely change the way product managers on-board users.
But today, with every AI software now tucking a disclaimer at the bottom of the page, we will be wondering. “Gemini may display inaccurate info, including about people, so double-check its responses” & “ChatGPT/Claude can make mistakes. Check important info” are two examples.
⭐️YoLa Fresh, a GrubMarket for Morocco, digs up $7M to connect farmers with food sellers
🔵 The fresh produce supply chain in Africa and emerging markets is faced with a daily list of cascading challenges. They include environmental and labor issues through to logistical ones food wastage to poor demand-supply synchronization. These various issues affect stakeholders differently: farmers struggle with sales, while retailers struggle to negotiate effectively.
Several agritech startups have tried to solve these issues by taking control of the fresh produce supply chain, bypassing intermediaries, and directly connecting retailers and farmers; Frubana in Latin America, Meicai in China, and Waycool in India are a few examples. YoLa Fresh is one such startup that directly connects smallholder farmers with traditional retailers of fruits and vegetables, starting with Morocco.
⭐️How Clean Energy Ventures avoided the pandemic bubble and raised a $305M fund
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💫 Climate tech couldn’t escape the frothiness that engulfed the startup world earlier in the decade. For both founders or venture capitalists, it was tempting to raise money. Interest rates were low, money was cheap, and investors looking for better returns were hungry to get in the game.
“When COVID hit, we really had to do some introspection and say, ‘Look, we need to be super careful here. This is looking like a bubble.’” Dan Goldman, co-founder and managing partner at Clean Energy Ventures, told TechCrunch. His firm raised its first fund years before the pandemic, but it still hadn’t deployed all the capital. “We tried to remain really disciplined during that period.”
💎 Spanish startups reached €100 billion in aggregate value last year
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➡️ If 11 figures is your attention threshold, you may be interested in learning that the combined enterprise value (EV) of Spanish startups surpassed €100 billion in 2023, according to Dealroom’s latest report on the Spanish tech ecosystem.
➡️ As we’ll see, venture investment into Spanish startups also held up quite well, with €2.2BN raised across some 850 funding rounds.
Spain’s venture capital tally was lower last year than in 2021 and 2022; that’s no surprise as these years were outliers. Unlike other places, though, the country hasn’t fallen below pre-pandemic levels of activity. In 2019, for reference, Spanish startups had collectively raised €1.9BN in venture capital.
⚡️Are Software Companies Good Businesses?
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🔆 Research & development costs associated with software should be part of their cost of goods sold. Software companies don’t invest once in R&D & then sell copies of the software as we did in the 90s on CDs.
It’s software-as-a-service. So the costs of developing & maintaining the software are ongoing. If that argument is correct, then the average gross margin of a software company in the public domain would fall from 72% to 47%. Quite a stark difference.
🔄 Partnering with Dropzone: Automating Security Operations with AI
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🔄 Enterprises spend more on security but aren’t benefitting from the extra spend. Palo Alto Networks’ customers who buy security across 3 platforms spend more than 40x those that secure just one.
The average enterprise uses upwards of 70 security products. Many of these products produce alerts identifying phishing emails or network access issues or odd device behavior.
💻The Most Profitable Software Company in Q1 2024
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📶 Ethereum generated $370m in profit on $825m in revenue for about a 45% net income margin.
📶 The chart above shows both the historical performance & also explains how web3 blockchains like Ethereum generate revenue & profits.
If Ethereum were to trade on the New York Stock Exchange or the NASDAQ, it would top the net income margin (%) charts, with Microsoft, Adobe and Veeva thereafter.
⭐️The Capex Conquest in the Cloud
Amazon announced their earnings yesterday. Like Microsoft & Google, Amazon’s Web Service business is seeing a surge of growth, up from 13% annual to 17% annual growth (16% when excluding the leap year).
🎥 Aside from the overall growth of these clouds increasing, the massive investment in CapEx data centers, power plants, and GPUs is stunning. Google and Microsoft would wait another two years to replicate a similar level of investment.
🏃♂️Over time, we should expect Amazon and Google, amongst others, to start to compete with Nvidia GPUs, offering their own which should meaningfully improve margins.
We have the broadest selection of NVIDIA compute instances around, but demand for our custom silicon, Trainium and Inferentia, is quite high given its favorable price performance benefits relative to available alternatives. Larger quantities of our latest generation Trainium2 is coming in the second half of 2024 and early 2025.
🙂 Are AI Companies Valued Differently Than Non-AI Companies?
The Theory AI Index of publicly traded companies continue to outperform more classical software companies since we published the index earlier this year. ❗️
📎Across the five most important metrics, AI companies’ valuation correlates isn’t that much different than non-AI companies.
🏃♂️ETF Partners raises €285M for climate startups that will be effective quickly — not 20 years down the road
⚡️While many climate investors focus their efforts on breakthrough, deep-tech solutions, Patrick Sheehan at ETF Partners has other ideas.
#️⃣I’ve actually got nothing against carbon capture and storage, apart from the fact it’s probably going to be commercialized too late, he told TechCrunch. Instead, Sheehan and his colleagues are diving into more software-centric companies that promise to still move the needle.