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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).
⬇️ Materia looks to make accountants more efficient with AI
#Venture
💻 The U.S. is facing an accountant shortage. Fewer first-time candidates took the CPA exam in 2022 than in 2006, according to the American Institute of Certified Public Accountants. One possible reason people aren’t as interested in the field is the large amount of drudge work involved:
Accountants have to rifle through large amounts of unstructured data to perform audits or even just to find answers to their questions. Kevin Merlini, the co-founder and CEO of Materia, left the field for that very reason and is now working to reduce that burden for other accountants.
💻 Materia integrates into a firm’s existing workflow software and applications like Microsoft Excel and Teams to help break down the silos that exist in accounting firms’ troves of unstructured data.
Because of that, it can automate and augment the mundane and tedious parts of an accounting audit so accountants can focus more on high-risk areas that need special attention. It also offers a way for accountants to easily search across their firm’s data and documents to get answers.
⭐️ What If LLMs Change the Business Model of the Internet?
#VentureNews
💡 Last week, Reddit filed their S-1 to go public. At least 10% of their revenue - about $60m - comes from selling data to train Large Language Models. Reddit’s data sales revenue will likely be much more than 10% by the end of the year.
LLMs need data. They compress this it & reconstitute it to answer user queries. At Reddit, like many sites on the Internet, the content changes often. Users want to search the data for product reviews, travel recommendations, facts, & fun (the latest memes). Google isn’t the only one after this data : OpenAI & other providers are also brokering direct deals with Internet publishers.
🍔 The Sudden Repricing of Startups in Early 2024
#VentureNews
👍 We’re entering a new pricing environment for software: AI vs non-AI. It’s only happened in the last few weeks. Recent earnings have pushed some of the most important companies to all-time highs.
This dynamic doesn’t favor everyone. Theory created a public market AI index to track software companies who have significant product plans or current AI businesses. AI companies trade at 2.5x the multiple of non-AI companies in the public market. This yawning difference should compound over time as the adoption of AI is still relatively early - we’re only 18 months into it. In addition, the productivity gains & the concomitant willingness to pay for them is just getting started.
ℹ️ Databricks' Accelerating Growth
#VentureNews
© Databricks revealed some sensational growth this week, as they did last year. Exiting this quarter to $2.4 billion annual run rate, the company’s revenue growth is accelerated year-over-year by 10 percentage points.
© Net dollar retention is a major driver of growth at 140%, which is top decile. The table above shows the other data points that we’ve collected through their press releases in the last two years.
The fastest growing product category mentioned is the data warehouse revenue : 300% growth, now at $400m annually, nearing 20% of revenue. With these modest data points, we can build a basic linear regression model for what the company is worth. This model is rough with an R^2 of approximately 0.45.
⭐️ A comprehensive list of 2024 tech layoffs
#VentureNews
💡 The tech layoff wave is still going strong in 2024. Following significant workforce reductions in 2022 and 2023, this year has already seen 60,000 job cuts across 254 companies, according to independent layoffs tracker Layoffs.fyi.
⭐️ Companies like Tesla, Amazon, Google, TikTok, Snap and Microsoft have conducted sizable layoffs in the first months of 2024. Smaller-sized startups have also seen a fair amount of cuts, and in some cases, have shut down operations altogether.
By tracking these layoffs, we’re able to understand the impact on innovation across companies large and small. We’re also able to see the potential impact of businesses embracing AI and automation for jobs that had previously been considered safe. It also serves as a reminder of the human impact of layoffs and what could be at stake in regards to increased innovation.
🌐 Apple's AI Challenger Sale
“Setting a new standard in privacy.”
💻 For privacy to become one of the leading selling points of software, competitive dynamics & user preferences have evolved. The mantra repeated over the last 20 years on the internet has been privacy is dead. Users simply don’t care. People are willing to trade their privacy for free & targeted experiences.
Since 2020, Apple has marketed their products as the private alternative poking fun at how public we all are about the minutia of our lives.
Apple is competing using the challenger sale : Apple is telling the market, to use AI, you should want private AI, you should want to control your own data because it’s valuable1. Apple’s massive distribution will affect consumer & enterprise preferences.
🍔 Crunchbase expands its diversity-tracking feature to Europe
#VentureNews
👍 Crunchbase is expanding the scope of its tagging options in Europe to start tracking how much venture capital funding goes to minority founders on the continent.
Diversity Spotlight is a feature on Crunchbase that lets companies add tags to their profiles to label themselves. For example, a company can opt-in to label itself as Black-owned or women-led. Crunchbase is now making this feature available in Europe.
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⚡️ Foresite Capital raises $900M sixth fund for investing in life sciences companies
#VentureNews
🎥 Venture fundraising has been a slog over the last few years, even for firms with a strong track record. That’s Foresite Capital’s experience. Despite having 47 IPOs, 28 M&As and 58 FDA-approved drugs under its belt, the 13-year-old multi-stage healthcare and life sciences firm took two years to raise its sixth fund.
🎥 The San Francisco-based firm was set on making sure its sixth vehicle wasn’t significantly smaller than its fifth fund, which totaled $969 million, consisting of a $775 million core fund and a $194 million companion opportunities fund.
Foresite hired Hadi Tabbaa to bridge the funding gap and lead the firm’s widespread investment relations effort. Tabbaa, previously with B Capital and Coatue Management, has helped the firm bring in new LPs, including family offices from Asia and the Middle East.
ℹ️ Primary Series A valuations held steady in Q1
#VentureNews
© Just like at the seed stage, the median valuation on primary Series A rounds held steady in Q1, while the median Series A bridge valuation took a significant leap. Q1’s median Series A bridge valuation of $52.1 million was the second-highest figure so far this decade.
© From Q1 2023 to Q1 2024, the number of Series A investments fell by 26%, while the median primary valuation increased by 19%. Fewer Series A rounds have been taking place, but those companies that are able to successfully raise have seen valuations rise.
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🍔 Round sizes moved in tandem with valuations in Q1
#VentureNews
👍 Over the past two-plus years, median valuations have mostly moved in tandem with median cash raised. At the seed stage, the median valuation was down 0.2% from Q1 2022 to Q1 2024, and median cash raised was down 7.1%. The gap was even closer at Series D, where the median valuations fell by 71.8% over that span and median cash raised decreased by 68.6%.
👍 The scale of the decline in median valuation since the start of 2022 also correlates with the venture timeline: The later the stage, the larger the decline. The same is true of cash raised, with one exception: Median round size has declined more at Series A than Series B.
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#️⃣ Creandum closes €500m fund for early-stage investments
#Venturenews
💻 Creandum has raised its seventh fund, a €500m fund to support seed and early-stage startups in Europe.
The oversubscribed fund was raised in 12 weeks and is backed by 30 global LPs, with more than half of the capital coming from US investors. Creandum’s investor base includes five of the eight largest US university endowments, pension funds and foundations.
💻 It aims to make 35-40 investments at seed and Series A stages across all sectors over the next two to three years.
Creandum is known for being an early backer of Spotify, Klarna and Depop. Recently it participated in the $220m seed round for French AI startup H, the $18m Series A for German SaaS company Codesphere and the $16m Series A for Spanish fintech Embat..
In a statement, Creandum said that the closure of its latest fund demonstrates strong interest from the world’s top investors in European tech, particularly at the early stages. Nearly a third of all seed funding globally goes to European startups, and Europe is home to more than 500 unicorns across 65 cities and 25 countries.
🍔 Total Series C investment rose from Q4 to Q1
#VentureNews
👍 It was a much friendlier fundraising quarter for companies in the middle stages of the startup lifecycle. The number of Series B deals in Q1 declined by a more modest 11% compared to the prior quarter. And Series C deal count increased by 14%, marking the busiest quarter for that stage since Q2 2023.
👍Total cash raised also rose significantly at Series C in Q1, hitting $4.6 billion. That’s a 130% increase quarter-over-quarter and a 44% bump year-over-year. At Series B, total cash raised has now increased in consecutive quarters.
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🍔Number of priced seed rounds declined sharply in Q1
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👍 For early-stage investors, Q1 was the slowest quarter in many years. Seed deal count fell to 414, down 33% from Q4 2023, and Series A deal count dropped to 313, a 36% decline. In both cases, those are the lowest quarterly deal counts since at least the start of 2019.
👍 Total cash raised also declined at both stages in Q1. The $3.1 billion in Series A cash raised in Q1 represents a 35% decline quarter-over-quarter and a 34% dip year-over-year. Cash raised at the seed stage declined by 33% both quarter over quarter and year over year.
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⬜️ Cube is building a ‘semantic layer’ for company data
#VentureNews
⭐️ Cube began as an open source project in 2019 offering what Keydunov describes as a “universal semantic layer” for organizational data that can feed into databases, business intelligence (BI) tools, and even AI-powered chatbots.
⭐️ Now, five years later, Keydunov and Tiunov have a veritable business on their hands, having launched a subscription-based service built on Cube — Cube Cloud — that adds automated workflows and enterprise-focused governance and deployment tooling.
“There’s no shortage of data,” Keydunov told TechCrunch. “And the demand for data continues to grow among employees, partners and customers, who are motivated by the idea that data-driven decisions lead to improved operational efficiency, enhanced customer satisfaction and competitive advantage. Technologies like AI, machine learning, the internet of things and blockchain are reshaping the data landscape and revolutionizing how organizations collect, process, and derive value from data. It’s not only humans who need data; now machines need data too.”
🍔 Brex’s compliance head has left the fintech startup to join Andreessen Horowitz as a partner
#VentureNews
👍 Ali Rathod-Papier has stepped down from her role as global head of compliance at corporate card expense management startup Brex to join venture firm Andreessen Horowitz (a16z) as a partner and compliance officer, TechCrunch has exclusively learned.
Rathod-Papier and a16z declined to comment on the move.
👍 According to her LinkedIn profile, Rathod-Papier now “oversees a16z’s foreign expansion and policy efforts, supporting the government affairs team, managing financial crime and national security risk, as well as overseas operations.” She was at Brex for a total of 2 ½ years, serving in a variety of roles including head of financial crime compliance before joining a16z in May.
Brex CFO Ben Gammell told TechCrunch that her departure was “amicable,” adding that Rathod-Papier “made invaluable contributions to financial management and compliance during her time at Brex” and that she helped position the startup “well for growth” in its next chapter.
🍔 What Happens When AI Performance Asymptotes?
#VentureNews
👍 In the past, the bigger the AI model, the better the performance. Across OpenAI’s models for example, parameters have grown by 1000x+ & performance has nearly tripled.
This is a chart of many recent AI models’ performance according to a broadly accepted benchmark called MMLU. 1 MMLU measures the performance of an AI model compared to a high school student.
What happens when Facebook’s open-source model & Google’s closed-source model that powers Google.com & OpenAI’s models that power ChatGPT all work equally well? Computer scientists have been challenged distinguishing the relative performance of these models with many different tests. Users will be hard-pressed to do better.
⬇️ Nobody Knows : Steel & Blockchains
#Venture
💻 Very few people know whether today’s apps are built with, just as they don’t consider the construction materials of their office building.
Which database did PayPal use to enable internet payments? Nobody knows. Venmo surged with social & mobile payments in the 2010s. Which database did they use? Nobody knows. Tomorrow, apps & software will have web3 components to them. Nobody will know.
The challenge today isn’t finding the applications for web3’s steel. If it works, developers will build with them.
💻 Already stablecoins, which enable rapid money movement, process as much as Visa transaction volume. Some games’ marketplaces use web3 technology. Reddit’s profile pics do too. Web3 social networks have flared up. Billions are traded on exchanges.Already stablecoins, which enable rapid money movement, process as much as Visa transaction volume.
Some games’ marketplaces use web3 technology. Reddit’s profile pics do too. Web3 social networks have flared up. Billions are traded on exchanges.
💻 The pace of innovation is hard to overstate. At the point that the benefits become clear, the pine trusses underpinning Instagram & Salesforce will be steel web3 infrastructure.
And no one will know.
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🔗 What StepStone’s $3.3B venture secondaries fund tells us about LPs’ current appetite for venture
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💻 StepStone raised the largest fund dedicated to investing in venture secondaries ever, the firm announced last week. This fundraise doesn’t just say a lot about StepStone’s venture secondaries investing prowess, but also about how LPs are thinking about the current venture market.
The fund, StepStone VC Secondaries Fund VI, raised $3.3 billion. This marks a big step up from the fund’s predecessor, which closed on $2.6 billion, a record size at the time, in 2022. Fund VI was raised from both existing and new LPs and was oversubscribed, according to StepStone.
Secondaries funds like StepStone’s buy existing investor equity stakes in both individual startups, known as direct secondaries, and LP stakes in venture funds. Direct secondaries allow LPs access to startup stakes in already successful companies nearing an exit, which means less risk and less time to reward.
🍔 Deal Dive: BeReal got its best-case scenario exit
#VentureNews
👍 There has been a lot of bad news about social media startups lately. Multiple companies, including Twitter alternative Post News, and IRL have shut down. And ShareChat’s valuation has dropped more than 50% after a recent funding round. But amid the negative headlines, the recent exit of French social network BeReal looks like a bright spot.
BeReal, which alerts users that they have two minutes to “be real” by taking both a front-facing photo and a selfie, was acquired by Voodoo, a French mobile game and app unicorn, for €500 million ($537 million) this week.
🚀 In May, the early stages grew in Europe, in total VC invested €1.7 billion in 407 rounds (pre-seed, seed, Series A).
📱 In April, there were €1.4 billion and 307 rounds, according to Sifted data.
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⭐️ Gorilla, a Belgian startup that helps energy providers crunch big data, raises $25M
#VentureNews
💡 Gorilla, a Belgian company that serves the energy sector with real-time data and analytics for pricing and forecasting, has raised €23 million ($25 million) in a Series B round led by U.S. venture capital firm Headline.
Founded in 2018, Antwerp-based Gorilla works with energy providers across Europe, the U.S. and Australia, including British Gas’ parent Centrica, Shell Energy and Atlanta, Georgia-based Gas South. Using Gorilla’s cloud-based platform, these companies can process vast swathes of energy data and derive insights on things like consumption patterns, allowing them to forecast future energy needs and identify where they might need to make improvements.
💸Friends & Family Capital, a fund founded by ex-Palantir CFO and son of IVP’s founder, unveils third $118M fund
#VentureNews
⭐️ Small VC firms require deep trust, mutual support and long-term commitment among the partners — a kinship that, in many ways, resembles a family dynamic.
Colin Anderson (Palantir’s ex-CFO and former research VP at Peter Thiel’s Clarium Capital) and John Fogelsong (the son of IVP co-founder Norm Fogelsong) didn’t need to cultivate a family-like relationship before starting their venture firm. A familial tie already existed between the two investors: Anderson is married to Fogelsong’s sister.
ℹ️ Strong rise in median Series B valuations in Q1
#VentureNews
© Series B valuations have bounced back in a major way over the past two quarters. The median valuation in primary Series B rounds jumped by 33% between Q3 and Q4, then rose another 15% in Q1. All told, the median primary valuation increased by 52% from Q3 to Q1, rising from $77.7 million to $118.4 million.
© The median bridge valuation at Series B was also on the rise in Q1, climbing to $105.8 million, up 28% from the previous quarter. In terms of percentage gain, that’s the largest increase in Series B bridge valuations in more than two years.
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ℹ️ Primary priced seed valuations flat in Q1
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© While the median valuation for primary seed valuations stayed flat in Q1, at $12.8 million, the median valuation on bridge rounds raised by seed-stage companies climbed to $20 million, tying its highest point since the start of 2020.
© This increase in bridge valuations was concurrent with an increase in the frequency of bridge rounds at the seed stage: About 42% of all rounds raised by seed-stage companies in Q1 were bridge deals (see below for more).
The combination of more bridge rounds and higher bridge valuations suggests that an increasing number of mature seed-stage companies that are able to garner attractive valuations have been opting for bridge rounds rather than new priced rounds.
🍔 Priced seed round valuation flat while volume down 44%
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👍 At the seed stage, Series A, and Series B, median valuations have been much more resilient than deal count over the past two-plus years. At seed, for instance, the median pre-money valuation declined just 0.2% between Q1 2022 and Q1 2024, while deal count fell by 43.5% over the same span.
👍 At the later stages, however, the trend is reversed: At Series C and Series D, round counts have been more resilient than valuations. The median Series D valuation dropped by 71.8% from Q1 2022 to Q1 2024, compared to a 58.9% decline for Series D deal count.
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🏃♂️ In 2024, many Y Combinator startups only want tiny seed rounds — but there’s a catch
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⭐️ When Bowery Capital general partner Loren Straub started talking to a startup from the latest Y Combinator accelerator batch a few months ago, she thought it was strange that the company didn’t have a lead investor for the round it was raising. Even stranger, the founders didn’t seem to be looking for one..
⭐️ She thought it was an anomaly until she talked to about nine other startups, Straub told TechCrunch. They were all looking to raise nearly identical rounds: $1.5 million to $2 million with around a $15 million post-money valuation, while giving up only 10% of their companies — aside from YC’s standard deal, where it takes a 7% stake.
Most had raised the majority of that already from multiple angels with only a few hundred thousand dollars’ worth of shares left to sell.
These dynamics mean there are likely numerous startups among the 249-strong YC winter batch that won’t be raising from traditional seed investors at all. That happens with every cohort, of course, but the difference this time is that the traditional seed investors would have liked to fund them. However, many seed investors,
🍔 West region saw over 50% of investment last 12 months
#VentureNews
👍 Companies in the West census region combined to bring in 53.3% of all capital raised by startups on Carta from Q2 2023 through Q1 2024, with California accounting for nearly 45% of that cash. Massachusetts ranked second among the states with 12.71% of all capital raised, while New York claimed 10.31%.
👍 In terms of VC activity, the West region is centered around California. The Northeast revolves around Massachusetts and New York. The South has two smaller hubs, in Texas (4.67%) and Florida (3.99%). The Midwest, though, is without a real standard-bearer: Illinois led the way in terms of cash raised over the past 12 months, at just 1.68%.
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⭐️ West took significant share inQ1 2024
#VentureNews
💡 The West (and specifically California) has always been the center of gravity for the U.S. venture capital industry. During Q1, the region’s gravitational force seems to have gotten even stronger.
Startups based in the West raised 62% of all total capital invested on Carta in Q1, its highest quarterly figure since Q1 2019.
💡 As a result, the other three census regions saw their market shares decline in Q1—in some cases significantly. The proportion of all VC raised by startups raised in the South fell to 12% in Q1, down from 17% the prior quarter and from 23% a year ago. And the Midwest’s share of cash raised fell from 7% down to 4%.
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🌐 Kleiner Perkins leads $14.4M seed round into Fizz, a credit-building debit card aimed at Gen Z college students
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💻 Carlo Kobe and Scott Smith believed so strongly in the need for a debit card product designed specifically for Gen Zers that they dropped out of Harvard and Cornell at ages 19 and 21, respectively, in 2021 to build a startup called Fizz.
💻 The pair wanted to go beyond creating a debit card for the younger generation. They wanted to make using the card a way to establish credit and become more educated about finances generally and ultimately be financially independent.
The best way to do this, they decided, was to make its core an artificial intelligence budgeting product and to offer gamified financial literacy courses presented in “a fun and interactive quiz format.” Its target demographic is college students, aged 18 to 24.