Is a vibe shift finally coming for VC-backed startups?

The question, from journalist Kara Swisher to Sweetgreen cofounder and CEO Jonathan Neman, following a discussion on kale and robotics, was simple. “Are you profitable?” she asked, as a 2018 episode of her Recode Decode podcast drew to a close. “We are,” Neman replied.

But when the Los Angeles-based salad chain filed to go public last October, it revealed financials that directly contradicted Neman’s response to Swisher. Sweetgreen had lost $31 million in 2018. In fact, it has lost money every year since 2014. (The company declined to comment.) Investors don’t expect young, growing companies to be profitable, but Sweetgreen is already 14 years old. READ MORE

How to turn your VC firm into a DAO

Venture firms have been trying to reinvent themselves lately, in an era where founders have an edge with capital aplenty and, at least for now, still-high valuations. It’s no longer enough to be a good adviser, board member and cheerleader. VCs are pushing services like marketing, recruiting, design and data, and broadening their investing stages from seed to growth. READ MORE

New SEC rules aim to prevent private equity firms from passing legal costs to investors

The Securities and Exchange Commission is looking to keep private-equity firms from passing on legal costs to investors, a move aimed partly at addressing a long-standing worry among these investors that they potentially could end up having to foot the bill for an asset manager’s misdeeds.

The U.S. financial regulator’s slate of proposed new regulations for private funds last month would prohibit managers from charging investors the costs of regulatory exams, investigations, or SEC settlements and fines. READ MORE

Private Equity performance at decade high

The report shows that the second quarter of 2021 was a particularly good one for the global LBO market, delivering a quarterly return of almost 12 per cent. This growth was mostly driven by the European and North American regions. The strongest progression was recorded for the youngest vintage years of 2017-2019. 

Growth in the VC market, meanwhile, slowed modestly, but this sub-strategy is still delivering a double-digit return for investors. On industry sectors, it was the private equity deals in the Industrials and Financials sectors that accelerated performance most intensively. READ MORE

To Make Deals in the Middle Market, Private Equity Needs Cultural Literacy

Private equity investors, roaring ahead to another prolific year of deals, are increasingly eyeing buys hidden away in the lower middle market: companies valued between $10 million and $100 million. It’s not uncommon these days for these investors to pursue strong founder-led or family-owned companies in the $100 million, $50 million, or even $25 million annual revenue size. According to The National Center for the Middle Market, many are “B2B organizations that operate within the supply chains of other larger businesses” — sturdy bolt-ons or platforms that offer innovative product designs, compelling business models, or a valuable stable of workers. READ MORE

Where Is Venture Capital Headed In 2022?

My colleagues and I at Prime Movers Lab reviewed over 3,000 investment opportunities last year and are on pace to exceed that in 2022. In the process, we deployed more than $400 million across six sectors: transportation, energy, infrastructure, manufacturing, agriculture and human augmentation. To accurately allocate capital across so many burgeoning sectors, every year, we run 25-plus squads, which are our internal teams that go deep on particular technologies and themes, such as lithium, orbital debris and cultivated seafood. The work of these squads, combined with the careful watching of public and private markets, have led me to a few predictions for where I see venture capital going the rest of this year. READ MORE

Funding To EV Startups Hit A 10-Year High. Now, It’s All About Execution.

Both legacy automakers and startups are focused on the electric vehicle space, which brought in record amounts of capital commitments and private investment last year.

Venture-backed startups in the EV space raised upward of $20 billion in 2021, more than double the nearly $10 billion raised by companies in the sector in 2020. That’s after auto giants like Ford and GM announced plans to commit billions to EVs over the next several years, which means acquisitions, partnerships and other activity in the sector is expected to pick up. READ MORE

Many Recently Public Companies Worth Less Than The Private Capital They Raised

Many venture-backed companies that went public last year have created little value beyond the capital invested in them. Some are even worth less than the capital they raised.

That’s the finding from our review of valuations for recently public companies that were among the largest recipients of venture funding. Most are companies that took the SPAC route to market when mergers with blank-check acquirers were all the rage last year. READ MORE

2022 Venture Capital Report

Despite the continued uncertainty and upheaval caused by the COVID-19 pandemic, the number of venture capital financings reached a record high in 2021 and proceeds nearly doubled from 2020.

VC-backed company liquidity activity also surged, with sharp increases in both the number of IPOs and the median pre-money valuation at the time of IPO, while the number of acquisitions and median acquisition price reached their highest levels in more than two decades. READ MORE

Corporations are scrambling to get into the venture game

The venture capital boom of 2021 was not built from merely traditional VC money. A host of other capital sources played a role in the global trend, from new methods of disbursing angel and seed capital to crossover funds pouring into late-stage startups. And amid all the noise, record-setting totals, and rapid-fire dealmaking, corporate venture investors were busy, investing gobs of parent-company cash into far-smaller concerns. READ MORE

Why tech companies have venture capital funds

February saw the announcement of yet another corporate venture fund, prompting CNBC reporter Jordan Novet to quip, “If your company has no corporate-venture arm, what is it even doing?” Novet’s comment came on the heels of MongoDB’s new fund (disclosure: I work for MongoDB), but the intentional irony strikes home because it comes on the heels of recent announcements from Databricks (December 2021) and Snowflake (November 2020), joining larger tech companies that launched their own venture funds years ago, including Salesforce (2017), Microsoft (2016), Google (2009), Red Hat (2000), and Intel (1991). READ MORE

Russia-Ukraine Conflict Could Further Rankle Supply of Semiconductors And VC Funding

While 2021 was a record year for VC-backed semiconductor startups raising money, this year has started off much slower—a trend that may continue due to the Russian invasion of Ukraine.

Last year saw VC-backed semiconductor startups—which includes everything from chipmakers to design firms to hardware developers—raise more than $6.4 billion in funding, according to Crunchbase data. That number dwarfed the $3 billion seen in 2020. READ MORE