Consumer venture capital has weathered multiple market shifts in recent years and is positioned to continue as a force in the venture ecosystem. Though individual consumers may face challenges in the current economic environment, consumer brands will almost invariably stay in demand. Low consumer activity and high consumer company performance might seem to be at odds, but they're not as implausible if we broaden our definition of consumer goods.
While it’s true that people may spend less on luxury goods and non-essentials during periods of economic uncertainty, they still continue to generate business for products and services like food brands and free mobile apps. These may not be our first association when we think of consumer products, but they are a relative constant in a market that is otherwise always in flux. READ MORE
Twitter Backed A Bunch Of Underrepresented VCs. Under Elon Musk, It’s Trying To Dump Them.
In January, the leaders of several venture capital firms that had taken money from Twitter received a note from their last remaining contact at the social media company. Sent from a personal account, the email informed them that the team that stewarded those investments had been obliterated as part of Elon Musk's shambolic takeover of the social media platform.
Someone in Musk’s sphere would likely reach out, the former Twitter employee explained. But neither they, nor their former colleagues, almost all of whom had quit or been laid off, knew who that might be or what would happen next. “The person who did this was trying to help some of the GPs [general partners] who were hurt by [the departures],” one venture capitalist told Forbes. “They apologized for their inability to do better by them.” READ MORE
Big-time VCs link arms for climate coalition
About two-dozen venture capital firms say they are teaming up to “build a robust movement” in the VC business to combat the climate crisis. The group calls itself the Venture Climate Alliance, or VCA.
The coalition counts well-known tech investors, including Tiger Global and Union Square Ventures as members, and said in a joint statement on Tuesday that its goal is to “define, facilitate, and realize net zero-aligned pathways” for early-stage startups.
Several things are happening here. READ MORE
Silicon Valley Startups Brace for a Summer of Pain
The startup world has had a tough year — plagued by mass layoffs, plummeting venture capital investment and the chaotic collapse of Silicon Valley Bank. But many in tech believe that the worst is yet to come. READ MORE
Private equity crackup looming amid higher interest rates and escalating losses
Significant cracks in the $12 trillion private equity business are emerging with big firms like Blackstone Group, Apollo Global management, and other big players failing to meet fundraising goals, asking investors for money and suffering losses on some major funds, Fox Business has learned.
Private equity has been among the best performing investment vehicles in recent years. The firms will buy public companies, take them private and sell them at a profit years later. They also invest in real estate and trade various securities to earn returns that often beat the markets. Unlike big banks and securities firms, they receive less scrutiny from regulators, side-stepping the so-called systemically important designation that brings tremendous oversight. READ MORE
Welcome to a new, humbler private-equity industry
During the past decade it sometimes seemed as if anyone could be a private-equity investor. Rising valuations for portfolio companies, and cheap financing with which to buy them, boosted returns and reeled in cash at an astonishing clip. Improving the efficiency of a portfolio firm, by contrast, contributed rather less to the industry’s returns. As acquisitions accelerated, more and more Americans came to be employed, indirectly, by the industry; today more than 10m toil for its portfolio firms. But last year private equity’s twin tailwinds went into reverse, as valuations fell and leverage became scarce. By the summer, dealmaking had collapsed. Transactions agreed at high prices in headier times began to look foolhardy. READ MORE
Need Funding? Here's How to Pitch Venture Capital and Private Equity Firms in 2023
If there's one thing we all know about business, it's that no cycle lasts forever. Courses correct. Pendulums swing. Bubbles burst. What goes up comes down. So it is for entrepreneurs seeking funding in 2023. After a year of record investment activity in 2021 among U.S. venture capital and private equity firms, rising inflation and recession fears led to a precipitous drop in funding in 2022: The value of VC deals fell by more than 30 percent year-over-year, while PE dealmaking declined nearly 20 percent, according to PitchBook. Then, in March, Silicon Valley Bank failed, shaking up the VC world. Now more than ever, investors are focused on fundamental analysis. Or as Cameron Newton, founder of VC firm Relevance Ventures, says, "People want to see the data. How are you a sustainable business?" A reasonable question at any time. But now -- while times are tight, and VCs are sitting on a record $300 billion of dry powder -- would be a good time to fine-tune your pitch. So how do you land that investor meeting? Here's what seven VC and PE investors say they want to see before writing a term sheet. READ MORE
How To Raise An $8 Million Seed Round In Less Than Two Weeks
Jennifer Smith needed to raise the seed round for her tech company Scribe. But she didn’t have two months to step away from her cofounder duties to do it—so she did it in under two weeks.
Scribe makes process documentation quick and easy. Think of running a monthly report. With Scribe, hit a record button on your browser, run the report, and Scribe will record each step of the process. It then gives a step-by-step instructional document with screenshots. It can be used in any industry that’s process-driven to make training a breeze. READ MORE
As SPAC Boom Subsides, Some De-SPACed Companies Seek Chapter 11 Protection
The contraction of the market for special purpose acquisition companies (SPACs) and the recent challenges de-SPACed companies have encountered have attracted considerable press attention. The stocks of many de-SPACed businesses — companies formed by the merger of a SPAC with an operating business — are trading well below the SPACs’ original IPO price, and a number have filed for bankruptcy. READ MORE
M&A Exits For VC-Backed Cyber Startups Continues To Sputter
Just as funding has sputtered to cybersecurity startups in recent quarters, the main exit avenue for startups and investors also has been narrowing.
As one of the largest cybersecurity gatherings kicks off this week in San Francisco — the RSA Conference, where deals have often been announced — M&A deal-making in the cybersecurity space continues to slow with only 13 deals announced for VC-backed startups in the first quarter of the year, per Crunchbase data. READ MORE
PCAOB flags widespread weaknesses in audits of SPACs
A two-year surge in the number of SPACs reversed in 2022 amid financial market volatility, tougher scrutiny of SPACs by the Securities and Exchange Commission and a rise in interest rates during the most aggressive monetary tightening in four decades.
The number of SPAC initial public offerings plummeted to 84 last year, an 86% decline compared with the 613 completed in 2021, according to the PCAOB, which oversees the accounting firms that audit public companies. READ MORE
How To Get a VC to Boomerang Back For a $5 Million Series A Extension
Fundraising is simultaneously one of the most rewarding and painstaking parts of being a founder. No matter what anyone tells you, fundraising is hard. It requires long hours, endless pitching and more “nos” than most people hear in their lifetimes. And just when you think it can’t get any worse, there’s now a pandemic-driven economic crisis in the mix, along with a VC winter.
When the pandemic first hit in 2020, my company, Anvil, found its purpose in aiding small to medium-sized banks as they distributed loans to small businesses. Our paper automation platform allowed most companies to not only enter the digital age, but flourish in it. In June of that year, we raised a $5 million Series A from investors such as Gradient Ventures, Citi Ventures, Menlo Ventures, Restive Ventures and 122 West. READ MORE
The Fintech Funding Crunch In 4 Charts
Few sectors illustrate the massive runup in venture funding that occurred in 2021 as well as financial services and the fintech industry. In that year, billion-dollar venture fundings went to neobanks, wealth management providers, buy now, pay later startups, cryptocurrency exchanges and insurance brokers.
Some 20% of the total $681 billion in global venture funding in 2021 went to the fintech sector alone. READ MORE
The List Of Big, Losing Startup Acquisitions Grows Longer
No investor sets out with the intention to buy high and sell low. However, that’s often how deals turn out, particularly pricey startup acquisitions carried out under much frothier market conditions.
In recent weeks and months, we’ve seen increasing evidence of this money-losing dynamic at work. Public companies that bought startups at prevailing valuations a year or more ago are now selling those assets at steep writedowns. Others are holding on, but with big losses on the books. READ MORE
The Party’s Still Over: The VC Downturn In 6 Charts
For VC investors and startups alike, this year’s first quarter was a painful hangover from 2022, the stunning year that ended the glitzy venture funding party that was 2021.
For Q1 2023, the operative word is down: funding is down, deal flow is down, overseas investment is down. The only soaring numbers in the first quarter are those displayed in our Crunchbase Tech Layoffs Tracker. READ MORE
The share of VC deals that are done in Silicon Valley is at an all-time low
The San Francisco Bay Area is the home of Apple, Google, and Meta, but its grip on the technology sector’s future is arguably weakening. Though it remains the single biggest region for US deals involving venture capital, the area’s share of these deals has been on the decline and now stands at 18.6%, according to PitchBook, which tracks private capital markets.
The collapse of Silicon Valley Bank, which was felt more acutely in this market, where it funded many startups, may further contribute to the decline in deal activity in the Bay Area, PitchBook notes. READ MORE
Tech investors’ obsession over profit is already waning
When it became clear that the public market had forever descended from the peaks of 2021, venture investors decided to break camp and head downhill as well, advising their portfolio companies to focus on lowering their burn because capital had suddenly become expensive.
Why the focus on cost-cutting? Because conserving cash is an easy way for startups to postpone fundraising, giving them more time to both increase their revenue and potentially wait for tech valuations to recover. READ MORE
Just how hard is it for startups to raise capital today?
If you are a founder looking to raise your first external capital or your startup is a bit farther down the line, you need to know what’s going on in the world of venture capital. Don’t worry, the TechCrunch+ crew has your back.
Building off of TechCrunch+’s rapid-fire coverage of individual startup funding rounds, we’re digging deep into the global trends shaping venture appetite, covering how startups are responding to a new and more conservative reality. READ MORE
OpenAI Wraps Up Tender as AI Talent War Heats Up
OpenAI has told employees it has finalized a tender offer that allowed some staff to cash out their holdings, one person with direct knowledge of the situation said. The move caps a process that began last fall alongside talks to raise billions of dollars from Microsoft.
Over the past few months, the San Francisco startup behind artificial intelligence–powered chatbot ChatGPT has negotiated the tender offer in which investors buy employee profit units—essentially, rights to future OpenAI profits—at a price that implies a roughly $27 billion valuation, two people with direct knowledge of the discussions said. The size of the deal couldn’t be learned. READ MORE
Series C Isn’t What It Used To Be
In startup life, getting to Series C is kind of like hitting middle age. You’ve been toiling away for a while now, and everyone knows what you do. Nonetheless, it’ll take a lot more money to keep forging ahead.
Lately, U.S. investors have gotten much stingier when it comes to furnishing middle-aged startups with capital to continue on their journeys. One metric to measure this is Series C funding, which is down 74% in the first quarter of 2023 from year-ago levels. READ MORE