2023 has proved to be challenging for many cash-conscious startups, especially those that anticipated raising venture capital in the first half of the year. As the Federal Reserve continues to increase interest rates in an effort to curb high inflation, the public market pullback, especially in the tech sector, and fears of a looming recession have made many investors hesitant to deploy new capital. Such fears have largely quelled the pandemic era of high valuations and easy access to cash for startups. During the “good times” of the past few years, many startups (including those with relatively limited track records) and their founders were able to access venture debt to bolster balance sheets and extend cash runways without the dilutive effect of raising investor money. However, the recent bank failures have significantly impacted the venture community, threatening to upend access to venture debt facilities. Although there are a few bright spots (like artificial intelligence and climate tech), with private company valuations falling and lower availability of venture debt, we expect startups will need to further preserve cash and resources to navigate the expected continued rocky terrain ahead. READ MORE
Four venture capital personas (and how to land them)
There’s tons of advice out there about how to approach venture capitalists for startup fundraising, but in my experience as both a former VC and current founder, I’ve found there is no one-size-fits-all method.
Venture capital investors get into the industry for many different reasons and come from a wide variety of backgrounds that shape their perspectives on the companies they consider for investments. READ MORE
Women Reshaping the Venture Investing Landscape
Women have historically been left out of many industries over the decades but none more so than the world of finance. There is a glaring level of gender inequality in women’s financial literacy, raising capital, and venture investing that leaves women underrepresented, underserved, and underestimated. READ MORE
For venture capitalists, investing in climate tech isn’t a leap of faith
“Every major change we've seen in our society, those changes have been led by startups,” says David Miller, managing partner at Clean Energy Ventures, while we’re discussing the role of venture capital in tackling climate change.
The clearest route to averting the worst impacts of climate change is to dramatically reduce our use of fossil fuels, but doing so will require innovators to develop new or nascent technologies to help wean us off our carbon addiction. Meanwhile, with a certain amount of global warming already locked in, other entrepreneurs will have to create solutions to help humanity adapt to the world’s growing climate catastrophes. READ MORE
SPAC deal is among 2023's largest M&A transactions
A pending $23 billion deal between Black Spade Acquisition Co. and VinFast Auto Pte. Ltd. would mark the largest M&A transaction involving a special purpose acquisition company in almost two years.
Black Spade and VinFast, an electric-vehicle maker, announced an agreement in May for the transaction, the second-largest M&A deal announced in 2023 and one of nine $10 billion-plus M&A deals announced through the first five months of the year. READ MORE
Talent Continues to be the Driving Force Behind Private Equity Firms
It has never been harder to attract top talent to private equity and PE portfolio companies. “We’re seeing a huge reluctance to leave jobs for anything less than top brands, and successfully recruiting out the absolute all-stars is requiring more than just outsized economics,” said Jordan Brugg, global head of private equity for Spencer Stuart. So, what can PE firms do? A recent report from Spencer Stuart lays out a few ideas. Start the process early. “It bears repeating that the war for talent has never been more fierce, so you need to move extremely fast when you see someone who fits,” the Spencer Stuart report said. “As a result, our clients are spending more time at the outset before launching searches to get all the stakeholders in agreement; candidates can smell misalignment. This means you need to iron out the business strategy, the case for the role, and the compensation parameters early on.” READ MORE
Private equity bought out your doctor and bankrupted Toys“R”Us — here’s why that matters
Brendan Ballou is the author of Plunder: Private Equity’s Plan to Pillage America. Brendan is also a federal prosecutor, and served as special counsel for private equity in the antitrust division at the Department of Justice. (Although, he will be the first to tell you, the book does not reflect the views of the DOJ.)
Now, the idea behind private equity or PE is simple: a private equity firm gathers up a bunch of cash, raises some investor cash, and takes on a lot of debt to buy various companies, often taking them off the public stock market. Then, they usually install new management and embark on aggressive cost cutting and turnaround programs mostly because they have to pay down all that debt pretty fast. The company can then be sold or taken public again for a hefty profit. But don’t worry — if it doesn’t work out, the PE firms are extracting fees at every step of the process, so they get paid no matter what happens. READ MORE
Smaller VCs are having an impact on diverse investors and founders
Smaller funds, those that have $50 million or less in assets under management, are helping to usher in a new wave of diversity within venture capital. And the reasons for this are simple.
The latest crop of investors stems from historically overlooked or marginalized communities that are setting up funds and then investing back in those funds. “Small funds operate with a sense of purpose, leveraging their limited resources to drive positive change and foster diversity in the entrepreneurial landscape,” B. Pagles Minor, the founder of DVRGNT Ventures, told TechCrunch+. READ MORE
It’s Taking Longer For Startups To Raise From Series A To Series B
Startups that raise Series A rounds typically have only a short break before they’re fundraising again.
Among U.S. companies that go on to close Series B funding, the median is just under two years to do so, according to a Crunchbase analysis from 2012 to today. For the speediest quartile, the median is under 18 months. READ MORE
Pandemic Didn’t Alter Dominance Of Stanford, Harvard Or MIT For Funded Founders
The pandemic changed many things about how Americans build and fund startups, from the rise of remote teams to the willingness of investors to back companies located far from the home office.
One thing that hasn’t changed, however, is the dominance of three universities — Stanford, Harvard and MIT — in churning out founders of funded companies. READ MORE
5 charts: Big GPs set the tone for fundraising
In nearly every corner of the private markets, fundraising totals are lower today than a year ago. That's what many GPs are saying, and their laments are borne out in the data, according to PitchBook's Q1 2023 Global Private Markets Fundraising Report.
Over the 12-month period that ended in March, investment funds dedicated to PE, VC, real assets, real estate, private debt and funds-of-funds raised anywhere from 15% to 64% less than what those strategies raised the prior year. READ MORE
Revealed: the top 20 global venture capital firms
Only five of the top 20 best-performing venture capital firms around the world are based outside the US and only one is European, according to the 2022 HEC-Dow Jones Venture Capital Performance Ranking.
The top place is taken by IT specialist New York-based IA Ventures, with Australia-based internet and software investor Blackbird in second place.
The size of the US VC market is much larger than any other country, so the prominence of American firms is not surprising. READ MORE
North Korean hackers spoof venture capital firms in Japan, Vietnam and US
Hackers based in North Korea are spoofing financial institutions and venture capital firms in the U.S., Vietnam and Japan, according to new research.
Recorded Future’s Insikt Group linked the campaign to APT38, a state-sponsored group in North Korea notorious for several high-profile attacks on cryptocurrency firms and other organizations. READ MORE
Startup founder pleads guilty to ripping off VC investors with cooked books and phony customer claims
She took the phrase “fake it ‘til you make it,” a bit too literally.
A startup founder has pleaded guilty to cooking the books of her human resources software firm and lying about how many customers it had in order to attract over $5 million from venture capitalists focused on diverse investing. READ MORE
These 3 Charts Show It’s Not Easy Being A Seed Startup These Days
U.S. seed startups have been the least affected by the venture funding downturn. But these companies are competing in a more crowded field than ever for investor attention and will likely have to wait longer to raise their Series A rounds — if they’re able to at all — an analysis of Crunchbase data shows.
To paint a clearer picture of the state of the U.S. seed market, let’s break it down into three charts. READ MORE
Sequoia Capital splits China, India businesses into separate entities
Sequoia Capital is splitting into three entities after the company announced it was "becoming increasingly complex to run a decentralized global investment business."
The venture capital firm said Sequoia India and Southeast Asia will become Peak XV Partners and Sequoia China will become HongShan, while the U.S. and European business will remain Sequoia Capital. READ MORE
Global Venture Funding Leveled In May 2023 Despite Big AI Raises
For the past two months, global venture funding has leveled off above the $20 billion mark, as investors continue to pare back their funding pace.
Global funding almost reached $22 billion in May 2023, up a bit month over month and significantly down, around 44%, compared to May 2022, Crunchbase data shows. READ MORE
Hourly Workers Are In High Demand, As Are Some Startups Catering To Them
Few people get rich working short-term and hourly wage jobs. However, it is how most of us make a living.
In the U.S. for instance, over 76 million workers were paid at hourly rates last year, representing over 55% of all wage and salary recipients. Millions more earn freelance and gig work income calculated using other methods. READ MORE
These Are The Top Universities For Funded Founders
Every year or so at Crunchbase News, we tally up which U.S. universities graduate the highest number of recently funded startup founders. And each time, we see mostly predictable results, with a few surprises in the mix.
This time around, we saw minimal flux at the top of the list. The leading universities for funded founders are Stanford, MIT, UC Berkeley, and Harvard. The top business schools are Harvard, Stanford and Wharton. READ MORE
There’s No Easy Exit for Companies Backed by PE and VC
The true value of private equity- and venture capital-owned companies — a source of much debate — can be hard for outsiders to know. But Verdad Advisers’ founder Dan Rasmussen and senior analyst Chris Satterthwaite have figured a way to peek behind the curtain — and what they’ve found is not pretty.
“The clock is ticking” for private equity, Rasmussen told Institutional Investor. “The margin picture was bad and has gotten worse, the debt picture was bad and has gotten a lot worse, and the valuation picture was bad and has gotten a lot worse.” Combined, it’s “pretty scary,” he said. READ MORE