SPAC seeking to merge with Trump’s Truth Social media company settles with the SEC

The Securities and Exchange Commission announced Thursday that it settled with the blank-check company seeking to merge with former President Donald Trump’s media company.

The SEC said Digital World Acquisition Corporation (DWAC) violated anti-fraud laws by failing to disclose to investors that it was actively pursuing a merger deal with Trump Media & Technology Group (TMTG), which owns the social media site Truth Social, before it went public. READ MORE

FTC’s Khan puts private equity ‘on notice’ that roll-up strategies could be illegal

Biden administration antitrust enforcers are continuing an aggressive crackdown on what they see as anticompetitive business practices, and new merger guidelines issued Wednesday could be of particular concern to the private-equity industry.

Federal Trade Commission Chair Lina Khan said in an interview with CNBC Wednesday that her agency, along with the antitrust division of the Department of Justice, are intent on looking more closely at roll-up strategies, in which a company engages in a series of small acquisitions in a single industry that ultimately result in that company holding a significant share of the market. READ MORE

8 VCs say they are still bullish on SAFE rounds, but it’s not 2021 anymore

SAFE rounds, or simple agreements for future equity, have been around since Y Combinator invented them a decade ago. But they took on a different role in 2021 when they became a fast-moving tool that helped startups close deals in mere days. Before that they were used to close really early rounds or were used between financings.

But the market looks very different now. Valuations have started to level out, and deals have slowed down. The power dynamics seem to be swinging back toward investors and out of the founder-friendly market we’ve been in for the last few years. READ MORE

Small, Diverse, Emerging Fund Managers Are Changing Venture Capital

If you think that only 16.1% of venture capitalists being women is paltry, then you’ll be dismayed that only 1.4% of assets under management (AUM) are managed by women and people of color. It’s pathetic.

Two women who met when they were 23 and 25 are showing the world that you don’t need to have worked in a venture capital firm to start a fund that performs in the top 10% of funds and that investing in under representation pays. There is more than one way to learn the investing ropes. READ MORE

House committee takes aim at U.S. venture capital firms for investments in Chinese A.I.

The House Select Committee on the Chinese Communist Party sent letters to four separate U.S. venture capital firms, including Qualcomm’s venture arm, expressing “serious concern” about their investments in Chinese tech startups.

The letters, which were made public on Wednesday, were sent to GGV Capital, GST Ventures, Qualcomm Ventures, and Walden International. They were written by and Wisconsin Republican Mike Gallagher and Illinois Democrat Raja Krishnamoorthi, the top two members on the committee. READ MORE

Dimon says private equity giants are ‘dancing in the streets’ over tougher bank rules

Executives warned Friday that tougher regulations in the wake of a trio of bank failures this year would raise costs for consumers and businesses, while forcing lenders to exit some businesses entirely.

When asked by Wells Fargo analyst Mike Mayo about the impact of changes proposed by Federal Reserve Vice Chair for Supervision Michael Barr in a speech earlier this week, JPMorgan CEO Jamie Dimon said that other financial players could end up winners. READ MORE

Venture Capital Funding Plunges in Wake of Bank Failures

Venture capital lending to startups has declined substantially in the wake of bank failures that slashed financing options, though the second half of the year could appear somewhat more promising for startups trying to obtain funds.

Santa Clara, Calif.-based Silicon Valley Bank, a key venture capital provider, slowly has ramped up lending to startups again.1 North Carolina's First Citizens Bancshares bought the bank after the Federal Deposit Insurance Corp. (FDIC) seized it in mid-March. READ MORE

No, startups are not facing a ‘mass extinction event’

“The Mass Extinction Event for startups is under way,” a partner for a well-known venture capital firm warned in a recent article in the Wall Street Journal. Capital from venture investors and bank loans is “scarce and expensive” and “venture-backed startups are running out of money and facing hard choices”.

The numbers support this: venture capital funding in the first quarter of 2023 was only at 40% of the levels seen in the fourth quarter of 2021. But mass extinction? READ MORE

Gold rush over: what happens to biotech now that venture capital is out of reach?

If you were to look back just a little over two years ago to the start of 2021, then putting money into a biotech company seemed like a pretty safe bet. After all, the COVID-19 pandemic had shined a positive spotlight on the biopharmaceutical industry, and initial public offerings (IPOs) were booming.

But the last two years have seen venture capital and overall funding within the industry dry up due to the economic downturn, which has heavily impacted many biotech companies. READ MORE

Private Equity’s Fundraising Woes Aren’t Over Yet

Investors plan to put slightly more capital to work in private equity this year after commitments bottomed out in 2022. But don’t call it a comeback.

Rede Partners — a consultancy that advises private equity firms on primary fundraising, general-partner-led secondary transactions, and other projects — surveyed 149 limited partners this spring about their plans for capital earmarked for private equity funds. Among the investors surveyed, 26 percent of investors plan to decrease their capital deployment, 26 percent plan to increase it, and 48 percent said their deployment would remain unchanged. READ MORE

The Private Equity Machine Will Be Tough to Unjam

High finance has hit a low. Investment banking work has all but dried up and the private equity industry bears a lot of the blame. The bad news for those involved is that managers of buyout funds might struggle to get their flywheels spinning again even when the current economic uncertainty starts to clear up. 

Private equity has been a huge driver of investment banking revenue over the past 10 years because of its regular cycles of buying, selling and refinancing companies. At Goldman Sachs Group Inc., for example, more than 30% of global investment banking fees came from private equity related work in recent years, compared with less than 20% a decade ago. READ MORE

Founder reflects on lessons learned after closing startup: ‘Jump in, test a lot, don’t quit your day job’

Lalo, a Seattle startup that helped families create digital memorials for loved ones by storing digital content, is shutting down after two years.

Lalo founder Juan Medina told GeekWire that the company attracted thousands of users and millions of TikTok views but ultimately wasn’t able to convince customers to pay for its product or raise enough venture capital. READ MORE

Maybe the second half of 2023 will have greater capital flowing into crypto, but maybe not

Looking at the first half of 2023, funding for crypto startups continued to grow more scarce. In Q2, venture capital flowing into the industry dropped for the fifth consecutive quarter since Q1 2022 to $2.34 billion globally as investors withheld their checkbooks, fearing risks from a severe regulatory stance and an uncertain economy.

The second quarter’s $2.34 billion tally was raised across 382 deals, according to PitchBook data, but it’s a stark decline from the $12.14 billion peak the industry hit in the first quarter of 2022. The biggest raises during Q2 2023 were LayerZero’s $120 million Series B round and Worldcoin’s $115 million Series C round. READ MORE