Venture capital is suffering even as the U.S. stock market is surging.

A few years ago, the startup market was setting one record after another, fueled by low interest rates, U.S. government stimulus spending to counter the COVID-19 lockdown and AI enthusiasm.

AI fever has gotten worse due to the smoke-and-mirrors of ChatGPT and other large-language models, but now interest rates are higher, government stimulus is waning and startups are struggling. The fact that startups are suffering while the overall U.S. stock market is surging suggests that investors are finally realizing that startups no longer are $100 bills on the sidewalk. READ MORE

Only 2% of VC Funding Goes to Female and Ethnic Minority Founded Businesses

The Treasury Committee is challenging the lack of diversity in the venture capital industry as only 2 per cent of funding goes toward female founded and ethnic minority businesses, according to new report.

The Committee also found that 80 per cent of investments went to the “Golden Triangle” of London, Oxford and Cambridge, with the capital receiving almost half of funding despite only being home to under a fifth (19 per cent) of such firms. READ MORE

Pitching in a VC downturn

After years of exuberance, venture capitalists are becoming more selective about where they invest. And many startups have found that raising capital is more difficult.

Investors pay more attention to the pitch financials and take longer with their investment decisions. At the same time, many of the same rules apply—with a focus on a startup's long-term prospects and the quality of the founding team. READ MORE

AI investment is booming. How much is hype?

French startup Mistral AI didn’t have a working product when it raised €105 million ($118 million) in one of Europe’s largest-ever seed rounds last month. But Antoine Moyroud, a partner at Lightspeed Venture Partners, one of the biggest backers of the fledgling firm, wasn’t fazed.

“It may seem like a very big number,” he told CNN, but the company has big, global ambitions and needs a lot of expensive computing power to see that through, he said. READ MORE

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