Venture-backed startups are failing at record rates

If current trends continue, more VC- or private equity-backed startups will fall into bankruptcy this year than at any point since 2010. 

In the first half of 2023, 338 U.S. companies filed for bankruptcy protection, according to newly released S&P Global Market Intelligence data, including 54 companies with private equity or venture capital backing. At that rate, 108 VC-backed startups will fail by year’s end, besting the 95 that failed during 2010. READ MORE

How To Bring 10,000 More Women Into Venture Capital

Historically, venture capital has been dominated by men in Silicon Valley, who may have fueled massive innovation but who also fueled questionable cultures and some business practices that most of us wouldn’t want to replicate. Despite the public stories of harassment, discrimination and biased decision-making, some courageous women have broken in and learned the trade. By my count, today we have more than 425 women-run venture firms with the ability to dramatically shift the innovations, leaders, jobs and corporate cultures of the future, by investing in and supporting companies and ideas that support women around the world. Yet, because many of these firms can’t find investors in their ventures, they can’t scale funding fast enough to sustain a reasonable operation. READ MORE

3 Reasons To Downgrade VC And Embrace A New Era In Venture Financing

Is the failure of Silicon Valley Bank one of the first dominoes to fall signifying the end of the easy money in venture financing? Or will the days of wine, roses, cheap money, and SPACs return with the resurgence of the stock market?

Ventures are said to be holding on to the cash they raised earlier, and are reluctant to raise more because some valuations have fallen by half or more. They are also waiting for the return of the glory days and high valuations of the recent past. READ MORE

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