AI Start-Up Investments Bucking Venture Capital Decline Trends

According to Crunchbase, over a quarter of the total investments in the US based startups this year has gone toward AI companies, more than double the percentage of last year. This is equivalent to 1 in 4 dollars has been invested in USA AI startups in 2023, so no wonder every company building a new technology has AI emblazoned everywhere in their pitch decks. Comparatively between, 2018 and 2022, AI startups, received an average of 12% of funding capital. READ MORE

New IPOs offer a true reflection of late-stage VC valuations

After about a year-and-a-half without liquidity prospects, investors and employees of some of the largest unicorns may see a glimpse of light at the end of the tunnel.

Last week's IPO filings of Instacart and marketing automation company Klaviyo mean that once they debut, various types of investment activity—from new late-stage rounds and secondaries trading to other public offerings—are likely to see a pickup. That is in large part because there will finally be more clarity about what private companies are worth. READ MORE

Many Boom-Era Startups Will Face A Fundraising Cliff In 2025

You can tell a lot about investors’ enthusiasm for a startup by the pace of its fundraising.

A company that takes just months to go from one round to the next looks like a hot property. One that takes a couple of years is probably well-regarded, albeit maybe less buzzy.

Once a few years pass with no new round raised, however, a startup’s shine has likely faded. If four or more years go by, the probability of ever raising a subsequent venture funding round falls precipitously. READ MORE

SEC makes biggest overhaul of $20T private equity, hedge fund industry in years

The Securities and Exchange Commission voted to overhaul rules for private equity and hedge funds, but in a victory for the industry did not make it easier for investors to sue fund managers and also did not ban arrangements that make it easier for some investors to cash out than others.

The securities regulator’s five-member panel voted 3-2 in favor of a series of changes aimed at increasing transparency, fairness and accountability in the private funds industry, which has more than doubled its assets over the past decade. The industry manages around $20 trillion in assets. READ MORE

Private Equity Turns to Left-Field Finance to Get Deals Done

Private equity firms are turning to a new weapon to help them get their buyouts over the line: less-than-conventional funding.

M&A activity has slumped this year in part because spiraling interest rates have made traditional PE investors nervous about leveraged acquisitions. Buyout firms are increasingly using expensive subordinated debt — also known as junior financing — to help fill funding gaps and get deals done. READ MORE

How to play the private equity game without a fund

In 1998, Scott Dickes left his job as a vice president at a private equity firm and embarked on the quixotic journey of a fundless sponsor.

A fundless sponsor (or "independent sponsor," per a more recent conceptual rebrand) is an investor that pursues a deal without the security of the committed capital in a PE fund. A typical timeline for an independent sponsor starts when a PE professional spins out of an established investment shop, spots an asset that shows some potential, negotiates the acquisition, and scrambles to get the equity financing and leverage later. READ MORE

Private Funds Exhale Over SEC Rule Despite Big Compliance Costs

Hedge funds and private equity firms are breathing a sigh of relief, welcoming concessions the Securities and Exchange Commission made when green-lighting a rule that imposes new restrictions and requires more fee disclosures.

The SEC adopted, by a 3-2 vote Wednesday, regulations aimed at increasing transparency in the multi-trillion-dollar private fund industry. But the agency eased—and in some cases abandoned—some of the most contentious parts of its initial proposal. READ MORE

Women Founders Still Get Less Than 2 Percent of All Venture Funding. How This Woman-Led Company Beat the Odds

I proclaimed myself an entrepreneur eight months after the passing of my father, Martin Becker. Dad was a Holocaust survivor who came to America at age 12 with no money, family, ­education--or ability to speak English. He started a small salvage business in San Fran­cisco, because, having been drafted to serve in the Korean War, that's where he disembarked upon his return. He sold ­dented cans and jars with the labels torn off at steep discounts, and then became an importer/exporter, wholesaling canned foods to hotels and restaurants. I'd accompany him on sales visits. We would always follow the meetings by eating dinner in whichever restaurant he had made the sale to. He later told me those were the happiest days of his life. READ MORE

Venture capital’s cold war

The India-based VC firm Peak XV is having an exciting few months. A TechCrunch report on Friday laid out the firm’s good news, bragging that it had signed 10 new term sheets and made three exits since it split with the U.S.-based Sequoia Capital in June. By all accounts the firm is thriving, at least by the numbers, and it’s a perfect example of how the global venture capital game is fracturing.

Startup funding is going through the same chaotic decoupling that’s roiling supply chains and semiconductors — and just like hardware, it’s mostly about the rivalry between the U.S. and China. As VCs in the U.S. pour money into the next generation of companies, China hawks in the U.S. government want to make sure those funds aren’t flowing to America’s enemies. At the same time, VCs want to put the money where it will have a chance to grow — and increasingly, that means looking outside the U.S. READ MORE

5 trends in VC funding for pre-seed startups

Silicon Valley’s image as a shiny, money-spewing beacon on a hill of boundless opportunity has gotten a bit of a readjustment over the past year. The fundraising landscape has been utterly brutal. Yes, VCs are still sitting on a lot of dry powder, but as the entire economy shifts, many are nervous about where their next fund will come from.

It seems that we’re heading into a perfect storm, where more and more VCs are moving downstream, investing in slightly later-stage startups with less risk. READ MORE

Many Of 2021’s IPOs Have Flopped. What Does That Mean For 2023’s Hopefuls?

Close to half of the 171 companies that went public in 2021 at billion-dollar-plus valuations and are still trading are now worth less than $500 million. Just 40% of 2021’s IPOs are worth more than $1 billion.

The figures, from an analysis of The Crunchbase Billion-Dollar Exits Board, reveal that even as the IPO markets show signs of life, startups eyeing a public-market debut will face intense headwinds. READ MORE

VC-backed startups are in a 'difficult position' in 2023

Startup funding in the second quarter of 2023 declined by over half its value since last year, falling to $10 billion. PitchBook Lead VC Analyst Kyle Stanford sits down with Yahoo Finance Live to discuss the environment for companies seeking venture capitalist support funding.

"There's 51,000 private VC-backed companies right now and then there's also... maybe about half as much capital, and so these companies are trying to find a way to move forward," Stanford says on the struggle to access capital funds. READ MORE

How Firms Can Prepare For The Rise Of AI In Venture Capital

Venture capital (VC), long regarded as the pulsing heart of innovation and entrepreneurial risk-taking, is on the brink of transformative change. When VC industry giants like Mike Moritz from Sequoia step back, it underscores an impending shift in the rhythm of venture capitalism.

Challenges such as inexperienced general partners (GPs) and hurdles in fund-raising have nudged the sector into a period of introspection and self-reinvention. Likewise, technology innovation is impacting VC as much as the companies that VC supports. READ MORE

Biotech’s Cash Crunch—Why Capital Is Down When VC Is Up

Companies that successfully raised money in their Series A funding rounds a couple of years ago are now facing challenges in securing fresh capital. According to Silicon Valley Bank, of the more than 350 biotech companies raised Series A financings between July 2020 only 102 achieved successful Series B rounds last year.

Initial public offerings (IPOs) followed a similar trend, with an impressive 182 companies collectively raising nearly $30 billion in 2020 and 2021, according to BioPharma Dive, while 2022 saw just 47 biotech IPOs raised a total of about $4 billion and the first half of 2023 saw fewer than a dozen. READ MORE

The late-stage venture market is crumbling

If you are a startup founder raising a venture round this year, you’ll get a lower valuation than you might have in 2021 or 2022. New data from CB Insights details that there have been sharp valuation declines across nearly every startup stage around the world.

But you probably know that already. A more interesting question to ask, then, is if deal volume is going to shrivel across stages, too. Sure, it’s useful to know what the new norm is for, say, seed-stage or Series B deals, but it’s far more important to understand how quickly the later stages of the venture market are contracting. READ MORE