Fate of US venture capital in China teeters on uncertainty

On a weekday afternoon at Red Rock Coffee, the cafe known for spotting venture capitalists in Silicon Valley, one is likely to overhear a few conversations in Mandarin. With China reopening its borders this spring following three years of COVID-19 restrictions, managers of U.S. funds in the country have been flocking to the Bay Area. While these trips were routine before the pandemic, they have now taken on a fresh purpose of discovering deals beyond China.

USD-denominated funds in China have long been drawing inspiration from Silicon Valley startups, using them as benchmarks for investment targets back home. They would seek out the equivalents of Facebook, Amazon and Uber on the other side of the Pacific Ocean and hope they become winners in the country’s largely untapped internet market. READ MORE

Quantitative Benchmarking: A Competitive Edge For Entrepreneurs

You may find yourself doing this before writing an investor deck: Saying to yourself “here we go again” as you dig your old competitive analysis chart out of the archives, throw some new logos in there, put your new logo on the top right corner of your made-up axis, and move on.

It’s time to break away from this flawed approach, which does you no favors as an entrepreneur, and embrace the power of quantitative benchmarking to gain a true competitive advantage. READ MORE

How To Approach An Investor If You’re Doing It For The First Time

There are plenty of events where startup founders can pitch their projects. However, if you’re fundraising for the first time, the competition is so high that the likelihood of getting investments is minimal.

At our fund, we receive around 10,000 pitches a year; at every event we attend, there are at least 30 startups approaching us, and most of your competitors are very well-prepared. READ MORE

Record Numbers Of Companies Seek Financing In Bifurcated Market

This year has turned out to be quite positive for venture funds that have dry powder left after pacing themselves during the venture bubble of 2020-2021.

We’ve seen a dramatic increase in 2023 in the number of early-stage startups seeking financing as well as a large set of mid- to late-stage companies coming back to raise subsequent rounds. READ MORE

Digging into the Future of Funding in Agtech

Once viewed as a hot new space for disruption, the agriculture technology sector is now weeding out the venture capital investors who entered it with hopes of quick wins.

Panelists at ACG Raleigh Durham’s second-annual AgTech Investor Symposium on Oct. 12 discussed the adjustments in expectations for both investors and businesses raising capital in a sector that they argue still holds plenty of promise—just not in the way early VC entrants envisioned. READ MORE

WeWork bankruptcy: One of the biggest startup failures of all time, and venture capitalists haven't learned a thing.

WeWork just isn't working anymore, and the venture capitalists who backed the company when it was a high-flying startup haven't learned a thing from its disaster.

WeWork could file for chapter 11 bankruptcy protection from creditors as early as next week, The Wall Street Journal reported. "We do not comment on speculation," a spokesperson for the company told Insider. READ MORE

The Untold Private Equity Compensation Story in 2023

Private equity executives were right to be worried early this year about the impact rising interest rates would have on their firms. Since then, deal volume has slumped and fund raising has slowed. Nevertheless, their employees are expecting raises this year — if they didn’t get one already.

The median total cash compensation for all levels of private equity employees — analysts through managing directors and partners — rose 13 percent in 2023, according to a survey of 1,179 workers across the U.S. by Odyssey Search Partners, a recruiting firm focused on alternative investment professionals. Analysts, the most junior employees, got the biggest bump this year, with a 21 percent increase in total cash compensation. All others expect raises in 2023, except for managing directors and partners, who said theirs would be flat. READ MORE

Biden’s AI Order May Have Wide Impact For Startups

The Biden administration on Monday released an executive order laying out a broad range of  safety and security requirements around the use of artificial intelligence technology.

The standards, which range from setting requirements for red-team testing to affixing labels on AI-generated content, could have a wide impact on how AI-focused companies, and startups in particular, develop and release new iterations of their products. READ MORE

How Former Googlers’ VC Firm Invests In Everything From LLMs To AI Doing Drug Discovery

Andy Harrison was at Google when the tech giant launched the Transformer machine learning model in 2017 — a massive leap forward in the way machines understand and generate human language that paved the way for the rapid rise of generative AI technologies like ChatGPT five years later.

Now Harrison is the CEO and managing partner at  Section 32, a venture investment firm with ties to Google that also invests heavily in AI. READ MORE

Andreessen Horowitz May Be Optimistic About Tech, But It’s Still Slowing Its Deal Pace

Andreessen Horowitz is known for its bets on then-startups such as Facebook, Instagram and Airbnb.

Firm founder Marc Andreessen is also known for his opinion pieces, from “Software Is Eating The World” to the new and much-discussed “The Techno-Optimist Manifesto” published last week. The 5,000-word “manifesto” basically says technology is the cure for — not the cause of — the world’s ills and comes complete with an enemy list and even a “meaning of life” entry. READ MORE

Investors Have Stopped Feeding The Supply Chain

For a number of years, one of startup investors’ favorite activities involved writing checks to companies in the supply chain management sector.

From 2018 till the end of 2022, investors across the globe poured more than $50 billion in seed through growth financing into supply chain-related companies, per Crunchbase data. Several startups raised billions, including cold chain logistics company Lineage Logistics, freight-forwarding platform provider Flexport, and Hong Kong-based Lalamove. READ MORE

So how about another 20 IPOs?

The third quarter is behind us, but the scores are still being totted up. This week will bring a deluge of numbers from major tech companies, helping us better understand the state of the market, for example. Another lens into the third quarter that has yet to gel are its venture capital results. We’ve covered the big numbers from the United States, Europe, Latin America, Africa and India, and we’ve looked at how far capital has extended to underrepresented groups. READ MORE

Strategic Partnerships: Best Practices And Pitfalls To Avoid

Strategic partnerships are formidable tools in an entrepreneur’s arsenal, capable of accelerating growth, adding credibility to your offerings, and opening doors to new horizons. However, when mishandled, they can spell the slow decline of your business. READ MORE

Is A Private Equity Recapitalization The Right Fit For You?

Many business owners and founders have an eventual goal to sell their company. But not all do, especially those who are younger or earlier in the growth phase of building their company. The idea of completely disengaging from the business one spent years—even decades—building just isn’t appealing for those with an enduring entrepreneurial spirit, even with the sale proceeds from an exit in mind. Many fear having “nothing” left after a sale, whether emotionally or in terms of how they will fill their days post-transaction. READ MORE

Want to invest in startups? Here are 4 ways to get started as a solo GP

Sometimes the nontraditional route leads to the best results. Zach Coelius, the managing partner of Coelius Capital, started out as an entrepreneur. Over the past two decades, he founded a bunch of companies, and after a successful exit from one of those, he fell into the world of angel investing via syndications.

And after some time in that world, his connections led him to VC, but not as part of a group. Organically, Coelius’ connections and reputation let him function as a solo general partner (GP). READ MORE

6 Steps Used By Unicorn-Entrepreneurs To Launch Without VC

It’s down from a torrent to a trickle. What’s an entrepreneur to do?

The 10-year U.S. Treasury-bond rates are approaching 5%. The days of wine, roses, and the cheap money that has been easily available for the last 15 years may be ending. READ MORE

Standardization and Innovation in Venture Capital Contracting: Evidence from Startup Company Charters

In 2003, a group of approximately two dozen lawyers specializing in venture capital (VC) finance embarked on a mission to standardize the financing documents utilized by VC firms for investments in US-based startups. The primary objective was to mitigate the transaction costs associated with memorializing the non-binding term sheet negotiated between a company and a VC investor. While a term sheet typically outlines the standard economic and governance terms (e.g., valuation, type of liquidation preference, the number of investor- and founder-appointed directors), translating these core “deal” terms into definitive financing documents often entailed further negotiation. This additional negotiation occurred as both investor and company counsel sought to converge on the precise contractual language that would legally govern the investment. The standardization project aimed to curtail this latter form of negotiation by establishing a standard “template” for each of the five documents used in US VC finance. Since December 2003, the National Venture Capital Association (NVCA) has hosted these templates on its website, leading to their colloquial reference as the “NVCA financing documents.” READ MORE

Women receive just 1.9% of VC funding. Here’s why and what founders can do

My experience as a female founder hoping to secure venture capital (VC) funding can be summed up in one anecdote: I was at lunch with a hedge fund guy. He polished off the sample can of my Sang Vietnamese Coffee. We talked through the business fundamentals, and he smiled and nodded at every juncture. Then he said, “Lan, investing in women hasn’t panned out for me.” 

This investor had watched numerous male entrepreneurs go under—and yet he continued to invest in them. The fact that a few failed attempts by women entrepreneurs were being used to paint an entire gender with a broad brush is like blaming a single raindrop for a flood. But that’s what you’re up against when you’re a female founder. READ MORE

Not everyone is fond of venture debt

The magic of live panels is that speakers always make comments you didn’t expect — even if you are the moderator and no matter how much prep you have done. I know this from experience: It happened to me at TechCrunch Disrupt 2023.

The panel in question focused on capital-intensive startups, so I knew that we were going to discuss alternatives to venture capital as sources of funding. What I wasn’t prepared for was for the three panelists to agree on dissing venture debt. I was clearly surprised. READ MORE

Investors are split on whether California’s diversity bill will make an impact

California passed a bill earlier this month that requires venture firms operating in the state to report the diversity breakdown of their investments. The news of its passing spread quickly through the startup world, and immediate reactions to it have been split.

There are those in favor of the bill, those who support it but with caveats, and those who simply don’t think this will bring any change. Oh yes, and those who simply made fun of it. Still, most people brought up good points in their support and criticism of the bill, called SB 54, and we spoke to industry players to put everyone’s thoughts on the bill into one place. READ MORE