A 5-Step Survival Guide to Fundraising for a Niche Industry

The global venture capital (VC) market is going through an undeniably rough phase caused by a seemingly unending stream of economic and geopolitical issues, simultaneously occurring across all corners of the globe. According to KPMG's "Venture Pulse Q3 2023" report, worldwide VC investment dropped to a sixteen-quarter low in Q3 2023. Many market players feel concerned by the historically high number of down rounds, the overall slowdown in the speed of VC deals and the protracted lack of exit opportunities.

Based on CB Insights' "State of Venture Q3 2023" report, 9M of 2023 showed the lowest results in the amount of funding received by startups since the same period in 2019. The number of deals is also slightly lower: 21,216 deals during 9M of 2023 versus 22,992 deals within the same time frame in 2019. READ MORE

A16z Tops Active Investor Ranks In Slow Year

Overall, startup investors put far less money to work in 2023 compared to the prior two years. They also did far fewer deals.

However, some investors slowed down much less drastically than others. The result is that these firms, which include prominent cross-stage investors such as Andreessen Horowitz (a16z), Lightspeed Venture Partners and Bpifrance, reigned as the most-active venture investors of 2023, per Crunchbase data. READ MORE

The VC Funding Party Is Over

“It might be the best time for any kind of business in any industry to raise money for all of history, like since the time of the ancient Egyptians,” an excitable Stuart Butterfield, CEO of Slack, told Farhad Manjoo in The New York Times in 2015.

This was no exaggeration. While interest rates remained close to zero, venture capital funds raised more money than ever and exited their investments at some of the highest valuations ever witnessed. READ MORE

The search for better unit economics prompts consumer tech investors to shift focus

A slew of consumer tech and companies focused on consumer packaged goods (CPG) have gobbled up venture capital in the past year. Keychain, Harmonya, Highlight, Ramani, SupplyPike, Vividly and Turing Labs, just to name a few, captured investor attention for their technologies.

Companies weren’t the only ones getting funding. Investor firms focused on consumer and CPG were, too. That includes VMG Catalyst, Alethia and Humble Growth. READ MORE

Venture Debt: Poison For Startups Or The Antidote To The VC Drought?

“Do you think companies in Silicon Valley should take more debt?” Chamath Palihapitiya, Founder of Social Capital, asked me bluntly during an interview in Mountain View a few months ago.

We were at the headquarters of one of Chamath’s most promising climate tech startups – Mitra Chem – perched awkwardly around a table on the factory floor surrounded by millions of dollars of state of the art equipment. We were discussing Mitra Chem’s eye-watering $40 million Series B. READ MORE

After A Turbulent Few Years, Venture Should Steady In 2024

For the past handful of years, the venture market has been on a wild ride. From the cheap money days of 2020 and 2021 to the market recalibration in 2022 to some rocky times in 2023, the private market has had its ups and downs.

However, venture capitalists view 2024 pretty optimistically — although with caveats — with funding likely already hitting its low, the exit markets coming back, and a coming to terms with the new normal of work. READ MORE

1031 Exchanges In The World Of Private Equity Commercial Real Estate

Commercial real estate investors are understandably interested in pursuing strategies that reduce or even eliminate tax liabilities. It’s no surprise that some of the most common questions investors ask are related to deferring taxes upon the profitable sale of a commercial property, and for many of these investors, a 1031 exchange is a great option. A little-known but important fact in the commercial real estate industry is that investors can work with a private equity sponsor to complete a 1031 exchange. READ MORE

Hedge funds take on private equity in battle for distressed companies

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Hedge funds are challenging private equity firms over restrictions that dictate who can lend to or buy the debt of buyout-backed companies, weighing legal action to capitalise on a surge in corporate distress. Private equity portfolio companies can be particularly exposed to interest rate rises because of buyout firms’ reliance on debt to buy businesses. The firms draw up “whitelists” of approved lenders to stop potentially troublesome credit investors from using a position in the companies’ debt to steer the business’s strategy. READ MORE

2024 M&A Outlook: PE Comes Off the Bench

2023 brought a relatively sluggish year for M&A as macroeconomic conditions kept many key players on the sidelines. However, S&P’s latest analysis predicts that several factors may spur dealmakers into action in 2024.

The decline in deal announcements and total value, observed since 2022, has been attributed to the impact of a rising interest rate environment, leading to increased financing costs and decreased equity prices. While expectations suggest that interest rates will remain somewhat elevated, an end to the Federal Reserve’s hiking cycle will improve the M&A outlook. READ MORE

Industries Without Investors

Venture-capital backed startups almost all cluster in the same handful of industries, mostly various types of software. This leaves a variety of large and economically important sectors with almost no venture-capital backed startups. That means those industries see fewer new companies and new ideas; they must rely on either growth from existing firms, which are unlikely to embrace disruptive innovation, or on startups that bootstrap and/or finance with debt, which tend to grow slowly. READ MORE

2024 Commerce Predictions, According to Top Venture Capitalists

Commerce, or the buying and selling of goods globally, is one of our economy’s largest drivers and continues to see rapid evolution. At the dawn of 2024, we are living through continued geopolitical tensions, more war, and rising deglobalization; a seemingly-averted recession, stabilizing inflation, and a new (higher) cost of capital; and, of course, the mass adoption of consumer-focused AI. What is in store for commerce? And what are investors paying attention to? READ MORE

US startup funding drops 30% in 2023 despite AI frenzy

U.S. investors injected $170.6 billion into startups in 2023, a decrease of nearly 30% from the $242.2 billion recorded in 2022, as the venture capital funding market continues to grapple with valuation resets amid rising interest rates, according to PitchBook data released on Thursday.

The latest data, from a year in which megadeals in artificial intelligence captured the imagination of investors, shows a persistent decline from the peak of U.S. venture funding in 2021 when startups raised $348 billion. READ MORE

Looking at CES 2024: Startups and A.I. Take Center Stage

The annual Consumer Electronics Show (CES 2024) kicks off this week in Las Vegas. The tech conference, once a product showcase for giants like Sony and Samsung, has morphed into a hub for small tech companies over the past several years. 

Since the pandemic forced companies to stage virtual launch events, large companies have followed Apple's lead, saving big product reveals for private, in-house showcases. This shift effectively opened the popular tech conference up to startups. For smaller, newer companies, shows like CES are prime opportunities to mingle with distributors and manufacturers and bend the ears of influential tech journalists in a quest for both publicity and the market's attention.  READ MORE

How to build the foundation for a profitable AI startup

Investment in AI companies has now entered its cautious phase. Following a year when the money directed at AI startups far outpaced any other sector, investments have recently become more sound or validated. Investors are more wary about the AI hype and are looking for companies that will turn a profit.

Building a profitable AI business poses unique challenges beyond those faced when launching a typical tech startup. Systemic issues like the high cost of renting GPUs, a widening talent gap, towering salaries, and expensive API and hosting requirements can cause costs to quickly spiral out of control. READ MORE

A VC Just Shared His Formula for Requesting Introductions. It's Pure Genius and Will Work for Anyone

Kirby Winfield, founding general partner of Seattle pre-seed venture capital firm Ascend just shared his incredibly smart formula for entrepreneurs to request "warm" introductions from their investors. The instructions are clear, sensible, can easily be followed by anyone with a LinkedIn account, and should work for anyone seeking business introductions for almost any purpose. (Many thanks to my friends at GeekWire for linking to this from their email newsletter.)

I'm already planning how I can use this approach myself. It's well worth checking out Ascend's blog post, which includes lots of screenshots so you can see exactly what to do. Here's a quick overview. READ MORE