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| Here’s your daily VC briefing: - 🌎 Global VCs are struggling to raise new funds
- 🎯 Tiger Global Management missed the target for PIP 16 fund
- ⚠️ Sam Altman relinquished control over the OpenAI Startup Fund
Thank you. Karan
p/karan-chafekar |
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| 1 | | Global venture firms raised funds worth $30.4B from investors in Q1 2024, per Pitchbook data seen by the Financial Times. The fundraising pace has slowed down compared to 2023, which was already deemed the worst year for fundraising since 2016. Investors have curbed spending due to a lack of exit options, particularly IPO listings, which are crucial for realizing returns on investments. More: - U.S.-based investors raised funds worth $9.3B in the first three months of this year, about one-tenth of 2023’s tally.
- FT believes the era of megafunds –investment vehicles larger than $5B– has ended.
- Some of the largest VC firms, including Tiger Global, Coatue, SoftBank, and Insight Partners, have all had to lower their fundraising target and slow down investment pace in response to the prevailing economic conditions.
Zoom out: - Fundraising peaked in 2021 when global VC firms closed funds worth $555B.
- Due to an abundance of dry powder available in 2021, VCs invested $747.5B in global startups in 2021.
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| 2 | | Tiger Global Management closed its Private Investment Partners 16 fund at $2.2B, falling short of its $6B target, sources informed Bloomberg. 
What the numbers say: Tiger initially planned to raise $8B for the latest fund but revised its target to $6B due to economic headwinds. By Feb. 2023, the firm had lowered the target further to $5B as rising inflation and high interest rates spooked investors. 20% of the fund’s commitments came from Tiger insiders, traditionally the most prominent investors in their funds. The latest fund will be used to back enterprise technology startups across the U.S. and India. What happened: The news comes after venture chief Scott Shelifer stepped down from his role in November. Founder Chase Coleman took over Shelifer’s responsibilities. Shelifer pushed the firm to invest heavily in the sector. However, due to the downturn, Tiger had to mark down the value of its portfolio by 33% in 2022 and by another 6% last year. Tiger slashed the valuation of the PIP 15 fund by 18% at the end of Sept. 2023. PIP 15 is Tiger Global’s largest fund yet to date, closing at $12.7B in 2021. Tiger’s assets under management halved from $100B in 2021 to about $50B in Sept. 2022. Where to see the impact: Tiger joins a growing list of VC firms that have missed their fundraising targets as investors remain cautious about investing in VC and private equity due to global economic volatility and slumping startup valuations. Peers that missed targets include Apollo Global Management, Carlyle Group, and Insight Partners. | | |
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| 3 | | VC firms invested $36.6B in U.S.-based startups through 2,882 deals, per a new report published by Pitchbook. Both deal value and count dropped compared to the same period last year, which saw 4,026 deals worth $51.6B. While overall investments trended downwards, median valuations showed a slight uptick across several stages due to relatively strong performance in public markets and investors’ preference to invest in companies with strong metrics. More: - The IPO listings of Reddit and Astera Labs accounted for 73.4% of the total exit value generated in the first three months of the year.
- The successful debuts of Reddit and Astera Labs have “created [a] buzz in the market narrative because of how slow exits have been for two years,” claims Pitchbook.
- In Q4 2023, exit value in the U.S. touched $18.4B, about double compared to the €7B ($7.54B) exit value generated by European startups.
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| 4 | | OpenAI’s CEO Sam Altman has given up control over the AI startup’s CVC division, OpenAI Startup Fund, per SEC filing disclosures seen by Axios. Ian Hathaway, who has managed the fund since its launch in 2021, has taken over control from Altman. More: - By last May, the OpenAI Startup Fund had received $175M in total commitments from investors, including Microsoft.
- The firm’s gross asset value has since touched $325M.
- It has backed 13 companies to date, including legal tech startup Harvey, collaborative audio editing platform Descript, AI-powered medical scribe Ambience Healthcare, language learning app Speak, teaching aid Class Companion, robotics firm 1X, and self-driving software maker Ghost Autonomy.
- An OpenAI spokesperson said, “The fund's initial GP structure was a temporary arrangement, and involved no personal investment or financial interest from Sam.”
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| 5 | | Crypto-focused VC firm Paradigm is in talks with investors to secure between $750M and $850M for a new fund. Paradigm had initially planned to raise a $1B fund, per a report from last September. More: - If successful, the fund might be the largest crypto fund since the industry’s crash in 2022.
- Paradigm last raised a $2.5B fund in 2021, its largest crypto-focused investment vehicle to date.
- Coinbase Global co-founder Fred Ehrsam and ex-Sequoia Capital partner Matt Huang founded Paradigm.
- Last October, Ehrsam stepped down from the managing partner role to general partner.
Zoom out: - Paradigm invested $278M in the bankrupt crypto exchange FTX.
- FTX investors are suing Paradigm, Sequoia, and Thoma Bravo for giving an “air of legitimacy” to FTX.
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| 6 | | Today's Funding: Biopharmaceutical - Neurosterix, a biopharmaceutical startup advancing allosteric modulator therapies for neurological disorders, raised $63M in Series A funding led by Perceptive Xontogeny Venture Fund II. Investors participating in the round include Perceptive Life Sciences Fund and Acorn Bioventures.
Fintech Foodtech - Onego Bio, a startup manufacturing egg protein via precision fermentation, closed its Series A funding round at $40M. NordicNinja led the round, with additional backing from Tesi, EIT Food, Agronomics, Maki.vc, Holdix, and Turret. The round also includes $10M in non-dilutive funding from Business Finland.
Healthtech - ViaLase, a medtech startup developing a femtosecond laser for the treatment of Glaucoma, bagged $40M in Series C funding from Venture Investors Health Fund, Arboretum Ventures, and Falcon Vision.
Legaltech - Legal technology startup Luminance secured $40M in Series B funding led by March Capital. National Grid’s venture division, National Grid Partners, and law firm Slaughter and May also participated in the funding round.
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| 7 | | Quick Hits: - This company built an ice cream robot that can lower costs and increase profits for ice cream stores. Learn more about investing.*
- Autism Impact Fund closed its debut fund at $60M, higher than its initial target of $50M. The fund aims to invest in behavioral health data-driven platforms, healthcare solutions, and value-based care startups.
- Laton Ventures announced a $55M fund to back global gaming and interactive entertainment startups. While the fund will primarily focus on gaming content startups, it will also invest in gaming infrastructure and tech solutions.
- California Public Employees’ Retirement System announced Stephen Gilmore as its new chief investment officer. Before this, Gilmore held the CIO role at the New Zealand Superannuation Fund.
- Healthcare technology-focused VC firm Sonder Capital hired Kate Garrett as its managing partner. Garrett is tasked with spearheading Sonder’s next growth phase as the firm inches closer towards the close of its second early-stage fund called Sonder Futures II.
- Visa and Mastercard have come to a historic $5 billion settlement, marking a pivotal moment for business owners. Claim your share today!*
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Karan Chafekar |
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