Over the years, smart home investments have faced significant challenges, with many well-funded companies failing to thrive. Despite the potential of connected-home technologies such as smart windows, lighting, security systems, and kitchens, the market has seen a series of setbacks. Earlier this month, Brilliant, a smart-home upstart founded in 2015, laid off its entire staff while seeking a buyer. The company, based in San Mateo, California, had raised $64 million to scale its in-wall control system for home automation, but ultimately struggled to sustain its operations. Similarly, View, a maker of smart glass for buildings, announced its plans to go private and file for Chapter 11 bankruptcy. The company had raised over $1.8 billion before going public in 2021, highlighting the substantial losses in the sector. Another notable closure was Veev, a former unicorn integrating home automation systems into its building model. The company shuttered and sold its assets to […]

In a surprising turn for the VC landscape, the number of mega rounds has surged by 58% in 2024 compared to the same period last year. This significant uptick is notable, especially given the overall stagnation in venture funding. However, the 116 mega rounds this year still fall short of the nearly 280 mega rounds closed during the same period in 2021 and 2022. While the current numbers are not yet at the record levels of 2021-2022, the 2024 spike in mega deals indicates a renewed investor confidence in startups with immense potential and scalability. Investors are showing a clear preference for high-stakes bets, concentrating their funds on fewer but more promising ventures. Healthcare and biotech sectors have emerged as the frontrunners in securing these mega deals, with 42 rounds closed so far this year. Leading the pack is Xaira Therapeutics, an AI-driven drug discovery firm that recently came out […]

In the initial three months of 2024, venture capitalists showed immense interest in investing in cryptocurrency startups, contributing a total of $2.4 billion in 518 deals. This signifies an impressive 40.3% increase in funding from the previous quarter, driven by a new wave of optimism and a bull market pushing up cryptocurrency prices. Statistic shows that deal volume increased by 44.7% compared to Q4 2023, with investment reaching over $1 billion for March ($1.09B) and April ($1.02B) The surge in crypto funding was mainly caused by the SEC’s endorsement of Bitcoin ETFs and the subsequent increase in new institutional investments in the sector. Venture capitalists are optimistic that the bullish market will maintain its upward trend in 2024. Key deals in the crypto space include Zama securing $73 million for crypto encryption in a Series A round, EigenLayer’s $100 million Series B for an Ethereum restaking platform, and Together AI […]

European startups in the early stages are finding some relief during the current funding shortage. As per Pitchbook’s Q1 2024 European VC Valuations report, the median funding amount for early-stage European startups rose to €2M ($2.17M), driven in part by notable deals such as French EV network startup Electra’s €304M ($330M) Series B funding round. The percentage of up rounds increased to 76.3%, and this positive direction is anticipated to persist due to declining interest rates. Nonetheless, the percentage of down rounds grew to 21.7%, demonstrating the ongoing challenges encountered by mature startups in raising funds because of limited opportunities for successful exits. As early-stage startups are feeling relieved, later-stage ones are facing a new set of challenges. The median pre-money valuations for late-stage European startups decreased by 5.4% to €10.6M ($11.5M) in the first quarter. Due to the closed IPO listing window, the majority of exits are now occurring […]

The AI sector is on a roll, with median pre-money valuations for early-stage and late-stage startups soaring to an impressive $70M and $100M, respectively, according to Pitchbook’s Q1 2024 U.S. VC Valuations Report. These numbers are a testament to the rising hype and investor interest in the AI realm. In stark contrast to the AI sector’s success, about 24.7% of deals in other sectors experienced flat or down rounds, highlighting the challenges many startups face in securing capital. The AI wave has well and truly displaced fintech from its previous top spot in terms of median pre-money valuations. The surge in investor enthusiasm for AI startups is evident in the recent funding rounds of companies like Perplexity, an AI-powered search engine that secured $62.7M at a staggering $1.04B valuation, and Lambda, an AI cloud computing firm that raised a whopping $320M Series C funding round at a $1.5B valuation. While […]

Insurtech funding took a nosedive in Q1 2024, plummeting 18% quarter-over-quarter to hit $0.9 billion – the lowest level since 2018. The decline was particularly steep in the property and casualty (P&C) insurtech segment, where funding dropped by a staggering 25% QoQ. However, there are glimmers of hope amidst the gloom. Notably, the median insurtech deal size has actually increased in 2024 so far, reaching $5 million – up 19% from the full-year 2023 median of $4.2 million. This suggests that while overall funding may be down, investors are still willing to make significant bets on insurtech startups they believe have strong potential. The uptick in median deal size is partly driven by an increase in early-stage deal sizes, with the median early-stage deal hitting $3.2 million in 2024 so far. Nevertheless, the average insurtech deal size ($9.8 million) is down 17% compared to 2023, indicating that while larger deals […]

In the first quarter of this year, there was a rise in mergers and acquisitions in the artificial intelligence (AI) industry, with 40 exit transactions compared to 38 in the previous quarter. Yet, the number of transactions in the current period was lower than the 62 deals that took place in the corresponding period the previous year. The biggest transaction in the first quarter was Veradigm’s acquisition of ScienceIO, a biomedical language platform, for $140 million. The increase in M&A deals is due to the interest of key buyers, including private equity companies and big corporations like Microsoft and Nvidia, who have built up large amounts of cash. Significantly, Nvidia has increased its cash and short-term investments to a remarkable $26 billion in the last four quarters, establishing the chip giant as a strong competitor in the AI acquisition arena. Despite the uptick in M&A transactions, the AI industry’s overall […]

The issue of diversity in venture capital remains unchanged and is not expected to improve in the near future. Even after making multiple promises to improve, the field continues to be mainly controlled by white males. In America, only 4% of venture capitalists are Black, compared to just 15% of general partners in Europe being women. What is the main reason for this lack of diversity? Prejudice towards those with similar interests and controlling access. Research indicates that individuals have a tendency to employ and support individuals who resemble themselves. Due to the significant underrepresentation of diversity among VCs, it is not surprising that teams composed entirely of men and white individuals are much more likely to receive funding, thus continuing a harmful cycle. However, VCs are also contributing to this current situation by practicing “knowledge gatekeeping” – keeping information and power protected, making it difficult for individuals from marginalized […]

The much-anticipated slowdown in AI funding did not materialize in the first quarter of 2024. Venture capitalists continued to pour billions into AI-related startups, indicating sustained confidence in this rapidly evolving sector. According to Crunchbase data, Q1 2024 saw a staggering $12.2 billion invested in venture-backed AI startups across 1,166 deals. This figure represents a modest 4% uptick from the previous quarter, Q4 2023, which saw $11.7 billion invested in 1,072 deals. While the total funding amount is down 25% from the $16.3 billion raised in Q1 2023, that quarter was an outlier due to OpenAI’s historic $10 billion-plus funding round from Microsoft. Q1 2024 witnessed a few sizeable deals that would have been considered exceptional just a year ago. The three biggest AI-related rounds of the quarter were: Michael Marks, founding managing partner at Celesta Capital, stated, “AI is real, just like SaaS or e-commerce.” He noted that startups […]

The venture capital ecosystem is currently experiencing a significant slowdown, primarily due to a notable scarcity of exits, particularly large-scale tech public listings. In the first quarter, the total U.S. VC exit value stood at a mere $18.4 billion, with the IPOs of Reddit and Astera Labs making up roughly three-fourths of this figure. Although these IPOs generated considerable media buzz, it’s still premature to declare them as indicators of a reinvigorated public listing environment. Over the past two years, the exit market has been lackluster, causing many General Partners (GPs) to struggle to turn paper gains into actual cash distributions to Limited Partners (LPs). This situation has been exacerbated by many institutional investors facing liquidity constraints amid an ongoing market correction. With a generally low Distribution to Paid-In (DPI) ratio, LPs have found themselves unable to recycle distributions back into commitments to venture funds. This has led to a […]

In a surprising turn of events, European startups have managed to buck the global funding slowdown, raising a respectable $11.8 billion in the first quarter of 2024, according to Crunchbase data. This figure marks a marginal increase from Q4 2023 and a less than 10% decline from the same period in the previous year. While the overall European venture funding in Q1 2024 was slightly lower than the average quarter in 2023, the region’s startups continue to attract a significant share of global venture capital. In fact, around 18% of the world’s venture funding was allocated to European companies, with North America accounting for just over 50% of the quarterly investments. The leading sectors for funding in Europe were financial services, healthcare, and energy, with AI companies raising a sizable $1.4 billion, or roughly 12% of the total European venture capital. The United Kingdom emerged as the dominant player, representing […]

In a stark contrast to the sector’s high-flying days, the global edtech industry has faced a reckoning in recent quarters, with a dramatic 72% plunge in funding from $10.58 billion in 2022 to just $2.97 billion in 2023. This bleak picture is further underscored by the latest data from HolonIQ, which reveals that in the first quarter of 2024, a mere 100 global edtech startups managed to raise a combined $580 million from venture capital firms. The downturn has not spared even the industry’s star players. Quora, the popular question-and-answer platform, found itself on the receiving end of a down round, raising $75 million while its valuation plummeted from a peak of $1.8 billion in 2017 to a mere $500 million. The most noteworthy deals in Q1 2024 included a $120 million round for education financing solutions startup Avanse, a $21 million funding for global student housing platform Amber, and […]

In the ever-evolving world of startup fundraising, the post-money SAFE (Simple Agreement for Future Equity) has become the darling of the pre-seed landscape, leaving founders to navigate the complexities of this new financing tool. While most founders understandably focus on the valuation cap at which they’ll raise using a post-money SAFE, a more prudent approach may be to consider the acceptable level of dilution they’re willing to accept for a given amount of cash. Take the famous Y Combinator example: when startups join the program, they receive $125,000 in exchange for 7% of the company. The implied valuation cap for this investment is around $1.78 million, but that’s not the primary concern. Founders, especially those raising multiple rounds of SAFEs, would be better served by concentrating on the dilution implications of the funds rather than the valuation caps. It’s the same underlying math, but an emphasis on dilution may help […]

In a remarkable display of the startup world’s resilience, global startup venture funding surged by a staggering 6% quarter-over-quarter in the first three months of 2024, according to the latest data from Crunchbase. The first quarter of the year closed with a total of $66 billion in funding, a testament to the unwavering investor appetite for innovation and growth. The numbers paint a compelling picture – seed-stage startups raked in $7 billion, while early-stage companies secured a remarkable $29.5 billion, representing a 6% year-over-year increase. This surge in early-stage funding can be attributed to the robust performance of sectors such as AI, electric vehicles, and green energy, which witnessed a flurry of large Series B rounds. However, the VC pullback trend for late-stage startups continued, with funding falling 36% year-over-year to $29.5 billion. This shift in investor focus underscores the evolving dynamics of the startup ecosystem, where the appetite for […]

The startup world is abuzz with activity, as the latest data from Carta’s State of Private Markets report reveals a surge in both valuations and round sizes across most venture stages in the first quarter of 2024. According to the preliminary analysis, median pre-money valuations ticked upwards for seed, Series A, Series B, and Series C rounds, indicating a continued appetite for early-stage companies. However, the report also noted a decline in valuations for Series D and E+ rounds, suggesting a potential cooling of the late-stage market. Accompanying this valuation uptick was a notable increase in the median amount of cash raised across several stages. Seed, Series A, Series B, and Series C rounds all saw a sharp rise in the amount of capital secured, with the priced seed and Series C stages leading the charge. “Although the final numbers on total rounds and capital raised are not yet available […]

The Rise of the Underdog Unicorn Founders A groundbreaking study by Defiance Capital has shattered long-held assumptions about the pedigree of successful entrepreneurs. Analyzing 845 unicorns and 2,018 founders across the U.S. and U.K. from 2013 to 2023, the report reveals that 70% of unicorns were founded by underdogs – immigrants, women, and people of color. Remarkably, 17% of unicorns in 2023 had at least one female founder, a significant increase from the past. The study challenges the notion that a prestigious background is necessary for success, with only 34% of founders having worked at elite employers. Instead, the “DNA” of a unicorn founder is defined by three factors: an unwavering “no plan B” mentality, a “chip on the shoulder” that fuels their drive, and an unlimited self-belief. Many of these founders developed resilience from early experiences of feeling unfairly treated or limited. The pivotal role of immigrant founders is […]

In a resounding testament to the resilience and ingenuity of the American entrepreneurial spirit, the number of startups less than a year old has surged by an impressive 16% between 2019 and 2023, surpassing pre-Great Recession levels for the first time, according to a new analysis from the Center of American Progress. The data paints a striking picture of the entrepreneurial renaissance sweeping across the nation. Between January 2021 and December 2023, a staggering 5.2 million entrepreneurs in the United States filed for “likely employer” business applications, fueling the startup boom and injecting new life into the country’s economic landscape. The fourth quarter of 2023 witnessed a particularly remarkable surge, with 450,000 entrepreneurs filing business applications, a remarkable 37% increase compared to the same period in 2019. This upward trajectory was echoed across every state, with Wyoming leading the charge with an astonishing 93% surge, and even Alaska, the state […]

As the crypto market basks in the warmth of a bullish Bitcoin rally, venture capital (VC) firms are scrambling to raise new funds in a bid to capitalize on the burgeoning momentum. However, their efforts are being met with a lukewarm reception from limited partners (LPs), who remain wary of the industry’s tumultuous past and the hard-learned lessons of recent implosions like Three Arrows Capital and FTX. According to data from Galaxy Digital, crypto-focused VCs raised a respectable $5.8 billion in funds last year. However, this figure pales in comparison to the staggering $20 billion and $38 billion raised in 2021 and 2022, respectively, highlighting the industry’s precipitous fall from grace and the lingering skepticism that hangs over it. Compounding the challenge for crypto-focused VCs is the crowded market landscape, where differentiation is an increasingly elusive pursuit. Ray Hindi, managing partner at L1 Digital AG, aptly summarizes the conundrum: “Too […]

In the latter half of 2023, European startups experienced a notable shift in the timeline and dynamics of venture capital funding, according to insights from Carta reported by Sifted. The journey from Series A to Series B funding has become significantly longer for European Series A startups, with the timeframe extending by an astounding 85% compared to the first half of 2022. This trend has resulted in startups taking approximately 760 days on average to secure Series B funding after closing a Series A round. A Closer Look at Funding TimelinesThe funding landscape has seen varied changes across different stages. For pre-seed startups, the median time to raise seed rounds surged by 49%, reaching 511 days. This increase underscores the growing challenges and heightened scrutiny faced by early-stage startups in progressing to the next funding stage. Conversely, seed startups experienced a slight improvement, with the time required to raise Series […]

In the ever-evolving landscape of cryptocurrency and blockchain technology, the beginning of 2024 has marked a notable uptick in venture capital (VC) investment within the sector. According to recent data from Crunchbase, crypto startups have raised an impressive $625 million through 111 deals so far this quarter. This marks a significant increase from the $446.3 million secured in Q4 2023, highlighting a resurgence of investor confidence and interest in the crypto space. A Comparative Look at Funding TrendsReflecting on the previous year, crypto startups amassed $3.6 billion across 821 deals. When compared to the $16.2 billion raised in 2022, it’s clear that 2023 experienced a substantial 78% decline in funding. This downturn was largely influenced by the fallout of the FTX collapse and a general slump in VC funding across all sectors. Despite these challenges, the current quarter has seen noteworthy funding rounds, including Freechat’s $80 million Series A, Flowdesk’s […]

European Lenders Feast on Convertible Debt Amid Funding Crunch. In a striking turn of events, European lenders have embraced convertible debt deals with a voracious appetite, setting a new record high of $2.5 billion in 2023, according to data from Dealroom seen by Reuters. This surge in venture debt deal value, a staggering leap from the $1.7 billion tallied in 2022, has been fueled by the dearth of equity funding availability that has gripped the startup ecosystem. As equity fundraising plummeted from the dizzying heights of $130 billion in 2021 to a mere $62 billion in 2023, as reported by PitchBook, startups have been forced to seek alternative avenues of financing. Convertible debt has emerged as a lifeline, allowing founders to defer the dreaded valuation repricing to a later date and avoid the ignominy of a down round. However, this newfound love affair with convertible debt is not without its […]

The collapse of Silicon Valley Bank (SVB) sent shockwaves through the venture debt market, plunging it into a deep abyss. Venture debt, a lifeline for many startups, saw a staggering $7.7B decline in the first half of 2023 compared to the previous year. Early-stage and pre-seed to seed startups faced the brunt of this downturn, with venture debt plummeting by a whopping 57% and 59%, respectively, according to the Wall Street Journal. But like a phoenix rising from the ashes, the venture debt market staged an incredible comeback in the second half of 2023. According to Pitchbook, banks and non-bank lenders provided U.S. startups with a staggering $3B more in venture debt compared to the first half of the year. The catalyst for this revival was a recovery in public equities and a growing belief that interest rate hikes might plateau. With economic conditions stabilizing, banks regained their appetite for […]

How much are venture capitalists (VCs) actually investing in women? In 2023, startups across Europe founded or co-founded by women have raised a noteworthy €5.9 billion in venture capital (Dealroom). While this figure represents 9.6% of all venture capital raised in the region, it underscores both progress and stagnation in funding gender diversity. The proportion of venture capital flowing to women-founded startups has experienced significant growth over the past decade, doubling to its current share. However, this growth narrative meets a plateau, with the investment share hovering around 10% since 2017. Despite the stagnation, the landscape of women entrepreneurship is far from static. The past decade has witnessed a tenfold increase in the number of women-founded unicorns in Europe, reaching a total of 35. This milestone not only showcases the scalability and market relevance of these enterprises but also aligns the current number of women-founded unicorns with the total number […]

In 2023, the startup ecosystem experienced a significant shift in hiring practices, marked by increased scrutiny from founders on new hires. This change was part of a broader trend that saw the tech industry grappling with a record number of layoffs, leading to an overall contraction in the asset class over the previous 12 months. This development represents a stark departure from the explosive growth during the boom period of 2021 and 2022, when Carta companies alone added more than half a million new employees. The past year’s hiring statistics present a clear picture of the changing dynamics. Carta startups saw only 268,000 new hires, a substantial decrease from the previous years, while 286,000 employees departed, whether by choice or through reductions in force (RIFs). It’s important to note that these figures primarily track employees receiving equity, which increasingly represents a majority within tech startups. What Led to the Shift?Two […]

In 2023, European startups secured approximately $60 billion in venture capital (VC) funding, showcasing the continent’s dynamic innovation landscape. This funding performance, detailed in a report by global law firm Orrick, highlights the shifting tides of investment preferences and strategic adjustments startups are making in response to broader market conditions. Sector SpotlightThe artificial intelligence (AI) sector commanded a significant portion of the total VC funding, securing a 17% share. This indicates the growing importance of AI technologies across various industries. However, climate technology (climate tech) emerged as the frontrunner, overtaking AI in terms of investment popularity. The focus on climate tech underscores Europe’s commitment to sustainability and the growing investor interest in environmentally-focused innovations. Changing Dynamics in FinancingThere was a noticeable downturn in later-stage financing, attributed to founders exploring alternative financing routes or pivoting their business models towards profitability. This shift reflects the strategic adjustments companies are making in a […]

The venture capital (VC) funding landscape has undergone a significant shift, with the economic downturn now affecting seed-stage startups—a group previously deemed somewhat immune to such financial squeezes. According to data from Carta, these startups are increasingly exploring alternative funding avenues to weather the storm. Seed Funding TrendsThe final quarter of 2023 marked a notable low in new seed investment rounds on the Carta platform, recording only 462 new rounds. This is the lowest quarterly figure since the first quarter of 2019, illustrating a stark downturn from the peak of 902 transactions observed in Q4 2021. Alongside the decline in transaction volume, median round sizes have also seen a reduction, falling from $3.5M in 2022 to $3M in 2023. Despite these challenges, there’s a silver lining with median seed stage valuations, which rose to $13.3M in Q4 2023, an 11% year-on-year increase. This suggests that while fewer deals are closing, […]

In 2023, pre-seed and early-stage European startups showcased resilience and growth, defying the broader fundraising downturn. According to a recent Pitchbook report highlighted by TechEU, these startups not only survived but thrived, with pre-money valuations for pre-seed and early-stage ventures climbing by 4% and 2.5%, respectively. This growth comes in contrast to the overall cautious atmosphere pervading the investment landscape. The data reveals an intriguing trend across the startup lifecycle. While the median deal value for pre-seed, seed, early-stage, and late-stage startups recorded increases of 8.4%, 5.3%, 2.8%, and 11.7% respectively, seed-stage startups experienced a 9.2% year-on-year decline in valuations. This decline underscores the varied impact of market conditions on startups at different stages of development. Particularly noteworthy is the stark contrast faced by startups in venture growth stages, where both deal value and valuations witnessed declines of 4.7% and 26.6%, respectively. The report also sheds light on the exit […]

Revolut and SumUp are the only two confirmed profitable companies among the 10 most valuable unicorn startups in Europe according to Pitchbook. In total, there are about 140 unicorn startups in Europe in terms of euros. Most of them became unicorns because they chose a hypergrowth strategy. As a result, most of them are operating at a loss. There are only two exceptions in the top 10. The first one is the British Revolut, which announced EBITDA of £45 million ($54 million) in Q4 2023. The second is mobile payment company SumUp, which reported a pre-tax profit of £1.2 million ($1.5 million) in its 2022 declaration.

Carta specialists analyzed all the facts of attracting investments that were formalized with the help of SAFE or convertible bonds. We are talking about investments that took place before any significant venture rounds. That is, the sample includes both pre-seed and later seed. According to Carta, in 2023, 34.6% of all pre-seed funding rounds went to Bay Area companies. However, the picture changes slightly if we look at the deals themselves and their number rather than the capital. Small angel rounds of less than $1 million have become much more dispersed across the US geography.

The value of unicorn startups in the cybersecurity and artificial intelligence sectors grew by 24.4% and 22.9%, respectively, last year. This is evidenced by the Morningstar Pitchbook Global Unicorn Vertical Indexes. Almost half of the new unicorns (44%) belonged to the artificial intelligence and machine learning sector. The pace of unicorn creation dropped almost threefold over the year, but the cumulative value of all unicorns backed by venture capital funds increased by 12.77%. There is a simple explanation for the growth in the value of unicorns in the two industries: a few companies set the tone for the entire sector. For example, the growth in the valuation of unicorn startups in the cybersecurity sector can be explained by the fact that Wiz is close to a $10 billion valuation. The artificial intelligence sector received a rising tide that lifted all boats, thanks to Microsoft’s investment in OpenAI ($10 billion) and […]

Carta has published another interesting report on the distribution of investor interest depending on the stage of startup financing. The starting point was 2021, after which the increase or decrease in investor interest was analyzed. The graph clearly shows two trends. SAFE and Convertible note are becoming an attractive form of investment, particularly for new investors. It is fast and cheap – low entry barrier.

Last year, 95 startups from around the world received a valuation of more than $1 billion. This is the lowest number since 2016. Most of the new unicorns – 20 of them – specialize in artificial intelligence. Fintech, cleantech, and energy accounted for 14, 12, and 9 startups respectively. Geographically, there is a significant advantage of American companies – 41 of the new unicorns were from there. 24 companies are from China, and three each are from India and the UK. Today, there are more than 1,500 unicorn startups in the world with a collective valuation of more than $5 trillion. In total, they have already raised more than $900 billion from investors.

In Q4 2023, the income distributed by US venture capital funds to LPs fell to its lowest level in 14 years. The peak value was 32% in Q2 2022. Since then, the average distribution of US venture capital funds has been declining every quarter. The exception was a slight increase in Q1 2023. The main reason for the drop in yields is the lack of exit options. This directly affects the balance of funds that can be reinvested in other venture funds. With such results, LPs are less inclined to invest in new structures and venture capital companies with a poor history of profitability. Preference is given to funds with high DPI and a long history. The increase in the number of IPOs projected for 2024 should help improve the situation.

According to Pitchbook, at the end of 2023, American venture capital companies had $311 billion in dry powder. The capital of the so-called “dry powder” reached a record level. American venture capital firms were able to spend only half of the $435 billion raised from investors between 2020 and 2022. Investors are in no hurry to spend money given the current economic climate. The main reason is that you shouldn’t invest if you can’t make money on it. Last year, investors were able to distribute only $21 billion to LPs. As a result, there is growing pressure from investors to either waive management fees or return some of their capital. Sequoia Capital has already begun to waive fees for unused capital. Some investors, including Lightspeed, are transferring portions of their portfolios to a new continuation fund, from which LPs can withdraw at any time.

According to Pitchbook, US investors participated in 1,863 European deals in 2023. The activity decreased by 40% over the year. In 2022, U.S. VCs financed 23% of the total number of deals in the region. At the same time, despite the decline, the level of participation remained the third highest in the last decade. US investors are increasing their participation significantly each year, up from 11% in 2013. The main reason is the overall growth of the European startup market. American investors are likely to focus on their core domestic markets. But there are those who are increasing their presence. IVP and Andreessen Horowitz are opening offices in Europe. In addition, last October, General Catalyst acquired La Famiglia, a German early-stage venture capital firm.

Kruze Consulting has found through a survey that investors have begun to pay more attention to revenue performance. Startups that received Series A funding in 2023 showed four times more revenue growth than those that failed. Investors want to see Series A startups that are not only growing rapidly, but are also efficient in terms of capital utilization. While revenue growth is important, investors believe that gross profit margin is much more important, as several seed startups with impressive revenues have failed to raise funding in Series A rounds. Around 90% of seed-stage startups that raised subsequent Series A rounds had gross margins of more than 50%. On average, the most successful companies that passed Series A had gross margins of 80%. Startups that successfully raised Series A rounds had an average loss ratio of 3 times. Startups that failed had a 10x multiple.

Acquisitions of venture capital-funded startups hit an eight-year low in 2023 as strategic buyers and private equity firms decided to hold off on spending, expecting startup valuations to decline further. Only 1,738 venture-backed startups were acquired globally in 2023, the lowest number since 2015 and a 31% decline from 2022. In the U.S., the number of deals also fell to a ten-year low, with 824 deals in 2023, down 30% from the previous year. Large deals were rare, but some significant deals still took place, including the $4.9 billion acquisition of Scopely by Savvy Games Group. Expectations for 2024 vary, but many are hoping for a revival in deal activity, especially in the cybersecurity, cryptocurrency, semiconductor, and artificial intelligence sectors.

Another report reveals the difficulties startups faced in attracting investment in 2023. This time, the Carta service has revealed the down-rounds figures. A down round is an investment round in which the company’s valuation decreases compared to the previous one. That is, companies are forced to raise funds on deteriorated terms, but these are the realities of the market: take the money or die. The chart shows that companies at later stages of development have been disproportionately affected by this trend. As a rule, their valuation has fallen by a larger percentage. Experts disagree on how to interpret the drop in company valuations. Some see it as a market problem, while others see it as a path to recovery. Carta is inclined to the second opinion.

In 2023, the European technology landscape faced a significant reality check, as evidenced by data published by Sifted. Funding for European startups throughout 2023, up to December 5, experienced a notable 42% decline when compared to the previous year, 2022. The most substantial decline was observed in Series C and beyond funding rounds, where the total funds raised were reduced by half, marking a decrease from $61.4 billion in 2022 to $30 billion in 2023. Across all European countries monitored by Sifted, there was a consistent decrease in the total funding amount when compared to the previous year, with the exception of Denmark, which managed to match the €1.4 billion it raised in the preceding year.

The Crunchbase article, “Lower Valuations, Higher Bar: What It’s Like To Raise A Seed Round In 2024,” discusses the current state of seed-stage startup investing. Main ideas:Aftereffects of 2021’s Boom: In 2021, startups raising seed funding faced a more forgiving environment with higher valuations. However, the scenario has since shifted, leading to lower valuations and stricter criteria for funding. This change was influenced by the previous year’s overvaluation and the need for startups to prove their worth more convincingly to attract investors. Changing Dynamics in Seed Funding: Despite the lower valuations, seed funding hasn’t seen a significant drop from its peak. The bar for securing seed funding has risen, especially for first-time founders, who now need substantial traction to raise funds. The trend shows a shift towards larger seed rounds, with fewer but more sizeable deals being the norm. Implications for Future Funding: The seed stage has become a more […]

US seed funding has remained strong despite a decline in startup investments worldwide. This is promising for the future in 2024. US seed funding increased by almost 10% in 2022, but then dropped by 31% in 2023. However, it still remained more stable than funding at other stages. This downturn, while significant, was less severe compared to the broader investment landscape, with seed funding still above pre-pandemic levels. Investors are positive about the growing startup environment, with lower company values and more skilled workers, which could benefit early-stage companies in the future. In the last ten years, seed funding in the US has increased significantly, reaching a peak of over $16 billion in 2022 before dropping to $11.5 billion in 2023, which is still higher than the investment levels of 2019 and 2020. The current market dynamics have led to more selective investment practices at the seed stage, with a […]

Web3 startup investments dropped by 74% in 2023, totaling less than $7 billion from 1,564 deals (Crunchbase). This is a significant decrease compared to the previous year, which saw $26.6 billion invested across 2,891 deals. This is the lowest level of investment since 2020, marking a sharp decline in investor interest in the sector. In the fourth quarter of 2023, only $1.1 billion was raised in 221 deals, down 21% from the third quarter and 65% from the same period in 2022. During the year, only eight Web3 startups were able to raise $100 million or more in funding, a significant drop from 118 such rounds in 2022. Bitcoin has recovered significantly and regulatory developments, like the SEC’s approval of spot bitcoin ETFs from 11 companies, suggest a potential return of interest in the sector, despite the overall downturn. However, investor interest is shifting to AI, leaving Web3 facing the […]

In 2023, VCs invested $2.9 billion in Latin American startups. Crunchbase calculated the funds and tried to determine the reasons for the negative trend. The above amount means that venture capital funding in the region has fallen by 63% compared to 2022. The drop of 84% compared to the record-breaking figures of 2021 is even more impressive. Latin America has been experiencing the fastest decline in venture capital funding for two years in a row. Crunchbase’s experts think that the negative trend is not only due to regional specifics and political conditions. There are multiple reasons for it. The problems are primarily economic. This is a multiplier for the global decline in venture capital funding. Brazilian startups are doing better than others in the region. Lending provider QI Tech raised $200 million in Series B, and online real estate platform Loft received $100 million in new funding. Despite the overall […]

One of the signs of the next “venture winter” is a drop in valuations of companies that are attracting investment. Carta has analyzed the clients of its service over the past three years. In 2021, a study revealed that the median valuation of a new Series D company was over $800 million, making it very close to achieving unicorn status. In 2023, the average company at the same stage was valued at $222 million. The decline is also visible at other stages, but the percentage difference is very different. Compared to 2021, Series A valuations are down 8%. Series D valuations are down 73%. Carta experts believe that in 2024, we should not expect a rapid return of valuations. Interestingly, they call it a return to “full health”. Or maybe it’s the current valuations that are healthy?

In a significant shift within the venture capital landscape, 2023 has marked the longest fundraising period for venture firms in over a decade. According to recent data from Pitchbook, the median time required to close funds has expanded to 15 months, a stark contrast to the previous year’s decade-low average of 9.3 months. This notable increase, representing a 46% surge from 2022, signals a shift in the investment climate. The change is primarily attributed to a more cautious approach from limited partners (LPs), who have pulled back their investments in response to multiple economic stressors. Key factors include a decline in technology stock prices, rising interest rates, and a noticeable reduction in initial public offerings (IPOs). The current economic environment has prompted fund managers to adopt new strategies to attract LPs. These strategies include offering more favorable terms, such as side letters and co-investing rights. However, the fundraising landscape is […]

Crunchbase continues to summarize the results of the past venture capital year. it’s time to identify the most active investors. Andreessen Horowitz took part in 79 venture capital deals and became the first. Lightspeed Venture Partners and Bpifrance took second and third place in the list with 57 and 55 deals respectively. A16z also ranked second in the ranking of the most active investors leading or co-leading deals. Microsoft became the leader thanks to its $10 billion investment in OpenAI and $1.3 billion in chatbot startup Inflection AI. Interestingly, A16z’s leadership came despite the fact that they closed 43% fewer deals compared to 2022. This trend is even more pronounced given the fact that last year’s leaders – Tiger Global Management, SoftBank Vision Fund, and Sequoia Capital – are not on the 2023 list. Among Seed stage investors, the leaders have not changed: Techstars, Y Combinator, and Antler. Source: https://news.crunchbase.com/venture/active-investor-ranks-a16z-lightspeed-eoy-2023/

In recent years, DocSend has become one of the recognized standards in communication between startups and investors. Entrepreneurs use it to share presentations of their companies, tracking interest statistics. DocSend regularly releases reports that use general data without disclosing company names. This allows you to see trends that characterize communication between the parties. The company has just released another report describing the state of affairs in 2023. The 26-slide presentation with the report can be found here: DocSend report. We will share a few interesting slides from it. Less engagement vs. More pitch decks?! Team + Problem + Market size Show me your money! More contacts. Less meetings. Is winter coming?

Source Inspiration: Rick Zullo, Co-Founder & GP at Equal Ventures In the venture capital realm, a transformative shift is occurring: Seed rounds are increasingly becoming the new Series A. This evolution, insightfully highlighted by Rick Zullo of Equal Ventures, reflects a broader trend in early-stage investing. Historically, Series A rounds, often in the multimillion-dollar range, were the first significant institutional investments in startups. However, as the costs of launching companies have decreased, startups have been able to make substantial progress with just angel investments – traditionally the domain of friends, family, and enthusiasts. This shift has elevated the appeal and professionalism of angel and seed investing. The success of early seed investors has led to their growth and maturity. Limited Partners (LPs), eager for returns, are now allocating more funds to these investors, escalating the typical seed investment amounts. Consequently, what used to be modest $100k checks have grown to […]

When we first started collecting our database, Unicorn Nest has used multiple source to collect a biggest database of investors with 40,000+ entities. These are all investors who have made at least one startup investment in the last 15 years. When we were perfecting our scoring algorithm, we realized that a lot of data is hidden from view. New Datapoints Red flags Scoring algorithm

In an unexpected twist in the tech world, funding for AI startups is skyrocketing across Europe, a region traditionally not known as a hotbed for AI innovation. This surge is headlined by the French generative AI startup, Mistral AI, which recently secured a staggering $487 million in funding. This investment round, spearheaded by the renowned Andreessen Horowitz, catapulted Mistral AI’s valuation to an impressive $2 billion, placing it firmly at the top of Europe’s AI startup scene. This funding frenzy isn’t isolated to Mistral AI. To date, 16 other European AI companies have collectively hauled in over $1 billion, signaling a robust interest in AI technologies across the continent. Notably, Synthesia, another major player in this burgeoning field, has clinched the second spot on Crunchbase’s list of most-funded European AI startups. Following a $90 million Series C funding round led by Accel, Synthesia achieved unicorn status in June, further emphasizing […]

Every startup wants to accelerate its path to success. Using other services is usually a way of saving time on tasks you are not great at while focusing on your core expertise.  In this post we accumulated different services startups might need during their journey, according to the jobs to be done framework, what job are you looking to fulfill. We have examined the startups by sector, and we have divided them into the following categories: Analytics, Design, Customer Support, Project/Product Management and others. We will gradually be adding more categories, so do add this page to your bookmarks. If you have any suggestions about tools we need to add to this list, drop us a line at [email protected] with a subject line “Unicorn Startup Toolkit”. Analytics Mixpanel Mixpanel is a product analytics platform that helps you track how users interact with your product. It gives real-time data on where your users are […]

At Unicorn Nest, we do a lot of researches on the fundraising market on an ongoing basis. A significant part of them is aimed at the European deals, due to our strong Benelux expertise. In this post, I want to focus on industries, the number of European series A rounds of which has been growing most actively in recent years. By the way, if you are planning to raise Round A, there is something useful at the end of the article. Rocking industries We have analyzed 940 European investment rounds from 2016. To make the data easy to read, we aggregated 1000+ known industries to a list of 45. The most promising 7 of them will be discussed below: Civil Engineering, Content, Electronics, Gaming, Health Care, Insurance, Virtual Currency. Most of them grew unstably and slowly, and no industry had any super bursts. We took the average annual growth for […]

From today on, we have a new policy in our company. It is about the right to make mistakes: the fundamental and inalienable right of a startup. Every employee of a startup has the right to make a mistake (to err is human). All startups operate in a zone of uncertainty and we cannot hope that any hypothesis will be confirmed with a probability of any close to 100%. Moreover, we must be aware of the fact that most of our hypotheses will ever be confirmed. As an investor, I believe that each question has 1000 possible answers, of which 900 are incorrect, and the other 100 are correct. Out of the 100 correct, you need to choose the best one suitable for these circumstances. We have no methodology to define what are these 100 correct and the 1 that actually fits. Except for one. This methodology involves conducting experiments […]

Startups use plenty of communication methods to reach out to investors. Cold emailing contacts is not considered the most effective of them. Yet, Unicorn Nest is currently building a tool that could change cold emailing by helping startups quickly set up emails and manage all communications with funds (you can learn more and join the waitlist here). In this article, I show how our advanced cold emailing method can help you reach the right investors.  A potential investor receives up to 600 emails any given day. A startup needs to break through this cascade of information and make sure the right person gets the right message. An entrepreneur also may need to write at least three to five emails to these select investors. This strategy can be called “the rule of five touches,” trying to make contact with a potential investor five times. Finally, startup entrepreneurs need to track their […]