ℹ️ Prosus zeroes out its 9.6% stake in Byju’s
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© Prosus, one of Byju’s largest investors, on Monday said its once-$2.1 billion worth stake in the Indian edtech startup is now worth nothing, but it is still hopeful that the formerly most-valuable Indian startup can be salvaged.

The largest external investor in Byju’s with a 9.6% stake, Prosus said in its quarterly report that its stake in the startup is now worth zero “due to the significant decrease in value for equity investors.” Prosus Group CIO, Ervin Tu, said on an earnings call that the firm is still hopeful about Byju’s outlook, but improving governance at the Indian firm will be key.

The Indian edtech giant has had a difficult couple of years as it grappled with a series of financial and governance setbacks that have tarnished its reputation and imperiled its future. The startup’s woes were amplified last year when it failed to meet financial reporting deadlines and ultimately reported revenues well below its own projections.

© The financial stumbles were compounded by the sudden departures of its auditor and board members, including a Prosus executive, and scuttled a potential $1 billion fundraising effort. In a desperate bid for capital, the startup raised $200 million this year, but at a drastically reduced valuation of about $225 million to $250 million. This lifeline has also been entangled in legal disputes with some of Byju’s largest backers, including Prosus.

© The South African-Dutch investor, whose portfolio includes high-profile companies like Tencent, Delivery Hero, Swiggy and Stack Overflow, has invested more than $570 million in Byju’s over the years. It has never sold any shares in the Indian edtech startup, whose valuation climbed to a peak of $22 billion in early 2022. Prosus on Monday said its stake in Byju’s now represented a fair value loss of $493 million, after the adjustment, in its current financial year.

Prosus has also cut down the value of its other investments: It reduced the value of its stake in Stack Overflow, which it bought for $1.8 billion in 2021, by 39%, and has lowered the worth of its stake in Indian online pharmacy, PharmEasy, by 35%.

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✅ What Vinod Khosla says he’s ‘worried about the most’
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💻 Vinod Khosla is more popular than ever right now. The Sun Microsystems co-founder turned prominent investor — first at Kleiner Perkins and, for the last 20 years, at his venture firm Khosla Ventures — has always been sought after by founders thanks to his no-nonsense advice and his firm’s track record, including bets on Stripe, Square, Affirm, and DoorDash.

But a $50 million gamble on OpenAI back in 2019 — when it was far from clear that the outfit would succeed on the scale that it has — put Khosla Ventures, and Khosla himself, squarely in the spotlight.

He’s thoroughly enjoying himself. I sat down with Khosla this past week in Toronto at the Collision conference, and ahead of our stage appearance, he told me that he’s been appearing in public — either onstage or on podcasts or television interviews — several times a week lately. Asked if he was exhausted by the schedule — for example, he flew into Toronto just hours before our sit-down — he shrugged off the suggestion.

💻 Certainly, there are things he prefers to talk about, and the art of deal-making is not among these things. “Frankly, the investor side is much less interesting to me,” he said when I asked him about something I heard recently, which is that he hasn’t taken a dollar in management fees since starting Khosla Ventures, despite that it now has $18 billion in assets under management. (He confirmed this, but he said that’s only true of himself and not a corporate-wide policy.)

💻 He’s much more passionate about the startup opportunities he spies in a landscape being changed daily by advances in AI, so we talked about some of this white space.

We also talked about what concerns him the most about AI’s ripple effects; FTC Chair Lina Khan; and why, in his view, the “Europeans have regulated themselves out of leading in any technology area.”

We talked first about Apple’s splashy new deal with OpenAI, which allows Apple to integrate ChatGPT into Siri and its generative AI tools. Apple may be striking similar deals with other AI models, including with Meta, but naturally, as an OpenAI investor, Khosla is bullish on the tie-up, which is the only one Apple has announced publicly so far.

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💬 Deal Dive: Sir Jack A Lot returns with a startup for retail traders
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When former YouTube product manager Kevin Xu, known as “Sir Jack A Lot” on Reddit, turned $35,000 into $8 million trading stocks between 2020 and 2022, many people thought his fortunes, and his way of investing, had peaked, just like 2021’s memestock craze had.

📱 Xu doesn’t agree, though, and he’s now building a startup for retail investors that aims to bring the good-natured investing advice and community that people used to enjoy on platforms like the WallStreetBets subreddit, but with a layer of accountability that discourages scammers and grifters.

📱 Launched in April 2022, AfterHour lets users link to their stock brokerage accounts and, under a username of their choosing, post their investments to a social feed. “The only reason people trust me and Roaring Kitty is that we are transparent,” Xu told TechCrunch. “Why not show your actual positions or prove you are actually in something? [AfterHour] brings back a level of credibility and trust. You connect your brokerage and share real verified positions and screenshots.”

The company currently has more than 23,000 users, and while that’s not an eye-popping number by any means, its user base is growing, and early adopters seem dedicated — Xu said that more than 70% of its users are on the app every single day. The company is currently focused on growth, Xu said, but has plans for how to monetize in the future.

📱 “Monday to Friday, 9:30 a.m. to 4 p.m. is the game,” Xu said. “When we started, I was so scared that it would be quiet on the weekends, but on Monday, people just come back. We don’t do any scammy push notifications to get people back on Mondays, but they naturally come back.”

The startup recently raised a $4.5 million seed round led by Founders Fund — Keith Rabois’ last investment at the firm — and General Catalyst. Pear VC, Daybreak Ventures and F4 Fund also participated, among several others. Xu said AfterHour is now focusing on growing its user base and its team

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🐵 Seizing the Moment: Strategies for Startups to Outmaneuver Competition in a Turning Economy
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👍 The Fed no longer predicts a recession. Economic data is turning more positive, eg housing starts exceeded forecasts. 80% of public companies beating earnings estimates - three percentage points higher than the 5 year average.

This is the moment startups with big balance sheets’ advantage will shine.

👍 On the other hand, enough uncertainty permeates the market to depress prices. Public software companies’ share prices have fallen 10% on average in the last 30 days dotted with positive notes like the stabilization cloud growth rates for Microsoft & Google.

Efficiency has been the watchword for the last 3-4 quarters. Most companies have trimmed excess costs to drive go to market sales efficiency & burn ratios. For those companies with hundreds of millions on the balance sheet, they have two strategic options to evaluate.

👍 First, acquisitions. Many startups will look to raise starting in September. The fundraising market, while active, isn’t fully thawed. The metrics for Series As remain unclear, which provides an opening for selective technology & team acquisitions at reasonable prices.

👍 Second, scaling the marketing, then the sales spending as unit economics justify. Startups with bigger balance sheets will be able to ramp much more quickly than those needing to raise capital before scaling the GTM once more. Responding faster to market pull will increase their market share.

The right strategic bet on either of these options can provide a startup with significant advantage into this next economic cycle.

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⭐️ Hebbia raises nearly $100M Series B for AI-powered document search led by Andreessen Horowitz
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💡 The round valued the company between $700 – $800 million although TechCrunch couldn’t verify whether that valuation is pre- or post-money. (One possible scenario is $700 million pre/$800 million post.)

💡 Hebbia disclosed in an SEC filing in May that it had by then raised $93 million out of a hoped-for $100 million but we understand from two of the people that the round hit a near $100 million mark and has closed.

Hebbia and Andreessen Horowitz didn’t respond to a request for comment.

Hebbia was founded in 2020 by George Sivulka, who launched the company while working on his PhD in electrical engineering at Stanford. Sivulka was inspired by his friends working in the financial industry who told Sivulka that part of their long work weeks was spent searching for information in SEC filings and other dense documents. Sivulka thought that AI could help them save hours at the office and give them more time for rest and sleep.

Hebbia’s AI can look over billions of documents at once, including PDFs, PowerPoints, spreadsheets and transcripts and return specific answers, the company says.

💡 The startup sells primarily to financial service firms, including hedge funds and investment banks. But its product could also be used by law firms and other professional domains.

💡 The latest funding brings Hebbia’s total capital to over $120 million. The company raised its $30 million Series A in Sept. 2022 led by Index Ventures with participation from Radical Ventures.

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🍔 Andrew Ng plans to raise $120M for next AI Fund
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👍 AI big shot Andrew Ng’s AI Fund, a startup incubator that backs small teams of experts looking to solve key problems using AI, plans to raise upward of $120 million for its second tranche.

A filing with the SEC shows that the AI Fund’s second fund, AI Venture Fund II, has so far amassed $69.75 million from 13 partners — leaving around $50 million to be invested. The AI Fund’s PR declined to comment.

Ng, the founder of the Google Brain deep learning project, co-founder of Coursera, and recent Amazon board appointee, was one of the most recognizable names in the AI community when he became Baidu’s chief scientist in 2014. He left Baidu in 2017 to jumpstart a number of AI ventures, including the DeepLearning.ai course and Landing AI, a startup developing AI tools targeting manufacturing companies.

👍 Ng launched the AI Fund in 2018 with $175 million, serving as the incubator’s GP and leading its direction. (On the aforementioned SEC filing, he’s named as the “managing member of the general partner” for AI Venture Fund II.)

👍 The idea was to provide funding at the seed and Series A stages of a company’s life cycle, allowing teams to work in relative stealth until they were ready — and connecting them with Ng’s extensive professional network

At $120 million, AI Venture Fund II would be considerably smaller than the first AI Fund tranche. Still, it’s more than double what Ng reportedly originally hoped to raise — $50 million — for the AI Fund’s follow-up.

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📎 As Spain gets its latest VC fund, Southern Europe appears to be on a roll
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Evidence for this was apparent during Mobile World Congress in Barcelona earlier this year, as time and time again your TechCrunch reporter bumped into Northern European VCs scouting startups on the “Iberian peninsula” (Spain and Portugal).

These young companies bring a killer combination that VCs love: significantly lower operating costs and far less punchy valuations.

📱 Further evidence of this “Southern trend” arrives with news that a new venture capital fund, Plus Partners, is being launched by Enrique Linares, one of the co-founders of breakout European unicorn letgo, and Oriol Juncosa, a veteran of the Barcelona VC scene. While Plus Partners hasn’t released a figure for the launch of their new fund, the rumor I’m hearing is it will be in the $30 million-$50 million range.

📱 Looking at the fund’s co-founders, Linares led letgo, a used goods marketplace, to become the first Spanish startup to achieve unicorn status, attracting investment from Accel, Insight Partners and Prosus, among others. Prior to letgo, he co-founded Captalis, a fintech company with a significant presence in LatAm.

Juncosa started his VC career at Nauta Capital in Barcelona and went on to co-found the early-stage VC firm Encomenda Smart Capital. He then become CFO of Carto, a data visualization SaaS company based in the U.S. and Spain, which has raised more than $100 million.

📱 According to a Dealroom report on the Spanish tech ecosystem, the combined enterprise value of Spanish startups surpassed €100 billion in 2023. It also found venture investment into Spanish startups held up last year, with €2.2 billion raised across some 850 funding rounds.

Lastly, the European Investment Bank’s venture capital arm also backed a new fund in Spain this year which aims to invest €1 billion ($1.1 billion) in growth-stage tech startups.

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💎 Austin-based Ironspring Ventures raised $100M to invest in the industrial revolution
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💻 The Austin, Texas-based firm raised $100 million for its second fund to focus on industrial startups. This is a noticeable increase from the firm’s $61 million debut fund that closed in 2021. This latest raise enabled the firm to hire its first principal, Colleen Konetzke, and a head of platform, Stephanie Volk. The firm plans to invest Fund II into 20 startups, backing four to five companies a year.

The industries Findley is referring to include: manufacturing, construction, transportation and energy. The firm backed 16 companies in its first fund, including Solvento, a payments infrastructure startup for trucking companies in Mexico; OneRail, a last-mile logistics startup; and Prokeep, a communications platform for distributors, among others.

“What we saw back then was as true as we see today,” Ironspring co-founder and general partner, Ty Findley told TechCrunch. “There is a big gap in the venture industry that deeply studies and has genuine GP market fit with these industrial markets and can help them navigate a pretty challenging go-to-market [process].

💻 “We are seeing more top-tier tech and innovation talent flood into these industries,” Findley said. “Whether they are recirculating from recent tech unicorns, or just other tech talent that simply wants to make a big impact on their career that’s not based on photo sharing or adtech or chasing the next crypto coin, that is what the macro trends are.”

💻 GoodShip is a good example of this. The freight orchestration and procurement platform was started by former operators at Convoy. Ironspring co-led the firm’s 2023 seed round alongside Chicago Ventures and re-upped at the Series A earlier this year.

Ironspring being based in Austin is an asset, Findley said, due to where they invest — a narrative that conflicts with how many others in the venture ecosystem view the once emerging tech hub. Findley said that many of the industries the firm is focused on have history in Austin, and with Tesla moving its headquarters there and the recently approved $6.4 billion awarded from the infrastructure act for

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📎 Identity.vc is bringing capital and community to Europe’s venture ecosystem
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In 2023, the pair launched Identity.vc, a venture firm that invests in early-stage companies with at least one founder or executive who identifies as a member of the LGBTQ+ community. The Berlin-based firm is currently raising €50 million for its debut fund and has closed on €15 million thus far.

The founding partners also brought on Mari Luukkainen, who has prior operating and investing experience, as a principal.

These young companies bring a killer combination that VCs love: significantly lower operating costs and far less punchy valuations.

📱 Further evidence of this “Southern trend” arrives with news that a new venture capital fund, Plus Partners, is being launched by Enrique Linares, one of the co-founders of breakout European unicorn letgo, and Oriol Juncosa, a veteran of the Barcelona VC scene. While Plus Partners hasn’t released a figure for the launch of their new fund, the rumor I’m hearing is it will be in the $30 million-$50 million range.

📱 The firm writes checks that range from €250,000 to €1.5 million into companies from the pre-seed to Series A stages. The firm is sector agnostic and invests in Europe and beyond. Identity.vc has backed four companies thus far, including eco.mio, a software plugin that helps companies manage the environmental impact of their business travel, and Paxton, an AI legal tech company.

“The majority of LGBTQ+ founders: They are not out to their investors because they feel that could be a disadvantage,” Klein told TechCrunch. “We think that is a big mistake and [that means] you don’t have this trusted relationship with your investors. Those investors who don’t like it, you don’t want to have them on your cap table. You should be able to be yourself.”

📱 Klein said they’ve gotten a lot of positive feedback on the strategy, and fundraising hasn’t been too difficult thus far. He added that LPs are looking for funds that give them this kind of diversification.

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🍔 Defense tech and ‘resilience’ get global funding sources: Here are some top funders
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👍 We live in a very different world since the Russian invasion of Ukraine in 2022 and Hamas’s Oct. 7 attack on Israel. With global military expenditure reaching $2.4 trillion last year, startups are hoping to get a share of the pie, and formerly reluctant investors are keen to help them do so.

The U.S. budget is by far the largest, with contracts worth $53 billion to major tech firms between 2019 and 2022. But the rise of defense tech as an investment trend is very much global.

German-based AI startup Helsing is a strong example of the unprecedented amounts of capital available to tech companies with military potential.

Investor appetite is particularly strong for tech solutions with dual-use potential, meaning that they can be used for both civilian and military applications. The idea that defense tech can benefit society more broadly is also reflected in the rising concept of “resilience tech.” More than the worn-out term of “defense,” the word “resilience” reflects the idea that innovation can make democratic societies less vulnerable to attacks and help them recover faster.

👍 For instance, Helsing co-CEO Gundbert Scherf said that he and his co-founders created the company “because we believe that AI will be essential so that democracies can continue to defend their values.”

👍 The fact that Helsing’s mission resonated with mainstream investors such as Spotify founder Daniel Ek reflects a mindset change in society as a whole, but also in venture capital itself.

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⭐️ Matrix venture firm distances from India and China affiliates
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💡 Matrix is rebranding its India and China affiliates, becoming the latest venture firm to distance its international franchises.

The U.S.-headquartered venture capital firm will retain its name, while Matrix Partners India will rebrand to Z47 and Matrix Partners China will rename itself MPC. Matrix began operating the India affiliated fund in 2006 and the China fund in 2008.

The unexpected rebranding takes effect July 1. Notably, Matrix’s announcement referred to its India and China operations as “entities operating under the Matrix name” rather than as its own units.

💡 Matrix Partners India stated that the rebrand will not affect its operational structure, existing funds, or strategy. The new name takes inspiration from India’s journey towards becoming a developed country by 2047, it said.

Matrix is undertaking the “renaming and organizational update” to “clarify the local approach each of these teams has taken to operating in each of their geographies since inception and the organizational independence of each team,” Matrix Partners said in a post.

Hebbia and Andreessen Horowitz didn’t respond to a request for comment.

The move follows Sequoia’s splitting of its India and Southeast Asia and China units last year amid geopolitical tension between China and the U.S.

💡 “The decision to rename is driven by a shared commitment to clarity in the marketplace, responsiveness to regional market dynamics and a continued focus on competing locally, which will benefit each organization’s respective portfolio companies, investors, and partners,” Matrix said today.

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⭐️ Kleiner Perkins announces $2 billion in fresh capital, showing that established firms can still raise large sums
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💡 Many VC firms are struggling to attract new capital from their own backers amid a tepid IPO environment. But established, brand-name firms are still able to raise large funds. On Friday, Kleiner Perkins announced that it closed on more than $2 billion in fresh capital across two funds, a slight increase from the 52-year-old firm’s $1.8 billion previous fundraise in early 2022.

Other prominent firms that successfully defied the VC fundraising slump this year include Andreessen Horowitz, which secured $7.2 billion for several of its funds; General Catalyst, which is reportedly wrapping up a $6 billion fundraise; and Norwest, with its $3 billion capital haul.

Kleiner Perkins said in a blog post that it will continue to invest in enterprise software, consumer, healthcare, fintech and hardtech startups, as it has for its previous fund. But what’s changed is the opportunity to make these industries more efficient with the help of AI. The firm has already backed a few buzzy AI-driven startups, including business application search tool Glean and Harvey, an AI assistant for lawyers. However, compared to other large VC firms, Kleiner Perkins’s investments in prominent AI companies remains modest.

💡 Founded in 1972, Kleiner Perkins was once considered to be one of the most elite firms in Silicon Valley. It was an early backer of companies like Amazon, Compaq Computer, Genetech, Netscape and Sun Microsystems.

💡 While the firm lost some of its prominence in the last tech boom, it still invested in a slew of eventual winners, including Airbnb, Instacart, Slack and Robinhood.

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🍔 Sensorita uses digital twins to help waste management companies streamline construction waste
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👍 The amount of waste produced by the construction industry adds up to more than a third of the overall waste produced each year in the European Union.

👍 Sensorita wants to help the construction industry reduce its waste by fixing what Sensorita co-founder and CEO Ulrikke Lien considers to be the root of the issue: the lack of reliable data in the industry.

Lien told TechCrunch that many waste management companies collect from so many construction sites that they often don’t know where their bins are, how many of them there are or when they will need to be emptied.

“Since the very beginning, what stood out then, and what is still true now, the data that they have access to in the industry is so limited,” Lien said. “If you compare it to any other process industry, there is no one that would accept the level of data, or insight or knowledge, and that’s the general problem.”

The Oslo-based startup puts its sensors into construction waste bins and uses radar and machine learning technology to create digital twins of each bin. Waste companies can then use Sensorita’s software to get updates from where their bins are and how full they are and use that data to better plan pickups.

👍 “Today, they are walking around and monitoring fill levels with their eyes; that’s a big problem if you have to spend 45 minutes of your day checking fill levels,”

👍 Lien got the idea for the company back in 2020 when she was getting her engineering degree from the Norwegian University of Life Sciences. She originally wanted to build something for the municipality — household — waste sector but realized that there were already a number of startups trying to sell their tech to those players.

Plus, household waste is fragmented and backed by public money, which means it would be really hard to gain traction.

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📎 Industry Ventures raises a $900M fund for investing in small, early-stage VCs and their breakout startups
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The venture fundraising trend in 2024 is fairly clear by now: Large, established VC firms are continuing to attract capital from limited partners, while smaller, newer funds are finding it more difficult to raise.

But Industry Ventures’ latest fundraise should offer a dash of good news for emerging managers.

📱 On Tuesday, the 24-year-old firm announced that it raised a $900 million early-stage hybrid fund for investing in emerging managers and directly backing breakout growth-stage companies alongside their managers. The fund will also buy a secondary interest in emerging managers from other limited partners.

📱 This is Industry Ventures’ seventh hybrid fund, and it’s more than 50% larger than its predecessor, a $575 million vehicle raised in 2021. The $900 million fund will be split three ways: backing VC funds (40%), directly investing in promising Series B startups from their existing partnerships (40%) and acquiring stakes in emerging investment firms from other LPs looking to exit (20%).

The common lore is that it’s very challenging for emerging managers to raise funds now, but Roland Reynolds, senior managing director at Industry Ventures, says that is not what he observes with the funds his firm backs.

📱 While Industry Ventures’ new relationships are usually firms on funds I through III, it will continue to invest in managers as they mature, as long as their fund sizes are $250 million or less and focused on seed and Series A startups, Reynolds said. These managers include firms that have been around for over a decade, including IA Ventures and Altos Ventures.

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