⭐️ Kleiner Perkins announces $2 billion in fresh capital, showing that established firms can still raise large sums
#VentureNews

💡 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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💎 Husband-and-wife former Olympians target $50M for new fund to invest in influencer-led consumer brands
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💻 Samyr Laine and his wife, Ayanna Alexander-Laine, started Freedom Trail Capital in 2023 and are working their way toward a $50 million fund. Both are former Olympians who competed for Haiti and Trinidad and Tobago, respectively, in the triple jump. Now they put their grit and determination to work for founders wanting to launch and scale consumer brands.

“I love people and connecting with people,” Alexander-Laine told TechCrunch. “We know how to merge talent and business, and found that athletes are good in these spaces. We also have the stamina to conquer other things and other entities outside of sports.”

They, along with a third general partner, Ivan Lopez, have invested in seven startups so far with a small first fund close. These include a hair care company by Issa Rae called Sienna Naturals; a pet product company started by Kaley Cuoco called Oh Norman!; Ciara’s Ten to One Rum; and Kudos, a diaper company backed by Mark Cuban and Gwyneth Paltrow.

💻 Laine knows what it’s like to start and scale companies. He was previously working as senior vice president of operations and strategy at Westbrook, the venture firm founded by Will Smith and Jada Pinkett Smith. He also spent time as director of operations at Roc Nation, working with Jay-Z. Meanwhile, Alexander-Laine is getting her doctorate in business administration and will focus on healthcare finance and healthcare inequities.

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🍔 Senators urge owners, partners and VC backers of fintech Synapse to restore customers’ access to their money
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👍 A group of senators has banded together to urge Synapse’s owners and bank and fintech partners to “immediately restore customers’ access to their money.” As part of their demands, the senators implicated both the partners and investors of the company as being responsible for missing customer funds.

In a letter shared publicly on Monday, U.S. Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, along with Senators Ron Wyden (D-OR), Tammy Baldwin (D-WI) and John Fetterman (D-PA) pointed out that customers of companies that partnered with banking-as-a-service startup Synapse have not been able to access their money since mid-May.

👍The letter was addressed to W. Scott Stafford, president and CEO of Evolve Bank & Trust, but was also sent to major investors in Synapse, as well as to the company’s principal bank and fintech partners.

San Francisco-based Synapse operated a service that allowed others (mainly fintechs) to embed banking services into their offerings. For instance, a software provider that specialized in payroll for 1099 contractor-heavy businesses used Synapse to provide an instant payment feature; others used it to offer specialized credit/debit cards. Until last year, it was providing those types of services as an intermediary between banking partner Evolve Bank & Trust and business banking startup Mercury until Evolve and Mercury decided to work directly with each other and cut out Synapse as a middleman.

👍 Synapse raised a total of just over $50 million in venture capital in its lifetime, including a 2019 $33 million Series B raise led by Andreessen Horowitz’s Angela Strange. The startup wobbled in 2023 with layoffs and filed for Chapter 11 in April of this year, hoping to sell its assets in a $9.7 million fire sale to another fintech, TabaPay.

The Senators also expressed concern and being disturbed by “the potential shortfall of $65 to $96 million between what consumers are owed and the funds held on their behalf by Synapse’s partner banks,” calling it “both deeply troubling and completely unacceptable.”

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⭐️ Spain’s exposure to climate change helps Madrid-based VC Seaya close €300M climate tech fund
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💡 According to a recent Dealroom report on the Spanish tech ecosystem, the combined enterprise value of Spanish startups surpassed €100 billion in 2023. In the latest confirmation of this upward trend, Madrid-based VC fund Seaya has closed Seaya Andromeda, an “Article 9” €300 million climate tech fund based out of Madrid.

Article 9 refers to the EU’s Sustainable Finance Disclosures Regulation Act, which puts the onus on investment firms to ensure their investments have a positive impact on society or the environment.

Seaya has been around for 12 years, mainly focusing on mission-driven startups in Europe and LatAm. The new “Andromeda” fund will invest in growth companies that specialize in energy transition, decarbonization, sustainable food value chains, and the circular economy.

💡 The firm said the new climate fund will deploy between €7 million and €40 million as a first check; will retain capital for follow-ons; and plans to make 25 investments by the end of 2027. So far, five investments have been made from the fund (see below).

💡 Seaya was launched back in 2013 by former private equity investor Beatriz González, who got into climate and sustainable investing after backing a recycled clothing line. She previously worked for Morgan Stanley, Excel Partners and Darby Overseas Investments in the U.S.

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🍔 Forestay, Europe’s newest $220M growth-stage VC fund, will focus on AI
#VentureNews

👍 Forestay, an emerging VC based out of Geneva, Switzerland, has been busy. This week it closed its second fund, Forestay Capital II, at a hard cap of $220 million. The VC wasn’t well known in Europe until it started to lead rounds in enterprise startups a couple of years ago, notably scanning software startup Scandit — which has raised $273 million to date — out of Zurich.

The Forestay II fund will invest across Europe and Israel, with a “sweet spot” of leading growth rounds of $10 million to $15 million, at the inflection point of a company, it said.

As Chief Digital Officer in large corporations, mainly the biopharma clinical space, I had the chance to look at the entire value chain, from early research down to distribution, in fairly sizable enterprises,” he told TechCrunch over a call. “So by knowing the enterprise inside out, that’s why we decided to focus on enterprise and enterprise AI.

👍 To date, the VC has backed 13 companies, including K2view, Nexthink, Scandit and Wasabi; three of these have reached unicorn status and two were acquired. Most recently, the firm backed Neural Concept, a company spun out from EPFL, the Swiss Federal Institute of Technology in Lausanne, which raised $27 million in a Series B round to tackle fast manufacturing design with AI.

👍 Forestay also led the Series A round for Portugal’s “predictive maintenance” startup Stratio with a $12 million Series A back in 2021.

The Forestay fund was founded as a fund of B-Flexion, the private investment vehicle created by the Bertarelli family that is best known for building Serono into the third-largest biotech business globally, before its merger with Merck KGaA.

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📎 J2 Ventures, focused on military healthcare, grabs $150M for its second fund
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📱 J2 Ventures, a firm led mostly by U.S. military veterans, announced on Thursday that it has raised a $150 million second fund. The Boston-based firm invests in startups whose products are purchased by civilians and the U.S. Department of Defense.

While many emerging VCs are struggling to raise second funds, J2’s latest vehicle is more than double its $67.5 million debut fund from 2021.

📱 At first blush, the firm may seem to be benefiting from VCs’ growing interest in defense tech. But J2 has no interest in positioning itself as a defense tech investor.

“Our portfolio is national-security adjacent, but not defense-focused,” said Alexander Harstrick, J2’s managing partner. The firm does not invest in technologies that protect critical national infrastructure or help deter attacks, such as drones, robotics, or surveillance tech.

📱 Instead, J2 backs companies whose products help maintain the well-being and healthcare of nearly 3 million people employed by the U.S. military. Harstrick said that the Department of Defense (DoD) has historically adopted new technologies before they became popular with civilians. And it’s not just the internet, which was partially developed by the military.

📱 The firm also backs cybersecurity, infrastructure, and advanced computing startups like Femtosense, a developer of energy-efficient AI chips for smart devices.

J2 backs companies at the pre-seed stage to Series A and writes checks that range from $1 million to $5 million. The firm’s limited partners include JPMorgan and New Mexico State Investment Council.

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💎 Why deep tech VC Driving Forces is shutting down
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💻 Sidney Scott decided to take himself out of the venture capital rat race and is now jokingly auctioning off his vests — starting at $500,000.

The Driving Forces solo general partner announced on LinkedIn this week that he was shutting down his $5 million fintech and deep tech VC fund that he started in 2020, calling the past four years “a wild ride.”

A healthy performance of his first, small fund wasn’t enough. He told TechCrunch that with increasing competition for what is, essentially, still a small number of hard tech and deep tech deals, he realized it would be a challenge for smaller funds like his.

“This wasn’t easy, but it’s the right choice for the current market,” he said.

💻 Scott also thanked people, like entrepreneur Julian Shapiro, neuroscientist Milad Alucozai, Intel Capital’s Aravind Bharadwaj, 500 Global’s Iris Sun and UpdateAI CEO Josh Schachter, who stood by him.

During that time, he was also involved in building the first AI and deep tech investor network with Handwave, collaborating with investors at companies such as Nvidia, M12, Microsoft’s Venture Fund, Intel Capital and First Round Capital.

💻 That ride included about two dozen investments into companies like SpaceX, Rain AI, xAI and Atomic Semi. The total portfolio yielded over 30% net internal rate of return, a metric measuring the annual rate of growth an investment or fund will generate, Scott told TechCrunch.

💻 Thirty percent for a seed fund like this is considered solid IRR performance and it outpaces total average deep tech IRR, which is about 26%, according to Boston Consulting Group.

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⭐️ The UK’s most active early-stage investors
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💡 2023 wasn’t a good year for early-stage deal count in UK tech. There were 2.7k pre-seed, seed and Series A deals, according to Dealroom; the lowest figure since 2016 and a long drop from the 4.1k deals done in the heady days of 2021.

The figures for 2024 aren’t looking much stronger — Dealroom counts 1.1k so far this year — although a reporting lag typically means early stage rounds are under-reported.

💡 Using data from Dealroom, alongside investor deal count figures reported to Sifted by the firms themselves, Sifted has selected the investors that did the most pre-seed, seed and Series A deals, both new and follow-on, in the UK in the past 12 months (the start of June 2023 to the end of May 2024). Accelerators were not included:

1. SFC Capital

2. Maven

3. Mercia Ventures

4. Fuel Ventures

5. Future Planet Capital

6. SyndicateRoom

7. Haatch

8. Octopus Ventures

9. Seedcamp

10. Development Bank of Wales

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ℹ️ European VCs outperform US VCs over 10 and 15 year horizons
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© Venture capital might have been born in the US — but Europeans aren’t too bad at it nowadays.

European VC returns are better than North American VC returns over 10 and 15 year horizons, finds a new report from industry body Invest Europe, based on data from investment firm Cambridge Associates.

European VC yielded 20.77% net IRR (internal rate of return) over 10 years, compared to North American VC’s 18.18%. Over a 15 year period too, European VC has better returns: 16.57% IRR to North American VC’s 16.09% IRR.

© However, over a 20-year period, North American VC’s IRR edges past European VC’s: 13.03% compared to 12.87% for Europe. North American funds are also faster to pay back their investors — with LPs getting their money back in 4.5 years, on average, compared to 6.7 years in Europe.

IRR is an (imperfect) measure used in private equity to compare fund performance. It shows the expected annualised return a fund should generate; the higher the IRR, the better the performance. Most early-stage VC funds will be aiming to get an IRR above 30%.

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🔔 Europe's profitable startups
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💻 Two years ago, the US stock market tanked, growth-at-all-costs went out the window and get-to-profitability-ASAP came in.

Startups scrambled to follow the new VC mantra. More than 140k tech workers were laid off around the world in 2022; expansion plans were put on ice and markets were shut; and getting into the black became priority number one for founders.

Now, after an undeniably tough few years for our industry, more and more scaleups are announcing profitability.

Sifted hopes to track Europe’s biggest profitable private tech companies in this new database. We’ve included companies that have raised £100m+ and made an annual profit of £10m+. Data comes from news articles and data platform Dealroom.

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ℹ️ Corporate venture firms are a steadily growing presence in Europe's startup scene
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© Most CVCs don’t have a long shelf-life: their median life span is a mere four years, according to business school LBS. The reasons for that are well-trodden. If the parent company has a tough year, or has a change of leadership or strategic direction, the CVC can be one of the first things to get the chop.

© Recent victims include British telecoms giant BT’s venture arm, which has stopped making new investments, and UK software and IT services provider Capita’s venture arm Scaling Partner, which has dropped from 16 to 4 employees over the course of this year, according to LinkedIn, and also stopped new investments. The parent company’s share price has also plummeted since January.

This year German software giant SAP also shut its CVC arm SAP.io — which has invested in five unicorns and seen 70 exits — although it still invests in startups via VC firm Sapphire Ventures.

Danish shipping giant Maersk is another which has shaken up the focus (and team) of its CVC, Maersk Growth, in the past year. The move came as a new CEO took the helm of the parent company, and thousands of job cuts were announced.

© In 2022 and 2023, CVCs were involved in more than one in five deals — and so far in 2024, the share is only going up, according to PitchBook data.

Corporates and corporate venture arms have invested in 771 deals so far this year, worth a combined €12.31bn. In 2023, CVCs invested in 2,133 deals, worth a combined €26.16bn.

© Last year, pharmaceutical giant Novo Holdings was the most active CVC in Europe — doing 32 deals. In a sign of the times, two more of the most active CVCs were connected to pharmaceutical companies, while three were connected to oil and gas behemoths.

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ℹ️ Iceland is dodging the VC doldrums as Frumtak Ventures lands $87 million for its fourth fund
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© Iceland’s startup scene is punching above its weight. That’s perhaps in part because it kept the 2021 hype in check, but mostly because its tech ecosystem is coming of age. Iceland attracted the most venture capital per capita of all Nordic countries in 2023, but that stat is somewhat skewed by its relatively small population of fewer than 400,000 inhabitants.

More tellingly, foreign co-investments in Icelandic startups reached a record in 2023. In this context, it makes sense to see VC firms raise more funding.

© Frumtak Ventures is a perfect example. The firm just closed an $87 million fourth fund that was oversubscribed — and significantly larger than its third $57 million fund.

Most of Frumtak’s limited partners are Icelandic pension funds. “We were in a very good position that all our existing LPs were happy to back us again,” Kristinsson said. As for geographic scope, he added, Frumtak will back Icelandic founders, but “focus on local innovation with global potential.”

© Iceland’s tech scene skews toward early-stage startups, as does Frumtak, whose name roughly translates to “early catch.” But Kristinsson is confident that as the scene matures, more exits will follow. “Looking 10 or 20 years forward, my vision is that we will have fueled some of the biggest listed companies in Iceland in the next decades,” he said.

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⭐️AI startup Hebbia raised $130M at a $700M valuation on $13 million of profitable revenue
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💡 Hebbia, a startup that uses generative AI to search large documents and respond to large questions, has raised a $130 million Series B at a roughly $700 million valuation led by Andreessen Horowitz, with participation from Index Ventures, Google Ventures and Peter Thiel.

⭐️And its funding demonstrates that 50x annual recurring revenue (ARR) is becoming the norm for AI startups, especially ones that have booked millions of profitable revenue early in their journey.

The formal funding announcement confirmed most of the details previously reported by TechCrunch, although Hebbia continued to raise more funds, another $30 million, after our report. But Hebbia has not yet filed an updated disclosure on this funding round to the SEC, and the latest one at this time still says it was raising around $100 million of new equity.

Hebbia, which was founded by George Sivulka while he was working on his PhD in electrical engineering at Stanford, had ARR of $13 million and the company was profitable when it was pitching investors on the deal, according to a person with knowledge of the matter.

⭐️ The $700 million valuation implies that investors valued Hebbia at about 54 times ARR. Such heady valuations were common at the height of the pandemic-infused boom and are now routinely assigned to buzzy AI startups. Hebbia’s closest analogues, Glean and Harvey, had valuations of slightly over 60x ARR, according to the Information’s reporting.

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💎 Index Ventures raises $2.3bn across two new funds to double down on AI
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💻 Global VC investor Index Ventures, a backer of German AI unicorn DeepL and UK neobank leader Revolut, has raised $2.3bn across two new funds to double down on AI investments.

Along with its new $800m venture fund and $1.5bn growth fund, Index is also still investing out of a separate $300m seed fund.

💻 The firm says that the new funds will have a strong focus on AI, at a time when the technology is developing at pace and the availability of talent globally is increasing.

“AI alone will revolutionise virtually every sector of the economy and open up whole industries to venture that have remained virtually untouched,” said Shardul Shah, partner at Index Ventures. “Meanwhile, hundreds of thousands of people have worked in hypergrowth startups globally and can transfer those lessons to the next generation of companies.

💻Index has historically focused on enterprise software, SaaS, fintech, marketplaces and consumer; but has done several AI deals recently. It was an early investor in French AI darling Mistral — which is now Europe’s most valuable startup in the field, at €5.8bn.

At a combined $2.3bn, these two funds are smaller than the equivalent funds raised at the top of the market in 2021; a $900m venture fund and a $2bn growth fund, totalling $2.9bn.

💻 Index has also slowed down its pace of deployment; the two new funds have arrived three years after the previous ones. In 2021, Index raised its venture and growth funds just one year after its predecessors.

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