ℹ️ From Ethan Choi to Spencer Peterson, venture capitalists continue to play musical chairs
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© When Keith Rabois announced he was leaving Founders Fund to return to Khosla Ventures in January, it came as a shock to many in the venture capital ecosystem — and not just because Rabois is a big name in the industry.

© It was surprising because unlike in many other fields, venture capitalists don’t traditionally move around very much — especially those who reach the partner or general partner level as Rabois had.

VC funds have 10-year life cycles and partners have good reason to stay that course. In some instances, they may be a “key man” on a firm’s fund, meaning that if they leave, the fund’s LPs have the right to pull their capital out if they choose. Many partners and GPs also have some of their own money invested in their firms’ funds, which gives them further reason to stick around.

© So, while big-name investor moves in venture capital aren’t common, they seem to have become so in recent months. So far this year, there have been notable instances of investors returning to old firms, striking out on their own or taking a pause from investing entirely.

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🍔 AI-powered Regard nabs $61M to find missed illness, boost hospital revenue
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👍 People in tech often say that data is the new oil. That phrase, coined by British mathematician Clive Humby, of course implies that data is valuable.
The results of the last quarter can be found in the Crunchbase analysis.

👍 Data about a person’s health can also provide meaningful insights and improve outcomes, but only 3% of patient data is currently used by physicians, according to the World Economic Forum. Although doctors know they can glean useful information from patient data, they don’t have the time to review every detail in the medical record.

Regard, a digital health startup founded in 2017, wants to help physicians save time and increase the accuracy of diagnosis by analyzing patients’ health data using AI. Regard announced on Thursday that it raised a $61 million Series B round led by Oak HC/FT, with participation from Cedars-Sinai Health Ventures and existing investors TenOneTen, Calibrate Ventures and Techstars. The company is now valued at $350 million, according to a person familiar with the matter.

The company grew its revenue by 4.5 times in 2023 and is on a path to do a “similar amount of growth this year,” Ben-Joseph said. The company expects to reach profitability within the next two years.

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💎 More ex-military officials are becoming VCs as defense tech investment reached $35B
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💻 The distance between Silicon Valley and the Pentagon just keeps getting smaller. As venture capitalists continue to pour money into defense tech startups, they’re turning to a new hiring pool: veterans and ex-Department of Defense officials.

Andreessen Horowitz hired Matt Shortal, an ex-fighter jet pilot, as its chief of staff; Lux Capital brought on Tony Thomas, former head of U.S. Special Operations Command, as an adviser; and Shield Capital’s managing partner Raj Shah served in the Air Force.

💻 Hiring ex-military personnel can be a major advantage for firms, giving them “an understanding of what problems are actually on the battlefield,” instead of just “sitting in Silicon Valley and theorizing,” Ali Javaheri, PitchBook’s emerging tech analyst, told TechCrunch.

💻Silicon Valley pumped almost $35 billion into defense tech startups in 2023, and over $9 billion so far this year, according to a report released last week by PitchBook. This trend is anchored by some blockbuster fundraises.

💻 Shield AI, which produces an AI-powered drone pilot system, raised $500 million last year, and Anduril, Palmer Luckey’s defense tech startup, reportedly secured a fresh $1.5 billion in funding last month.

Although funding into the sector has slowed this year, Javaheri said it’s still shown “resilience” in the context of a brutal overall fundraising environment.

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⭐️'BOOOM' - the new €17m fund from solo GP Felix Plapperer
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💡 This week Felix Plapperer is officially joining the ranks of Europe’s solo GPs, as his VC firm, BOOOM, announces a final close of its first fund at €17m.

⭐️ The Berlin-based fund will invest in European B2B software startups at pre-seed and seed, with a particular focus on supply chain and procurement tech startups.

If you’re thinking that sounds familiar, it is — this is far from the only B2B SaaS-focused solo GP fund in Europe — but BOOOM has a twist. The three founders of German logistics unicorn sennder — David Nothacker, Julius Köhler and Nicolaus Schefenacker — “co-initiated the fund” and have committed to mentor all of its portfolio companies, Plapperer tells Sifted.

BOOOM will write cheques of €100k-€400k in around 30 companies. Like many solo GP funds, it won’t seek to lead deals.

⭐️ Investors in the fund include partners from well-known VC firms Accel, Index and Creandum, along with a handful of institutional investors and founders of tech companies including Celonis, King, Flix and sennder.

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🟢 Halo Industries Secures $80M for AI-Driven Semiconductor Innovation

➡️ Thomas Tull's US Innovative Technology Fund has led an $80 million Series B funding round for Halo Industries, valuing the company at $300 million post-money. Founded by Stanford researchers in 2014, this Bay Area startup is revolutionizing silicon wafer production for semiconductors using cutting-edge laser manufacturing technology.

➡️Halo's innovative approach to creating silicon carbide wafers is crucial for powering AI data centers, EV charging infrastructure, and electric grids. The company's environmentally friendly and cost-effective process offers a significant advantage over traditional mechanical and thermal methods. With revenue generation beginning in Q2 2023, Halo aims to scale its technology commercially and potentially go public within 3-4 years.

📌 This investment highlights the growing interest in next-generation semiconductor startups, driven by the increasing energy demands of AI technologies and the push for onshore semiconductor production. As AI continues to reshape various industries, the need for more efficient and powerful semiconductors becomes ever more critical.

The substantial funding secured by Halo Industries underscores the potential for significant growth in the AI infrastructure sector. As we witness the rapid advancement of AI technologies, investments in companies like Halo become crucial for sustaining this progress.

Keep an eye on this space, as innovations in semiconductor technology will play a pivotal role in shaping the future of AI and its applications across industries.

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🟢 Sequoia Capital Confirms Stripe's $70B Valuation, Offers Liquidity to Early Investors

➡️ Sequoia Capital, a major investor in payments giant Stripe, has made a significant move to offer returns to its limited partners (LPs) in funds raised between 2009 and 2011. The venture firm has proposed buying up to $861 million worth of Stripe shares, reflecting both investor demand for liquidity and Sequoia's confidence in Stripe's future.

➡️ This development comes amidst a dry IPO market, with only four venture-backed tech IPOs in 2024 so far. Stripe, once valued at $95 billion in March 2021, saw its valuation drop to $50 billion in 2023 before climbing back to $70 billion, as confirmed by Sequoia's recent 409A valuation.

➡️ Sequoia's total investment in Stripe since 2011 amounts to $517 million, with their current position valued at $9.8 billion. The firm remains optimistic about Stripe's durability across economic cycles and its future prospects. This move by Sequoia, along with Stripe's recent tender offer, suggests that the fintech giant may not be planning an IPO in the near future.

Sequoia's creative approach to offering liquidity highlights the evolving dynamics in the venture capital world, especially for long-held private investments. As Stripe continues to grow impressively, crossing $1 trillion in total payment volume in 2023, it remains a key player to watch in the fintech space, whether it chooses to go public or remain private.

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🟢 Menlo Ventures and Anthropic Launch $100M 'Anthology Fund' for AI Startups

➡️ Menlo Ventures, a major investor in AI startup Anthropic, has announced a collaboration to create a $100 million initiative called the "Anthology Fund". This fund aims to invest in pre-seed, seed, and Series A artificial intelligence companies, leveraging Menlo's close relationship with one of the world's leading foundational model companies.

➡️ The Anthology Fund will write checks starting at $100,000 and provide startups with $25,000 worth of credits to use Anthropic's models. This move comes after Menlo's recent investment of over $750 million in Anthropic, making it one of the company's top backers.

➡️ Tim Tully, a partner at Menlo Ventures, emphasized the opportunity to identify great companies building on Anthropic's technology or AI more broadly. The fund will use a proprietary machine learning tool to score and rank applications, with a more streamlined due diligence process compared to typical investments.

The Anthology Fund represents a strategic move by Menlo Ventures to capitalize on its strong position in the AI sector and foster innovation among early-stage AI startups. By offering both capital and access to Anthropic's models, this initiative could play a significant role in shaping the next generation of AI companies and technologies.

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🟢 Pro Rata Funds Emerge as New Trend in VC Investing

➡️ A new trend is emerging in venture capital: dedicated funds to help seed VCs exercise their pro rata rights in later funding rounds. Companies like Alpha Partners, SignalRank, and SaaS Ventures are raising capital specifically to support early-stage investors in maintaining their ownership percentages. This trend addresses the challenge seed VCs face when larger firms lead later rounds and try to squeeze out earlier investors.

➡️ SaaS Ventures, for example, recently closed a $24 million fund for this purpose. The strategy allows smaller VCs to continue participating in their successful portfolio companies' growth, even as valuations skyrocket. This approach is gaining traction as later-stage deals become more competitive and early investors seek ways to maintain their stakes in potential unicorns.

This trend could mean more support from your early investors throughout your startup's growth journey. It may also lead to more complex cap tables and negotiations in later rounds. Consider how you can leverage this trend to maintain strong relationships with your seed investors while still attracting larger VCs for growth rounds.

Be prepared to navigate the potential conflicts between new and existing investors, and consider how pro rata rights might impact your future funding strategies.

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🗣️ Climate VC Funds Gain Traction with Institutional Investors

➡️ Climate-focused venture capital funds are experiencing a significant surge in popularity among institutional investors. In the first half of 2024, 3% of all VC funds were dedicated to climate startups, tripling from five years ago. These funds have attracted nearly 5% of all LP capital commitments this year, defying the general fundraising slowdown.

➡️ Notable climate funds raised include Chevron Technology Ventures' $500 million Future Energy Fund III and Norrsken VC's $342 million Fund II. The sector's resurgence is attributed to influential players like Bill Gates' Breakthrough Energy Ventures and Chris Sacca's Lowercarbon Capital. Factors driving this trend include strengthening regulations, public pressure for ESG adoption, successful exits, and increased federal and state grant funding for climate tech startups.

As the energy transition gains momentum, climate VC funds are becoming increasingly attractive to institutional investors. This trend signals a growing recognition of the potential in climate tech innovations and the crucial role of venture capital in driving sustainable solutions. Keep an eye on this space for potential high-growth opportunities in the coming years.

🔗 Source #VentureHighlight

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🟢 28 US AI Startups Raise Mega-Rounds in 2024: A Venture Capital Surge

➡️ The AI sector continues to attract massive venture capital investments in 2024, with 28 US-based AI startups securing funding rounds of $100 million or more. Highlights include xAI's staggering $6 billion Series B, Scale AI's $1 billion round, and Xaira Therapeutics' $1 billion Series A. The funding spans various AI applications, from robotics and drug discovery to enterprise search and coding assistance. Notable investors include tech giants like Microsoft and Nvidia, as well as prominent VC firms such as Andreessen Horowitz, Sequoia, and Lightspeed Venture Partners.

This trend underscores the continued faith in AI's potential to transform industries and create significant returns for investors.

The sheer volume and size of these mega-rounds demonstrate that AI remains a hot sector for venture capital in 2024. As these well-funded startups develop and deploy their technologies, we can expect to see significant advancements and potentially disruptive innovations across multiple industries in the coming years.

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🟢 Alphabet's Potential $23B Wiz Acquisition: Implications for Venture Capital

➡️ Alphabet is reportedly in advanced talks to acquire cybersecurity startup Wiz for $23 billion, potentially marking its largest acquisition to date. This deal could significantly impact the venture capital and startup ecosystem:

1. M&A Catalyst: The acquisition could revitalize the stagnant startup M&A market, potentially encouraging other large tech companies to pursue similar deals.
2. Exit Opportunity: It represents a massive exit in a period of limited liquidity options for startups, especially late-stage ones.
3. Market Confidence: The deal's size signals strong market confidence in AI and cybersecurity sectors.
4. Limited Ripple Effect: While significant, the deal's uniqueness means it may not substantially alleviate the liquidity crunch for most late-stage startups.
5. Cybersecurity Focus: Highlights the growing importance and value of cybersecurity in the tech industry.

While Alphabet's potential acquisition of Wiz could inject much-needed energy into the startup M&A market, its impact may be limited due to the deal's exceptional size. Nonetheless, it underscores the enduring value of innovative tech startups and may encourage more strategic acquisitions in the near future. Investors and startups should closely monitor how this deal, if completed, influences market dynamics and valuations in the coming months.

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🗣️ SAFEs Dominate Pre-Seed & Seed Fundraising: Key Trends for Founders

➡️ Recent data reveals SAFEs (Simple Agreement for Future Equity) are now the preferred financing instrument for pre-seed and seed rounds across most startup sectors. Industries like Education, AdTech, and Fintech show over 90% SAFE usage, while more tangible asset-focused sectors like Medical Devices still lean towards Convertible Notes.

📌 Key SAFE trends include:

1. Valuation caps are nearly universal, with 62% having caps only and 29% including both caps and discounts.
2. Post-money SAFEs have become standard, accounting for 85% of 2024 agreements.
3. When discounts are used, 20% is the typical rate for both SAFEs and Notes.
4. SAFEs are more prevalent in major tech hubs, but their adoption is growing across all regions.

Founders, understand these trends to navigate your early-stage fundraising effectively. While SAFEs offer simplicity and founder-friendly terms, consider your industry norms and investor preferences when choosing between SAFEs and Convertible Notes.

🔗 Source #VentureHighlight

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🟢 VCs Spot Opportunities in CrowdStrike Outage Aftermath

➡️ The recent global outage caused by a CrowdStrike update has VCs eyeing new investment opportunities in tech infrastructure and security. Key focus areas include:

— Non-kernel cybersecurity solutions (e.g., Wiz, Oligo Security)
— IT management and monitoring tools (e.g., Fleet)
— Cloud observability companies
— API integration management (e.g., Middleware)

➡️ VCs emphasize the need for "watching the watchers" in cybersecurity and exploring alternatives to deep kernel access. The incident highlights vulnerabilities in critical systems and opens doors for startups offering innovative solutions. Investors predict a rise in companies addressing system stability, security, and infrastructure management, especially in sectors like finance and healthcare still relying on outdated tech.

For founders and VCs, this crisis presents opportunities in cybersecurity and IT management. As our digital world grows more interconnected, startups tackling these challenges could see significant growth. Keep an eye on innovations in non-invasive security and infrastructure resilience — they may shape the next wave of tech investments.

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🗣️ SPVs: The Backdoor to Hot AI Startup Investments

➡️ Venture capitalists are leveraging Special Purpose Vehicles (SPVs) to offer smaller investors access to shares in coveted AI startups like Anthropic, OpenAI, and xAI. This trend is driven by high demand and limited access to these companies' shares. Early backers create SPVs to exercise pro-rata rights, selling portions of their allocations to external investors.

➡️ The terms and fees vary widely, with some SPVs charging up to 2% of invested capital and 20% of profits. Multiple layers of SPVs can exist for a single company, each adding fees. Notably, Anthropic shares became widely available due to FTX's bankruptcy sale, while xAI's recent $6 billion round included SPVs with high fees. While these vehicles offer rare access to hot AI investments, they come with significant risks, including lack of direct company information and potentially high fee structures.

SPVs present a unique opportunity for smaller investors to access high-profile AI startups, but caution is crucial. Always conduct thorough due diligence and carefully consider the terms and fees before investing through these vehicles.

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🟢 QA Wolf Raises $36M for Automated App Testing Revolution

➡️ QA Wolf, a startup revolutionizing app quality assurance, has secured $36 million in Series B funding led by Scale Venture Partners. The company offers an "outcomes-based test coverage" approach, allowing developers to focus on feature work while QA Wolf handles comprehensive testing. This model has helped customers ship 2-5x more often and reduce rework. QA Wolf supports automated testing for Android, iOS, web, and Salesforce apps, with built-in maintenance and bug reporting capabilities. The platform's unique pricing model charges a flat rate for test creation, unlimited parallel test runs, and 24-hour failure investigation, aligning with customer goals for efficient coverage.

QA Wolf's significant funding and innovative approach to app testing highlight the growing demand for efficient, automated QA solutions. As app development continues to accelerate, tools like QA Wolf that streamline the testing process while improving outcomes are likely to see increased adoption.

This investment signals a potential shift in how companies approach quality assurance in the fast-paced world of app development.

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🗣️ Reality Check: The Harsh Truth About Startup Outcomes

➡️ Data from 3,067 US startups incorporated in 2018 reveals a sobering reality: 49% have closed, 45% are ongoing, only 5% were acquired, and a mere 0.2% reached IPO. This underscores the challenges startups face in achieving successful exits. To navigate these odds, focus on:

*️⃣Becoming a category-defining business like Uber or Netflix
*️⃣Choosing investors who offer guidance, not just capital
*️⃣Balancing growth with profitability for sustainability

➡️ The journey to building a formidable enterprise is a marathon, not a sprint. Reaching a sustainable model could be more valuable than chasing "unicorn" status. For AI Security startups and others, applying these principles can help create lasting value, regardless of exit outcomes.

While IPOs and acquisitions are rare, focusing on fundamentals like category leadership, strategic partnerships, and sustainable growth can lead to success. Remember, building a strong, profitable business is often more valuable than chasing elusive exit strategies.

🔗 Source #VentureHighlight

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🟢 Exoticca Secures €60M Series D for Multi-Day Tour Package Platform

➡️ Spanish startup Exoticca has raised a €60 million Series D round led by Quadrille Capital, showcasing the growing interest in digitizing complex travel bookings. The company's platform aims to revolutionize multi-day tour packages by offering real-time pricing and potentially reducing costs by up to 30%. Exoticca has seen impressive growth, doubling sales year-over-year since 2015 and now operates in eight countries, with a strong focus on the North American market.

➡️ The startup differentiates itself from competitors by providing a comprehensive solution that connects various travel components in one platform. With this new funding, Exoticca plans to expand its reach into Latin America, the Middle East, India, and China, further solidifying its position in the digital travel sector.

Exoticca's success story highlights the untapped potential in modernizing traditional travel services. The substantial funding and ambitious expansion plans signal growing investor confidence in platforms that streamline complex travel arrangements, presenting exciting opportunities in the evolving digital travel landscape.

🔗 Source #VentureNews

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🗣️Mayo Clinic Leads Hospital AI Readiness Index

➡️ CB Insights has released its Hospital AI Readiness Index, ranking top US health systems on their preparedness for AI adoption. The index evaluates health systems based on innovation (patents, acquisitions, and deal-making) and execution (AI implementation in clinical practice and internal operations). Mayo Clinic tops the list with a score of 46.21, excelling particularly in innovation. Intermountain Health and Cleveland Clinic follow closely.

➡️ Key activities driving AI readiness include investments in AI startups, patent filings in areas like cardiovascular health and oncology, and partnerships with AI companies for clinical decision support and pathology platforms. The index highlights the growing importance of AI in healthcare, from ambient documentation to surgical tools and digital wound care.

For venture capitalists and healthcare innovators, this index provides valuable insights into which health systems are leading in AI adoption and where opportunities for partnerships and investments may lie. It also underscores the accelerating integration of AI across various aspects of healthcare delivery and management.

🔗 Source #VentureHighlight

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🟢 U.S. Unicorn Growth Slows in June: A Shift in the Startup Landscape

➡️ June 2024 saw the addition of only four new unicorns to The Crunchbase Unicorn Board, all U.S.-based, marking the lowest monthly count this year. Interestingly, none of these newcomers are tied to the generative AI sector, signaling a potential shift in investor focus. These companies, aged 8-9 years, span diverse sectors including cybersecurity, sales & marketing, media & entertainment, and biotechnology.

➡️ Despite the slowdown in June, the first half of 2024 outpaced the same period in 2023, with 56 new unicorns compared to 50. The new entries added $104 billion in value to the board, with Elon Musk's xAI contributing a significant $24 billion. The U.S. continues to lead in unicorn creation, followed by China, with emerging markets also showing promise.

For venture capitalists, this data suggests a maturing startup ecosystem where achieving unicorn status is taking longer but potentially resulting in more stable, diverse companies. The slowdown in June might indicate a more cautious investment approach, but the overall growth in H1 2024 points to continued opportunities in the startup landscape, particularly in established tech hubs and emerging markets.

🔗 Source #VentureNews

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