Coatue to close European office / VC investors reduced crypto dealmaking in 2023 / French VC funding dips to lowest level since 2016
Inside Venture Capital
For January 09, 2024
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Here's a look at today's VC briefing.
* 🇪🇺 Tech downturn forced Coatue Management to close its European office
* 📉 VC investors drastically reduced their crypto dealmaking in 2023
* 🇫🇷 French VC funding dipped to the lowest level since 2016
Thank you.
Karan
p/karan-chafekar
1
Investment firm Coatue Management is shutting down its European office due to the global technology downturn. The news comes just two years after it established an office in Europe. Despite the closure, Coatue remains committed to European ventures, per an internal memo seen by Bloomberg.
More:
* The firm cited the need to streamline its investment approach and prioritize domain expertise over regional coverage as the core reasons for its withdrawal from Europe.
* Coatue's general partner in the U.K., Sarah Cannon, will step down from her role as she plans to stay in the nation.
* Cannon joined Coatue in 2022 from Index Ventures.
* Coatue has backed over 100 startups to date and launched a growth fund in 2021 to support promising late-stage startups.
* However, the firm reported an on-paper loss of about 30% on its $7.7B growth equity fund due to the slump in tech valuations and market volatility.
Zoom out:
* European VC investments made by crossover investors like Coatue dropped to a four-year low in 2023, per Atomico's latest report.
* Canadian VC firm Omers Ventures also shut down European operations in August 2023.
2
Crypto investors drastically reduced their investments in crypto startups in 2023 due to market volatility and the recent failure of high-profile startups such as FTX and BlockFI, per Pitchbook.
What the numbers say: Cryptocurrency exchange Coinbase's corporate VC arm, Coinbase Ventures, lowered its investment pace by 84% from H2 2021 to H2 2023. The firm participated in just 10 crypto VC deals in H2 2023, 64 lower than the same time in 2021. Rather than funding new startups, Coinbase Ventures opted to double down on existing companies. Early-stage VC firm Shima Capital participated in 13 crypto VC rounds in H2 2023, which is 76% lower than the 55 deals backed in H2 2021.
Relevance: Crypto investors with considerable cash reserves are focused on increasing their stakes in promising existing startups and are increasingly turning toward the secondary market to scoop up stakes. Out of the $1.2B invested since 2021, 10T Holdings allocated $660M to secondary trades.
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2023 was another tumultuous year as inflation, high interest rates, and general economic headwinds continued to constrain consumer behavior.
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3
French startups raised €9.4B ($10.3B) from VC investors in 2023, per Pitchbook. 2023's funding tally represents a 30% drop over the record high of €13.5B ($14.8B) set last year. Number of rounds dropped from 1.662 in 2022 to 1,231 in 2023.
More:
* Last year's total represents the lowest number of rounds since 2016.
* The total funding amount would have been much lower had it not been for battery maker Velkor's €2B ($2.19B) funding round and digital asset security startup Ledger's €460.8M ($504.4M) Series C round.
* Only two startups entered the unicorn club in 2023, much lower than five recorded in 2022 and nine in 2021.
* Despite the decline in funding, France's VC landscape was relatively better than its neighboring countries, mainly due to its stable exit environment.
* 163 venture-backed startup exits were recorded in France in 2023, just 15 below 2022's tally of 178.
* Of these exits, 122 were acquisitions.
4
Joshua Kushner's VC firm, Thrive Capital, is reportedly planning to raise a new fund between $3B and $3.4B to double down on technology startups, three sources informed the Financial Times. The firm is supposedly planning to start the formal fundraising process in the next few months. The fund's planning is still in the early stages, and details such as the target size could change before the launch.
More:
* Thrive Capital emerged as one the most influential VC firms in the U.S. after investing $1.8B in payments company Stripe and $130M in AI startup OpenAI in 2023.
* The firm last raised a $3B fund in Feb. 2022 to back early and late-stage startups.
* Thrive's previous funds have been backed by university endowment funds from Princeton and the University of Texas, the California Public Employees' Retirement System, and billionaires such as Mukesh Ambani, Xavier Niel, and Bob Iger.
Zoom out:
* News of Thrive's upcoming fundraising comes as U.S. VC firm's fundraising hit a six-year low in 2023.
* As a result, prominent VC firms, including Insight Partners and Tiger Global, lowered the target for their new funds.
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5
Southeast Asian growth-equity investor Asia Partners Fund Management held the final close of its second fund at $474M. The new fund brings the firm's total assets under management to over $1B.
More:
* The firm debuted with a $384M fund in 2021.
* Asia Partners' employees and board members have contributed 9% of the fund's capital.
* The firm typically invests between $20M and $100M in Series C and Series D startups that are capitalizing on the digital growth in Southeast Asia.
* Notable startups backed by the firm include ShopBack, Doctor Anywhere, SCI Ecommerce, GudangAda, Carsome, Snapask, and RedDoorz.
Zoom out:
* Asia Partners co-founder and partner Oliver Rippel is optimistic about Southeast Asia's potential and believes this decade will be a "golden age of entrepreneurship and innovation."
* Southeast Asian countries, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, collectively bagged $100B in revenue from the digital economy sector last year, eight times higher than 2016's tally.
* Ripple was previously the CEO of B2C e-commerce at Naspers.
6
Today's Funding:
Biotech
* Animal health biotech startup Gallant Therapeutics closed its Series A funding round at $15M. BOLD Capital led the round, joined by Digitalis Venture and Hill Creek Partners.
Robotics
* Robotic process automation platform Rewst raised a Series A round of $31M led by Meritech Capital. Existing investors OpenView, TDF Ventures, and Florida Funders participated in the round.
Software
* Anecdotes, a startup developing workflows and plugins to automate governance, risk management, and compliance, secured $25M in Series B funding. Glilot Capital Partners led the round with additional support from Vertex, DTCP, Red Dot Capital Partners, Vintage Investment Partners, and Shasta Ventures.
* Enterprise content tech platform Contents.com bagged $18M in Series B funding led by Alkemia Capital's Sinergia Venture Fund, with additional support from Thomson Reuters Ventures and others.
7
Quick Hits:
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* GIC and BlackRock-backed European battery manufacturing startup Northvolt is set to receive €902M ($987M) aid from the European Commission to set up a new EV battery manufacturing plant in Germany.
* Rocket manufacturing startup ABL Space Systems has raised $40M in fresh funding against a target of $100M, per SEC filings seen by TechCrunch. The firm emerged from stealth with a $200M funding at a $2.4B valuation in October 2021.
* Boston-based VC firm Cure Therapeutics hired Sage Therapeutics' former CEO, Jeff Jonas, and former chief scientific officer, Al Robichaud, as partners. The duo joins the firm as it gears up to start investing in neuroscience startups.
* Stellaris Venture Partners diluted 1% of its shares in Mama Earth's parent company, Honasa Consumer Ltd, for ~$16.9M (1.4B INR). After the transaction, Stellaris still has a 4.78% stake in the company.
* Khosla Ventures is reportedly leading a $30M funding round into a new AI startup launched by former Twitter CEO Parag Agrawal, per The Information. Index Ventures and First Round Capital are also supposedly participating in the round.
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Karan Chafekar Analyst
Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot.
This newsletter was edited by Aaron Crutchfield
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