I’m not being facetious. Data shows that it is a tough market for many VCs who are currently raising money. PitchBook’s mid-year update of its 2024 U.S. Venture Capital Outlook, just published by PitchBook, illustrates this.
The report paints an image of a divided industry between the haves, and the have nots. If you are a large, well-established company, you have a good chance of being able to fundraise successfully at this time. If you’re a smaller, newer firm, it will be a challenge.
The average fund size is $153.5 million this year, compared to $149.4 in 2023. This is because many major firms have closed funds in the billions of dollars, from Andreessen-Horowitz to Norwest Venture Partners. (A16z’s $7.2 Billion raise accounted for 80% of all VC dollars raised during Q1.
These well-established names may not be representative of the entire sector, where smaller, younger VCs struggle to close funds. PitchBook reports that at the time it pulled the data, 181 funds were closed in 2024. This is the lowest number of funds in the last decade.
PitchBook reports that if General Catalyst closes its $6 billion fund by the end of Q2, established managers will have raised as much money in the first half of this slow fundraising period as emerging managers have over the last 18 months.
It’s not that everything is perfect, even at a reputable firm. Exits are still a sensitive subject. It’s hard to blame LPs if they’re antsy. According to PitchBook, the rate at which distributions are returned to LPs is at its lowest since 2009.
The valuations of AI are high, but ZIRP-era values are not necessarily holding. In Q1 2024, down rounds reached their highest level in 2014, accounting for 17% of VC transactions in that quarter. Then there’s the reality check: In Q1 this year, flat rounds and down rounds represented 27.4% of VC deals–a decade-high.
Even sectors that are no longer popular are still growing. Fintech is a good example. Embedded finance is booming and is expected to reach $320 billion by 2030.
Now that I’ve laid the facts out, it’s finally time to be honest: Olivia Rodrigo 2021 hit song “Brutal” doesn’t have anything to do with startups and VC. The song is about the in-betweenness and agony of adolescence. “Ego crush/God, this is brutal.”
A song that is a masterpiece can be applied to many different things. Rodrigo made me think of VCs that aren’t the most well-known, long-established names in the industry right now. Many are going through a period of business adolescence with its accompanying existential growing-pain. The ego crush must be severe if you launched a fund during the 2021 boom.
The only way to get out of adolescence is through.
See you tomorrow
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Joe Abrams has curated the deals section in today’s newsletter.
VENTURE DEALS
Etched, an AI chipmaker based in San Francisco, has raised $120 million. Primary Venture Partners, Positive Sum Ventures, Hummingbird, Fontinalis Fontinalis, Lightscape Earthshot and others were also part of the round.
Fetcherr is a Tel Aviv-based generative AI engine for pricing, inventory and publishing. It has raised $90m in Series B funding. Battery Ventures led the funding round, and was joined by other investors.
Exsilio Therapeutics is a Boston-based developer of genome medicines. The company raised $82 million as Series A funding. Novartis Venture Fund, Delos Capital, OrbiMed and Insight Partners were the lead investors in this round. Morgan Life Sciences Private Capital and CRISPR Therapeutics were among the other participants.
Prewave, an Austrian platform for sustainability, risk and compliance in supply chains, has raised $67 million as part of Series B funding. Hedosophia, a leading investor, was joined by Creandum and existing investors Creandum Ventech Kompas Speedinvest and Working Capital Fund.
k-ID is a Singapore-based platform that helps youths comply with online gaming regulations. It has raised $45 million as Series A funding. Lightspeed Venture Partners and Konvoy were also involved in the round.
TechWolf is a Ghent-based company that generates enterprise skill data. It has raised $43 million as Series B funding. Felix Capital led the round, which was also joined by SAP Ventures, ServiceNow Ventures and Workday Ventures.
Conduit, the San Francisco-based blockchain app launch platform, has raised $37 million as Series A funding. Paradigm Ventures and Huan Ventures were the lead investors in this round, with Robot Ventures and Credibly Neutral joining them. Coinbase Ventures and Bankless Ventures also participated.
Formic Technologies in Woodridge, Illinois, a manufacturer of robots, has raised $27,4 million as Series A funding. Blackhorn Ventures led this round, which was also joined by Mitsubishi HC Capital America and Translink Orchestrating Future Fund. Alumni Ventures, FJ Labs and others.
Norm Ai is a New York City based platform for regulatory AI that has raised $27 million as Series A funding. Coatue led this round, which was also joined by Bain Capital Ventures (Bain), Blackstone, New York Life Ventures (New York Life Ventures), Citi Ventures and others.
LiveEO, a Berlin-based company which uses satellite data and AI to detect climate risks for critical infrastructure, has raised EUR25 million ($26.8million) in Series B financing. NordicNinja, German DeepTech & Climate Fonds and others were involved in the round.
Deskpro, a developer of help desk applications based in Austin, Texas, has raised $25 million from Elsewhere Partners as part of its Series A funding.
Hero Bread, an innovative San Francisco-based company that produces healthy baked goods, has raised $21 million. Cleveland Avenue, DNS Capital and Composite Ventures led this round, with Greatpoint Ventures joining them.
Payabli, an Miami, Fla.,-based platform that helps developers integrate payments infrastructure in their software, has raised $20 million Series A funding. QED Investors led this round, which was joined by existing investors TTV Capital and Bling Capital.
Climate X is a platform based in London, U.K., that analyzes climate risks and their impact on the value of physical assets. GV (Google Ventures), Pale blue dot and CommerzVentures led the round, and were joined by Blue Wire Capital and PT1.
COMPREDICT raised $15 million Series B funding. The Darmstadt-based company develops virtual sensors that collect data on car mobility. Woven Capital led this round, and Shift4Good was also involved.
Travertine Technologies is a Boulder-based company that helps critical element producers reduce environmental waste and carbon emission from their processes. The company has raised $8.5 million from Holcim MAQER Ventures as well as the Grantham Foundation for the Protection of the Environment. Clean Energy Ventures and Bidra Innovation Ventures.
Daytona, an open-source development environment manager based in New York City, raised $5 million as seed funding. Upfront Ventures was the lead investor in this round, and 500 EE joined them.
PRIVATE EQUALITY
Flexpoint Ford led an investment of $165 million in Create Music Group – a music and entertainment company based in Hollywood, Calif.
St. – Engelman’s Bakery is a portfolio company owned by Shoreline Equity Partners. Armands Baking Company is a bakery based in Bradenton, Florida. The financial terms were not disclosed.
EXITS
– eHouse acquired VL OMNI a Canadian e-commerce platform based in Ontario. The financial terms of the deal were not disclosed.
Precision Pulley & Idler has acquired Continental Global Material Handling from Stellex Capital Management, a Winfield-based manufacturer of conveyer equipment. The financial terms were not disclosed.
Rivean Capital has agreed to purchase Intero Integrity Services from First Reserve, a critical infrastructure inspector based in Tricht, Netherlands. The financial terms were not disclosed.
SCI Flooring, one of Rainier Partners’ portfolio companies, has acquired Carpetbaggers Inc., an Indianapolis-based provider of floor installation services. The financial terms were not disclosed.
ToxStrategies acquired Clintrex Research Corporation in Sarasota (Florida), a clinical research company. The financial terms were not disclosed.
OTHER
– JFrog, (NASDAQ:FROG), has agreed to purchase Qwak AI. Qwak AI is a New York-based platform for managing and building AI workflows. The financial terms were not disclosed.
IPOS
TWFG, an insurance company based in The Woodlands, Texas, has filed to become public on Nasdaq. The company reported $179 million of revenue for the fiscal year ending March 31st, 2024. Bunch Family Holdings, RenaissanceRE Ventures and Bunch Family Holdings are the backers of the company.
FUNDS + FUNDS
Elsewhere Partners is a private equity firm based in Austin, Texas. They raised $285 million to fund their third fund, which focuses on B2B software firms.
MiddleGame Ventures is a Luxembourg-based firm that specializes in fintech. They raised EUR150m ($160.4m) for their third fund.
PEOPLE
Katelyn Johnson, a managing partner at the New York-based venture capital company Cohen Circle, has been hired. She was previously with American Family Ventures.