Pre-Money: Dec 18, 2023

KPIs

The week’s top performance indicators

Dots & Lines

The week’s top takeaways

• Fed will pivot away from “higher for longer” in ‘24: Investors across asset classes breathed a sign of relief this week as the Federal Reserve held the fed funds rate steady for the third straight meeting. More significantly, it signaled that the rate hike cycle action is likely complete, and to expect three cuts next year. The “higher for longer” mantra has brought stress and fear to the venture ecosystem, and arriving at its end is a bullish signal looking ahead.

• We’re either ‘back’ or reaching a new normal: Don’t expect the end of the fed cycle to bring back the party right now, though. Challenges continue. Venture funds are taking longer to raise than any time since 2015, clocking in at 15.8 months on average. Time between rounds has grown, and the valuation markups they command have narrowed. At the end of a year in which more than 1,000 companies have laid off employees, Cruze, Etsy and Bolt added to the tally this week. But funds are still closing with new capital, underscoring LPs’ continued commitment to the asset class. It’s likely we’re reaching a new status quo, more akin to how things were in 2015, as opposed to going back to the halcyon days of 2021.

  
  
  

  

  
  

• AI is larger than life and top of mind across domains: Artificial Intelligence continues to defy the overall industry trends, scoring another week with gobs of cash being raised and continuing to dominate the conversation broadly. France-based Mistral AI was the winner of this week’s funding news, raking in more than $415 Million from a16z and other big names to compete with OpenAI. Regulators continued to opine on how the new platform creates risks and requires careful regulation across various industries, including financial services. And the Pope labelled the technology a risk to humanity. Like crypto before it, this new computing platform is on its way to becoming much more than just a technological innovation.

• Regulatory hurdles sink Figma deal and present a growing risk: Adobe’s bid to purchase design software Figma fell apart this week, triggering a $1 billion breakup fee. Blockers to acquisition are a growing concern in the space. Venture investors win when a company goes public or when it is purchased by a larger competitor. That second avenue is being challenged lately as regulators - led by the European Commission in this case and FTC Head Lina Khan in other recent actions - have been faster to invoke anti-trust and competitive concerns.

Deal Points

A few items of interest

• Unicorns remain rare in the wild but are not extinct, with more than a handful remaining and new ones having been spotted over the past month

• Epic Games, maker of Fortnite, won a potentially significant victory in its long-fought case chipping away at the market power of the Google Play app store

• Leaving venture capital firm Accel closed a $650 million early stage fund, underscoring that this could be a great moment to seed companies for the next cycle

• Venture investor and contrarian Balaji Srinavasan, founder of Earn and CTO of Coinbase, announced a novel fund to back “network states,” and is inviting the public to join

• WeWork founder Adam Neumann is back in business, with the launch of Flow’s first live-work property in Fort Lauderdale

• Nvidia founder Jensen Huang’s admission that if given the chance he probably would not do it again brought out many hot takes, including one reminding us startups are hard

• Nerdwallet founder Jake Gibson provided an inspiring rallying cry to the ecosystem, urging entrepreneurs to shake off the shell shock and get back on their horses

• SpaceX’s tender offer is rumored to be coming together at a higher price than planned, boosting the space exploration company’s value to $180 billion and proving that the opportunity to back Elon Musk is as desirable as ever