Pre-Money: May 13th, 2024

KPIs

The week’s top performance indicators

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Dots & Lines

The week’s top takeaways

• IPOs are working, for those who get there: Venture’s most recent IPOs show positive results - Reddit ($RDDT) up 15% since its March debut and posting strong earnings last week, Astera Labs ($ALAB) up 13% since its offering, and Ibotta ($IBTA) and Rubrik ($RBRK) holding their value since their IPOs last month. So the best-in-breed unicorns who meet the bar to go public are being well-received. But the majority of the highest-valued private companies are getting left behind, and the horizon remains dim. Leading auditor BF Borgers, responsible for more than 1,500 SEC filings in recent years, is under investigation for failure to comply with accounting standards, which is likely to hold up several pending offerings. And after facing regulatory scrutiny in the US on its November IPO filing, fast fashion company Shein, last valued at $66B, is now looking to go public in London. Rewards are high for getting into the IPO club, but entry remains difficult.

• Unicorns finding alternate routes: For businesses that are solid, but not strong enough to IPO - accounting for enterprise value of more than $3T according to Preqin - several routes are available to raise capital. Venture funding is still challenging, with speculation that the slowdown will continue for five years. And those who do manage to raise are taking valuation haircuts - like Pharmeasy, once valued at $5.6B but now worth less than 10% of that. Acquisitions may be coming back - with Docusign scooping up document manager Lexion for $165M this week. And public companies like 23andMe and Squarespace, who did not fare well after their 2021 IPOs, are increasingly going private to regroup and improve. Still others, like WeWork and IronNet, navigated bankruptcy and are ready to emerge. However they accomplish it, companies are doing what it takes to stay in the game until they can turn a corner or find themselves in a more favorable market.

• AI still leading the charge: Despite continued concerns about inflated valuations, investors continue the AI “land grab,” piling into companies with the hope of picking one a few eventual winners. AI companies raised more than $13B in Q1, a 24% boost from the prior quarter, despite the total of 739 deals constituting a 6-year low. The sector is expected to haul in $80B this year at latest estimate, with the bulk concentrated in top names like CoreWeave, Anthropic and xAI. The year-long frenzy has driven median early-stage valuations in the sector to more than $70M, and sucked the oxygen out of the rest of the sector. OpenAI just announced GPT-4o, its latest model that will be provided free - which takes us a step closer to “Her,” Warner Brothers’ 2013 hit where Joaquin Phoenix falls for his AI companion - and seems likely to keep the excitement going.

Deal Points

A few items of interest

• NYC is becoming the second AI powerhouse behind SF with to a steady flow of funding, a migration of engineers and proximity to customers ready to use the tech

• Tiktok brought its initial lawsuit, as expected, to fight the divest-or-ban bill, invoking the First Amendment

• New York-based security provider Wiz raised a $1B Series E on a $12B valuation led by a16z, Lightspeed and Thrive

• Overall venture company funding again remained flat in April

• Abound, a London-based fintech lender utilizing AI-based underwriting, raised $600M in debt and equity in a Series B led by GSR Ventures and Citi

• Paris-based real estate data management provider Stonal raised $107M led by Aareon

• Atlan, a X-based data and AI governance platform based in Singapore, raised a $105M Series C at a $750M valuation led by led by GIC, the country’s Sovereign Wealth Fund

• While many LPs are leaning away from venture, those who lean in can reap the benefits by getting their pick of managers and terms

• Invest in the future of water: Kara Water, the world’s first alkaline air-to-water dispenser.*

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