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Question: How Long Will the Down Market Last?
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By Marc Vartabedian, WSJ Pro
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Good day. Last week we asked how, if at all, the recent market turmoil is affecting firms’ use of the secondary market.
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John Avirett, a partner at investment firm StepStone Group, said that liquidity in the venture-capital sector is slowing, leading firms to pursue alternative methods to provide clients liquidity via the secondary market. Such methods include general partner-led restructurings, LP tenders, portfolio strip sales, and partial sales of a single portfolio company. “We expect the volume of VC secondaries to increase over the coming years given this dynamic.”
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Ali Hamed, general partner at Crossbeam Venture Partners, wrote that it’s too early to tell. “Before secondaries can get productive, buyers are going to need (i) a higher fidelity view on where the market will ultimately get priced (things are too volatile to tell right now), (ii) what growth and execution will look like within portfolio companies who have recently reduced expenses, and (iii) there needs to be a general re-setting of expectations of what books are really worth. There's just not enough willingness, yet, to be honest about what private portfolios are really worth, since they're still mostly held at their last round valuations.”
This week’s question: How long do venture investors think the down market will last? While nobody really knows, what timelines are investors mapping out in their projections?
Please email responses to marc.vartabedian@wsj.com.
Note to readers: We won't have a newsletter on Monday in observance of Juneteenth.
And now on to the news...
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PHOTO: ANDRE M. CHANG/ZUMA PRESS
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Investors in Celsius Network LLC are unlikely to provide more financing to bail out the struggling cryptocurrency lender, said people with knowledge of the situation, Vipal Monga and Angus Loten report for WSJ Pro. A big Canadian pension fund, Caisse de dépôt et placement du Québec, and WestCap Group, a growth-equity firm founded by technology investor Laurence Tosi, a former chief financial officer of Airbnb Inc., aren’t expected to put in more money to help the crypto lender, these people said.
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WestCap and Caisse de dépôt last year led a Series B funding round that raised $750 million for Celsius and valued the crypto startup at more than $3 billion.
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“Few are feeling OK about things,” said one person with knowledge of the discussions between Celsius and its investors. “There was more risk in this than fully appreciated,” the person said, referring to the investment in Celsius.
More: Celsius Is Crashing, and Individual Crypto Investors Are Spooked
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$6,000
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Tesla Inc. has raised the prices on some of its cars by as much as $6,000, as the electric-car maker grapples with surging costs along its supply chain.
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Fintech Giant Klarna Slashes Fundraising Ambition
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Klarna Bank AB is considering raising fresh funds at a significantly lower valuation than it achieved a year ago, according to people familiar with the situation, a sign of the punishing environment for tech companies, The Wall Street Journal reports. The Swedish payments firm is in talks with investors about a deal that could value the company at around $15 billion, the people said, less than it was seeking just last month. The Journal reported Klarna was in talks to raise up to $1 billion at a low $30-billion-range valuation. One of the people said the current talks could yield at least $500 million. There is no guarantee a deal will take place.
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Rivian, Lucid, Lordstown, Canoo, Fisker: EV Startups’ Fight to Survive
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PHOTO COMPOSITE: GEORGE DOWNS
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VIDEO: Electric-vehicle startups like Rivian, Lucid, Fisker, Canoo and Lordstown are having to adjust to the realities of making vehicles in a harsh economy. WSJ’s George Downs explains some of the challenges they’re facing and why some even risk going out of business.
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Join us on July 19 for a members-only virtual event to discuss portfolio management in turbulent markets with industry specialists and journalists from WSJ Pro Private Equity. The event will feature two panel discussions–one on how limited partners are adapting to current market conditions, the other looking at trends in the secondaries market. You can register here.
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Funds
Project A Ventures closed its fourth fund with $375 million in commitments to continue making investments focusing on sectors including fintech, commerce, enterprise software, data infrastructure, supply chain and climate tech across Europe. The London- and Berlin-based firm recently participated in funding rounds for petcare company Dalma, fintech startup ExpressGroup and customer service platform Yoummday.
Tel Aviv-based Greenfield Partners closed on $350 million in commitments for Greenfield Partners Fund II and several additional investment vehicles. Fund II will make Series B and Series C investments in 15 startups with a focus on enterprise software, fintech and consumer/internet. To date, the fund has invested in companies including Capitolis, Coralogix, Cynet, Silverfort, Panorays, EquityBee, Mixtiles, DustPhotonics, Planck and Quali.
Inovia Capital raised $325 million for its fifth early-stage fund. The new vehicle recently led funding rounds for healthcare startup Signal 1 and cybersecurity provider Flare.
People
GlycoEra AG, which is developing treatments for diseases with high unmet medical need in autoimmune, oncology, neurology and infectious disease indications, appointed Tanmoy Ganguly as chief scientific officer. He was previously a vice president at Evelo Biosciences. The company, based in Switzerland and Boston, raised more than $49 million in Series A funding last year co-led by 5AM Ventures, Sofinnova Partners and Roche Venture Fund.
Exits
Student debt management platform FutureFuel.io acquired College Finance Co., a multi-lender marketplace for education financing, for an undisclosed amount. Alongside the deal, FutureFuel.io rebranded as Candidly and announced several new hires. Kevin Walker joins as co-founder and president, Meera Oliva was named chief marketing officer and Jackie Ward was appointed chief people officer. Candidly is backed by investors including Equal Opportunity Ventures, Impact Engine, Rethink Impact, Salesforce Ventures and Vulcan Capital.
Revenue operations platform Clari Inc. acquired conversation intelligence startup Wingman for an undisclosed sum. In January, Sunnyvale, Calif.-based Clari said it closed a $225 million Series F round from investors including Blackstone, Maverick Capital, B Capital Group, Bain Capital Ventures, Madrona Ventures, Sapphire Ventures and Sequoia Capital. Wingman is listed in the portfolios of Arali Ventures, Speciale Invest, VentureSouq and Y Combinator.
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AlphaSense Inc., a New York-based market intelligence and search platform, raised $225 million in Series D funding, giving the company a $1.7 billion valuation. The Growth Equity business within Goldman Sachs Asset Management along with Viking Global Investors led the investment, which included a debt investment from funds and/or accounts managed by BlackRock secured earlier this year.
Zoovu, a Boston-based customer experience platform for business-to-business and business-to-consumer brands, scored $169 million in Series C funding. FTV Capital led the round, with Brad Bernstein, Alex Malvone and Bob Ranaldi joining the company’s board.
Metropolis Technologies Inc., a Los Angeles- and Nashville, Tenn.-based mobility commerce platform, landed $167 million in Series B funding. Co-led by 3L Capital and Assembly Ventures, the round included participation from Dragoneer Investment Group, Eldridge, Silver Lake Waterman, UP Partners, Moving Capital, Zigg Capital, Slow Ventures, Halogen Ventures and others.
Vendr, a Boston-based software-as-a-service buying platform, secured $150 million in Series B financing. Craft Ventures and SoftBank Vision Fund 2 co-led the round, which included contributions from Sozo Ventures, F-Prime Capital, Sound Ventures, Tiger Global Management and Y Combinator.
DataStax Inc., a Santa Clara, Calif.-based data management provider, picked up a $115 million investment. Goldman Sachs Asset Management’s Growth Equity business led the round, which included contributions from Crosslink Capital, Meritech Capital Partners and OnePrime Capital.
Fountain, a San Francisco-based applicant tracking system for high volume hiring, added $100 million in Series C funding, bringing the round total to $185 million. B Capital Group led the extension financing, which included participation from SoftBank, Mirae Asset Venture Investment, DCM Ventures, Origin Ventures, Commerce Ventures, SemperVirens Venture Capital, Uncork Capital and others.
Turntide Technologies, a Sunnyvale, Calif.-based provider of energy-efficient motors and electrification technology, snagged an $80 million investment, valuing the company at over $1 billion. Investors in the round included OGCI Climate Investments, SDCL Energy Efficiency Income Trust, Fifth Wall and Meson Capital Partners.
Aerin Medical Inc., a Sunnyvale, Calif.-based developer of noninvasive treatments for chronic nasal conditions, closed a $60 million funding round. Ally Bridge Group led the investment, which included additional support from KCK MedTech, Questa Capital and OrbiMed. Kevin Reilly, managing director of Ally Bridge Group, joined the board.
AirSlate Inc., a provider of workflow automation technology, completed a $51.5 million financing round, giving the company a $1.25 billion valuation. G Squared led the investment, which saw participation from UiPath.
Wahed Inc., a New York-based Islamic fintech startup, said Wa’ed Ventures, the venture capital arm at Saudi Aramco Entrepreneurship Center, is leading the company’s $50 million Series B round.
Elevate K-12, a Chicago-based startup offering live-streamed instruction to K-12 classrooms, closed a $40 million Series C round led by General Catalyst. Lexi Reese, executive-in-residence at General Catalyst, will join the company’s board.
Lightning AI, a New York-based artificial intelligence-building platform formerly known as Grid.ai, raised $40 million in Series B funding. Lead investor Coatue Management was joined by Index Ventures, Bain Capital Ventures, First Minute Capital and Mantis VC in the round. Coatue General Partner Caryn Marooney joined the board.
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Andy Jassy, chief executive of Amazon, in October. PHOTO: DAVID RYDER/BLOOMBERG NEWS
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