Good day. Last week we asked if this downturn is different, and what, if anything, is unique about this one compared with past pullbacks.

• Mark Goldstone, a partner at venture firm Eckuity, said, “Yes, this downturn is different, but all downturns have a unique signature. The key is to focus on what led to any one specific downturn. If we compare to the last pullback, which became a recession in 2008, the economy is now in a much better place. Compared with 2008, banks are much stronger, liquidity is far higher, LP dry powder is far higher, and the evolution of technology is much faster.”
   
• Simon Sharpe, a partner in the mergers and acquisitions group at law firm Proskauer Rose LLP, said, “Venture-backed companies have become increasingly reliant in recent years on capital from non-traditional venture investors, such as hedge funds, corporate VCs and pension funds. Will the last investors into the market on the way up be the first ones out on the way down? While tolerance for risk is a hallmark of traditional venture capitalists, we have not yet seen how these other institutional investors behave in a significant or prolonged downturn in VC fundraising.”
   
• Geoff Yang, founding partner of Redpoint Ventures, said, “Don’t panic—be present with employees. Cycles are part of business, and stronger companies will emerge and the weak will be culled. It’s a good thing. I'm telling founders now, like I've told others before them: slow spending and conserve cash and lower your break even rate, sharpen your focus, and do it now.”

This week’s question: What books do you recommend for summer reading?

Note to readers: The Pro VC newsletter won't be published Monday in observance of Memorial Day in the U.S. We will be back on Tuesday.  

And now on to the news...

The SPAC boom brought a wave of companies to the public markets promising years of rapid growth and profits to investors. Two years since the boom began, many of these companies are already warning they may go bust, WSJ reports.

At least 25 companies that merged with special-purpose acquisition companies between 2020 and 2021 have issued so-called going-concern warnings in recent months, according to research firm Audit Analytics.

Among those to issue the warnings—which come when a company’s auditor determines there is “substantial doubt” about its ability to stay afloat for the next 12 months—are a company planning to build an air-taxi network, numerous upstart electric-vehicle companies and a scooter-rental business.

A U.S. central bank digital currency could one day provide consumers with a level of safety amid a proliferation of privately issued digital assets such as stablecoins, Federal Reserve Vice Chairwoman Lael Brainard told House lawmakers Thursday, WSJ reports. Ms. Brainard told the House Financial Services Committee that in the future a central bank digital currency could coexist with and be complementary to stablecoins by providing a widely available, government-backed means of payment. “It could provide a safe, central bank liability as the neutral settlement layer in the digital financial ecosystem,” she said. “It would actually facilitate and enable private sector innovation.”

Individual investors are increasing their bets on private-equity vehicles, hoping that these funds’ long-term horizon will offer a refuge from volatile public stock and fixed-income markets, WSJ Pro reports. Private-fund managers say inflows of money from wealthy individual investors have increased this year, and asset managers expect the trend to continue as higher interest rates and inflation weigh on publicly traded assets.

Macro issues such as inflation, stock-market volatility and war in Ukraine will compel venture investors this year to spend more time tending to their existing portfolio companies and to weigh new investments carefully, said Jeff Grabow, U.S. venture capital leader for Ernst & Young. That has several implications, he said, including:

• Venture capitalists can finally take a vacation. The venture-financing market roared in the recent years leading up to 2022. As a result, venture investors were often afraid to take time off for fear of missing deals. This summer’s funding climate will likely be cooler, so they won’t have to react as quickly to investment opportunities, Mr. Grabow said.
   
• For startups, fundraising will become more difficult. Companies that have to raise capital this year will need to showcase their success in winning new business and satisfying existing customers to catalyze investment rounds. They also will want to close financings quickly. If the process drags, it could send a bad signal to the market about the company, according to Mr. Grabow.
   
• Entrepreneurs can no longer afford a growth-at-all-costs mindset. Executives will have to think more about where they are in their path to reaching break-even and profitability. That includes ensuring operations are lean and paring back in areas where the company might be overreaching, he said.

—Brian Gormley

Funds

SYN Ventures closed a $300 million second fund to continue making investments in early-stage cybersecurity, industrial security, national defense, privacy, regulatory compliance and data governance startups. The firm also appointed Ryan Permeh as an operating partner. He was previously co-founder and chief scientist at Cylance. West Palm Beach, Fla.-based SYN Ventures raised $165 million for its inaugural fund last year.

London-based Synthesis Capital, a global food technology and alternative protein investor, launched its inaugural $300 million fund. The oversubscribed vehicle’s limited partners include CPT Capital, Société Familiale d’Investissements, Nuveen, Credit Suisse Climate Innovation Fund, Dynamic Loop Capital, DisruptAD, The Nest, Heyi Holdings, trusts associated with the Sainsbury family, Interogo Holding, WTT Investment Ltd., CIFF and others. Synthesis Capital Fund I LP’s investments to date include Upside Foods, Perfect Day, Redefine Meat and Culture Biosciences.

Proptech-focused 1Sharpe Ventures closed its debut fund with $90 million in commitments. The fund aims to back 30 to 40 startups and will write checks in the $500,000 to $2 million range. The Oakland, Calif.-based firm has to date invested in Freemodel, Carats & Cake, Flock Homes and Cottage through the fund.

People

Antibody therapeutics startup Alchemab Therapeutics appointed Young T. Kwon as chief executive, succeeding Douglas A. Treco. Before joining the London-based company, Mr. Kwon was chief financial and business officer at Momenta Pharmaceuticals. Alchemab Therapeutics is backed by investors including RA Capital Management, Lightstone Ventures, DCVC, DHVC, SV Health Investors and the Dementia Discovery Fund.

Webscale, an e-commerce cloud platform, appointed Michael Hutchinson as chief financial officer. He joins the company from FogHorn. Santa Clara, Calif.-based Webscale is backed by investors including Benhamou Global Ventures, Mohr Davidow Ventures and Grotech Ventures.

Secure cloud networking provider Aviatrix named Michael Welts to the post of chief marketing officer. He was previously CMO at Wasabi Technologies. In September, Santa Clara, Calif.-based Aviatrix said it raised a $200 million Series E round from TCV, Insight Partners, CRV, General Catalyst, Meritech, TrueBridge Capital Partners and others.

Exits

Paddle, a payments infrastructure provider for software-as-a-service companies, acquired ProfitWell, a subscription metrics and retention automation software developer, for more than $200 million in cash and equity. Earlier this month, Paddle said it raised $200 million in Series D equity and debt financing at a valuation of $1.4 billion from investors including KKR & Co., FTV Capital, 83North, Notion Capital, Kindred Capital and Silicon Valley Bank.

Product management platform Productboard Inc. acquired SatisMeter, a user engagement analytics provider, for an undisclosed amount. Earlier this year, San Francisco-based Productboard secured $125 million in Series D funding from Dragoneer Investment Group, Tiger Global Management, Bessemer Venture Partners, Sequoia Capital, Kleiner Perkins, Index Ventures and Credo Ventures. SatisMeter is listed in the portfolio of Nextech Ventures.

Bloom, a provider of growth capital to digital entrepreneurs, secured a £300 million (about $377 million) Series A investment led by Credo Capital Partners and funds managed by Fortress Investment Group. Christopher Dailey, co-managing partner of Credo, will join the company’s board.

Motive, a San Francisco-based operations automation provider formerly known as KeepTruckin, landed $150 million in Series F funding, giving the company a valuation of $2.9 billion. Insight Partners and Kleiner Perkins co-led the round.

Nowports, a Mexico-based digital freight forwarder serving Latin America, picked up $150 million in Series C funding, bringing the company’s valuation up to $1.1 billion. SoftBank Latin America Fund led the round, which included contributions from Tiger Global Management, Foundation Capital, Monashees, Soma Capital, Broadhaven, Mouro Capital, Tencent and Base10 Partners.

Booster, a San Mateo, Calif.-based mobile energy delivery platform, scored more than $125 million in Series D funding. Rose Park Advisors led the round, which included participation from Chaac Ventures, Equinor Ventures, Thayer Ventures, Cercano Management, Conversion Capital, Enterprise Holding Ventures, Invus Opportunities, Madrona Venture Group, Maveron Ventures, Perot Jain and Version One Ventures.

FINN, a car subscription platform, closed on $110 million in Series B equity, along with $720 million in debt, valuing the company at more than $500 million. Korelya Capital led the equity portion, which saw participation from Keen Venture Partners, Climb Ventures, Greentrail Capital, Waterfall Asset Management, White Star Capital, HV Capital, Heartcore Capital, UVC Partners and Picus Capital.

StarkWare Industries, an Israeli blockchain technology startup, raised a $100 million Series D round, quadrupling the company’s valuation to $8 billion since its Series C funding six months ago. Greenoaks Capital and Coatue Management led the new investment, which included additional support from Tiger Global Management and others.

Babel Finance, a crypto financial services provider, completed an $80 million Series B round at a valuation of $2 billion. Investors included Jeneration Capital, 10T Holdings, Dragonfly Capital, BAI Capital, Circle Ventures and others.

Airspace, a Carlsbad, Calif.-based logistics technology provider, added $70 million in funding. DBL Partners, Telstra Ventures and HarbourVest Partners co-led the round, which saw participation from Scale Ventures, Defy Ventures, Qualcomm Ventures and Prologis Ventures. Joel Hwang, principal of HarbourVest, was appointed to the Airspace board.

Clozd, a Lehi, Utah-based provider of win-loss analysis technology for corporate sales teams, snagged $52 million in Series A financing. Lead investor Greycroft was joined by Madrona Venture Group and Album VC in the round.

Redbud Brands, an Austin, Texas- and Los Angeles-based startup focused on creating, funding and scaling consumer brands, nabbed a $46 million investment. Satori Capital led the round, which included contributions from Sands Capital, VMG Partners and others.

Zip, a San Francisco-based provider of a single platform for any employee to initiate a purchase or vendor request, grabbed $43 million in Series B funding, giving the company a $1.2 billion valuation. Led by Y Combinator Continuity, the round included additional support from Tiger Global Management and CRV.

Regrow Ag, whose software helps food and agriculture companies to achieve net-zero carbon goals, raised $38 million in Series B funding. Lead investor Galvanize Climate Solutions was joined by TIME Ventures, Rethink Impact, Cargill, Main Sequence Ventures, Ajax Strategies, M12 and others in the round.

• Apple boosting pay budget for workers amid tight labor market
   
• Twitter to pay $150 million privacy fine as Elon Musk deal looms
   
• Alibaba, hit by Covid in China, posts slowest revenue growth since IPO
   
• Crypto security debate goes to court

• Charm Industrial’s big bet on corn stalks for carbon removal. (MIT Technology Review)
   
• This new chip design could save Moore’s Law and reshuffle the industry. (Protocol)
   
• Scientists grow cells on a robot skeleton (but don’t know what to do with them yet). (The Verge)

This newsletter was compiled by Matthew Strozier, Zachary Cole and Brian Gormley.

WSJ Pro Venture Capital is a premium service of The Wall Street Journal. We cover venture capital and the global startup ecosystem. Share your tips, comments and questions: vcnews@wsj.com

The Team: Matthew Strozier, Yuliya Chernova, Brian Gormley and Marc Vartabedian.

Follow us on Twitter: @wsjvc, @ychernova, @BrianPGormley, @marcvarta.