Good day. The California State Teachers’ Retirement System hired Sapphire Partners to manage the pension’s investments in emerging early-stage venture funds in the U.S. Sapphire Partners will now have about $200 million a year in total to invest, with about half of that dedicated to emerging venture funds in the U.S., said Sapphire Partner Beezer Clarkson. The exact amount will vary based on the market, she said. That’s an increase from about $125 million that Sapphire was deploying annually before the Calstrs deal, she said. WSJ Pro Venture Capital spoke with Clarkson about this deal and the current venture market. Responses have been edited for clarity and length.

WSJ Pro: How do you incorporate Calstrs’ interest in investing in diverse-led managers into your strategy?

Clarkson: Diversity is a positive outcome of investing in emerging managers. We have a higher than typical number of diverse managers. We believe that’s because we try to meet lots of funds and have a wide aperture. That does create more work. I think it’s important to create a process that addresses unconscious bias.

WSJ Pro: So many people were launching venture funds in the 2020-21 era. What do you expect to happen to that crop?

Clarkson: There should be some consolidation in the market. Some fund managers might decide they don’t want to start a new fund. Some that were starting funds on the side, while running other companies, we’ll see if that will continue. Some folks who raised small funds may join an existing platform. We’ve also seen funds that have to pause between fundraises.

WSJ Pro: What advice do you have to emerging fund managers that are struggling to raise in this market?

Clarkson: People should be prepared for this to be slow and hard. It used to take 18 months to raise a first fund. People might have forgotten that history. A number of new fund managers are very deal-focused. Portfolio construction, the audits, the annual meetings, that’s all part of the process. If that’s not work you want to do, that may not be an attractive path for you. Organize your data, tell us why you are different, and send us a downloadable deck. 

And now on to the news...

Arm IPO. Shares of Arm surged in its highly anticipated stock-market debut Thursday, in a sign of the reviving fortunes of an IPO market that has been in the doldrums for most of the past two years, The Wall Street Journal reports. The British chip designer’s stock closed up 25% from its $51 IPO price, at $63.59.

• The market reaction to the biggest offering of the year will be met with a sigh of relief from investors, as well as companies waiting in the wings to go public and Wall Street firms that reap lavish fees from underwriting IPOs.
• Many investors are still smarting from the poor performance of the 2020 and 2021 class of IPOs, most of which remain below their debut prices. But there have been signs of life in the IPO market recently.
• Arm’s first-day pop also bodes well for grocery-delivery company Instacart and marketing-automation platform Klaviyo, which are preparing for stock offerings next week. If all three perform well, it could encourage others. Instacart is now preparing to raise the target price for its IPO following the successful debut of Arm.

Intermediate Capital Group has hired a well-known research scientist and pharmaceuticals executive to advise its life sciences unit, WSJ reports. Dr. Samantha Budd Haeberlein joins the London investment manager as a senior adviser to the seven-person investment team, which backs companies that aim to address unmet medical needs. Haeberlein is also the group chief medical officer of Enigma Biomedical Group, where she oversees the development of therapeutic drugs to combat neurodegenerative diseases.  

A crash in the shares of electric-car startup VinFast Auto is serving as a warning: One of Wall Street’s hottest financial trends in recent years often ends with everyday investors getting burned, WSJ reports. The Vietnamese firm last month became one of the latest startups to go public by merging with a shell company, an alternative route to the stock market that became popular during the pandemic. The eye-popping swings in its shares that followed mirror the volatility that has been common among startups that went public the same way and reflect the quirks of how such deals often work.

Funds

Galvanize Climate Solutions, which focuses on early- to growth-stage climate startups, held the final close of its Innovation + Expansion Fund at over $1 billion. To date, the fund has invested in 11 companies across the electricity, transport, industry, buildings, agriculture and carbon-removal sectors.

Vertex Ventures Southeast Asia and India closed its fifth fund with $541 million in commitments, which is 80% larger than the firm’s previous fund raised in 2019.

Cervin Ventures raised $162 million in new capital to continue making seed and Series A investments in startups specializing in enterprise software, data and artificial intelligence, cybersecurity, DevOps, cloud and networking. The Palo Alto, Calif.-based firm said it will allocate $118 million to its fifth flagship fund, with the remainder going to an associated opportunities fund.

People

Anzu Partners appointed Cathryn Paine to partner. Before joining the company in 2017, she was deputy to the COO and led recruiting at Mapbox.

Uncork Capital said Amy Saper is joining the firm as a partner, where she will focus on seed-stage startups, primarily in the business-to-business software and fintech sectors. She was previously a partner at Accel.

Deep tech-focused Celesta Capital hired Anita Rehman as partner. She was most recently a partner at GSV.

Verkor, a French electric-vehicle battery startup, raised €2.1 billion (about $2.25 billion) to help launch a planned factory. The company said the round includes €850 million from Macquarie Asset Management, Meridiam, Renault, EQT Ventures, EIT InnoEnergy and Sibanye-Stillwater, €600 million from the European Investment Bank, and €650 million from French government subsidies. Funding from the French government is pending approval from the European Union while the capital from other investors is subject to standard regulatory approval, Verkor said.

Databricks, a data and artificial intelligence platform, grabbed over $500 million in Series I funding, giving the company a valuation of $43 billion. Funds and accounts advised by T. Rowe Price Associates led the round, which included additional support from Andreessen Horowitz and others.

Helsing, a Munich-headquartered defense company specializing in artificial intelligence-based software technologies, landed €209 million (about $222 million) in Series B funding led by General Catalyst. Saab contributed €75 million toward the round for a 5% stake in the company.

Pixis, a San Francisco-based developer of artificial intelligence technology for growth marketing, secured $85 million in Series C1 funding. Touring Capital led the round, which included participation from General Atlantic, Celesta Capital and others.

UBQ Materials, an Israel-based startup that has created a plastic substitute made from unrecyclable household waste, closed a $70 million investment led by Eden Global Partners.

Tarana Wireless, a Milpitas, Calif.-based wireless broadband technology provider, picked up a $50 million investment led by Digital Alpha Advisors.

floLIVE, a London-based cellular data network provider, raised $47 million in Series C funding co-led by Greenfield Partners and 83North.

Beam Benefits, an employee benefits provider offering dental, vision, life, disability and supplemental health coverage, collected a $40 million investment led by Georgian.

Kin, a Chicago-based home insurance startup, completed a $33 million Series D extension led by QED Investors, bringing the Series D total to $142 million.

ELSA, a Los Gatos, Calif.-based company leveraging machine learning and speech recognition technology to teach English, fetched $23 million in Series C funding led by UOB Venture Management.

Pahdo Labs, a New York-based game studio, secured $15 million in Series A financing led by Andreessen Horowitz.

Optera, a Boulder, Colo.-based ESG and carbon management software provider, raised $12 million in Series A funding led by Next Frontier Capital. The company helps companies reduce their environmental impact by providing carbon accounting technology, actionable insights and forecasts, and tools to collaborate with supply chain and investment partners.

• Microsoft, Oracle deepen cloud integration
   
• Google extends lifespan of Chromebooks with 10-year update policy
   
• Why you should buy a 5-inch-tall mouse (For your computer.)
   
• Carriers are offering great iPhone 15 deals—just beware the fine print
   
• Musk warns senators about AI threat, while Gates says the technology could target world hunger

• Driverless car company uses chatbots to make vehicles smarter (MIT Technology Review)
   
• The AI-detection arms race is on (Wired)
   
• Instacart was all about grocery delivery. No longer. (New York Times)
   
• San Francisco loses tech firm to Miami after $10 billion buyout (Bloomberg)

• Sponsors of the New York Jets and Aaron Rodgers are putting on a brave face after the star quarterback’s season-ending injury.
   
• Flexport founder Ryan Petersen is back at the top of the digital freight startup, but the hard part of executing on the Silicon Valley-style disruption he promised is still ahead.
   
• Company board directors say ESG efforts have brought about real benefits, but the political backlash has had an impact.
   
• 🎧 Listen to the Tillamook County Creamery Association’s Paul Snyder discuss why ESG is fundamental to the way the farmer-owned cooperative manages long-term risks.

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, Angus Loten and Marc Vartabedian.

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