Good day. Finally, the ice is breaking on new technology company IPOs. That will help defrost the later-stage venture market, but only for some companies—those getting close to profitability and willing to accept lower valuations. The rest will continue to struggle to raise capital.

Grocery delivery company Instacart, which went public Tuesday, is the first significant venture-backed tech initial public offering since the January 2022 listing of Credo Technology Group Holdings, said Jay R. Ritter, a professor of finance at the University of Florida’s Warrington College of Business where he studies IPOs. The next expected debut this week is for the marketing automation company Klaviyo.

Instacart shares popped, opening at $42, up from $30 a share where they priced Monday night. Its shares closed at $33.70. Both Instacart and Klaviyo raised their expected price ranges ahead of the IPOs, in a positive sign for demand.

Yet, Instacart’s IPO valuation of about $10 billion represented a significant drop from its last private financing valuation of $39 billion. Klaviyo, meanwhile, was expected to price roughly flat with its prior private-market mark, which was $9.5 billion in 2022, according to data provider PitchBook Data.

The market is thawing but these IPOs aren’t at all an indication of a return to the heyday of 2021, when most tech IPOs were unprofitable and priced at very high revenue multiples.

High-interest rates, expected to persist for a while, mean that riskier investments, such as unprofitable businesses, have become much less attractive. That is partly because investors can make more money on bonds and similar assets. Both Instacart and Klaviyo were profitable for the six months ended in June 2023, according to their regulatory filings.

By settling for lower valuations than perhaps expected at the time these companies raised their prior financing rounds, Klaviyo and Instacart will encourage more founders to accept current market pricing, said Merritt Hummer, partner at Bain Capital Ventures, where she leads growth-stage investments in software, fintech and other tech companies.

“What has changed is the normalization of raising new capital in a down round,” she said. “The stigma will start to wear off.”

That could help clear more deals that have stalled.

Read our full take on what the IPOs mean for the late-stage market here.

And now on to the news...

Stock market debut. Instacart’s shares jumped in their trading debut, another promising sign for a reawakening IPO market, The Wall Street Journal reports.

• Shares of the grocery-delivery company finished their first day of trading at $33.70 on Tuesday on the Nasdaq exchange under the ticker CART, up 12% from the IPO price of $30 a share.
   
• Instacart’s initial public offering had been in the works for years, and Chief Executive Fidji Simo said in an interview that the company’s main goal with the offering is to provide liquidity to its employees. Instacart already has been operating like a public company, she said, and following the IPO it will continue to look for acquisition targets and other ways to build its retail support technology.
   
• “We will continue to deepen and expand all of the services that we launched with grocers,” Simo said.

Elon Musk raised the idea of charging users of his X platform, saying it was the only way to eradicate fake and spam accounts, WSJ reports.

• Musk didn’t elaborate on the plan, including how much he might charge users, saying it would be “a small amount of money.” X, formerly known as Twitter, didn’t respond to a request for comment.
   
• “The single, most important reason that we’re moving to having a small, monthly payment for use of the X system is it’s the only way I can think of to combat vast armies of bots,” Musk said Monday as part of a wide-ranging conversation with Israeli Prime Minister Benjamin Netanyahu at a Tesla factory in northern California.

FTX has sued founder Sam Bankman-Fried’s parents to recover millions of dollars in “fraudulently transferred and misappropriated funds,” the company said in a court filing late Monday, WSJ reports.

• Joseph Bankman and Barbara Fried, both Stanford Law School professors, “exploited their access and influence within the FTX enterprise to enrich themselves,” the company, operated in bankruptcy by new management, alleged.
   
• The lawsuit, filed in a Delaware bankruptcy court, is the latest attempt by FTX’s chief executive, John J. Ray III, to claw back some of the funds that Bankman-Fried paid out to relatives and business associates prior to the cryptocurrency exchange’s collapse last November.

Funds

Astanor Ventures, which is focused on sustainable agrifood technologies, closed its second fund at €360 million (about $384 million). The firm has offices in Luxembourg, Brussels and Berlin.

Cortado Ventures, which focuses on investments in Oklahoma and surrounding states, is nearing the final close of its oversubscribed $80 million second fund. The firm’s total assets under management is now $110 million.

People

Tarsadia Investments is expanding its venture, growth and private investing practice with the addition of two new sector heads. Rikhil Bajaj will focus on financial technology, software and digital assets, while Shubhra Jain will lead the firm’s VGP investments in healthcare technology. Bajaj and Jain were previously at SignalFire and Cota Capital, respectively.

Mortgage technology startup Haven Servicing appointed Daniel Wallace to the post of chief executive officer. He succeeds co-founder Jonathan Chao, who will transition to chief product officer. Wallace was previously general manager of lending at Figure Technologies.

Indigo Ag, a Boston-based sustainable agriculture platform, picked up more than $250 million in funding led by Flagship Pioneering. 

ZayZoon, an earned wage access provider for small and mid-sized businesses, landed $34.5 million in Series B debt and equity funding led by Framework Venture Partners. The company has offices in Scottsdale, Ariz. and Canada.

Tabular, provider of an independent data platform based on Apache Iceberg, completed a $26 million funding round led by Altimeter Capital.

Bastion, a San Francisco-based Web3 infrastructure integration platform, secured $25 million in seed financing led by a16z crypto.

Alcion, a Santa Clara, Calif.-based data management startup, snagged $21 in Series A funding. Veeam led the round, which included participation from Nepenthe Capital and others.

Flex, a Miami-based provider of credit and finance management for businesses, scored $120 million in Series A equity and debt funding. The $20 million equity portion was led by Florida Funders.

Yurts, a San Francisco-based generative AI platform for enterprises, grabbed a $16 million Series A round led by Nava Ventures.

Stoïk, a Paris-based provider of insurance designed for cyber risk, collected a €10 million (about $10.7 million) investment led by Munich Re Ventures.

Superorder, a New York-based provider of management software for restaurants, closed a $10 million Series A and angel funding round led by Foundation Capital. The company was formerly known as Forward Kitchens.

Yotta Energy, an Austin, Texas-based renewable energy startup, fetched an $8 million investment led by Evergy Ventures. The company incorporates solar, energy storage and electric vehicle charging technologies into commercial buildings.

• Justice department probe scrutinizes Elon Musk perks at Tesla going back years
   
• SEC charges investment adviser linked to Russian oligarch Roman Abramovich
   
• Companies stall climate action despite earlier promises
   
• Amazon to hire 250,000 workers ahead of holiday season
   
• Bleeding money on subscriptions? These 3 tools will cancel them fast
   
• iPhone 15 and 15 Pro review: is Apple’s most expensive phone worth it?

• Xbox leak: new Xbox Series X design, next-gen in 2028, and more (The Verge)
   
• SVB’s commercial banking president: ‘Come on back, the water’s fine’ (TechCrunch)
   
• The physical process that powers a new type of generative AI (Quanta Magazine)

This newsletter was compiled by Yuliya Chernova and Zachary Cole.

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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