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Overheated Late-Stage Market Pushes Fund Down to Seed
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By Yuliya Chernova, WSJ Pro
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Good day. It’s become common for seed funds to raise growth funds. Some later-stage investors are now moving down to the seed stages.
Index Ventures, which has historically focused on Series A through late-stage rounds, has raised $200 million for Index Origin, its first fund fully focused on seed rounds.
Nina Achadjian, a partner at Index, said the move into seed stems from several shifts in the market. On the one hand, the time between seed and Series A rounds for fast-growing startups is compressing, leaving less time for Index to build relationships with founders if it only connects with them post-seed, she said. At the same time, the late-stage game is getting more aggressive, pushing Index into the earlier stage.
“It’s two-fold. Top-down, getting smashed from growth funds, and bottom-up, [helping entrepreneurs who] instead of having three years to go to market have six months,” she said.
Historically many early-stage entrepreneurs liked partnering with multi-stage funds because they were getting a deep-pocketed firm invested in their future from the get-go.
But small checks are difficult to turn into meaningful investments for big firms. And so founders worry about ending up with an investor looking to secure an option for later rounds, if the startup succeeds, rather than one that wants to spend a lot of time and effort helping the startup early on.
Having a dedicated fund will help assuage such fears, Ms. Achadjian hopes. Every partner on the Index team will be able to invest through the fund, with each writing only one or two checks a year, she said.
“We have a $200 million fund, so every check matters, it forces the behavior of high-conviction seed investing,” she said.
And now on to the news...
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Dr. Katherine Squires, director of research and development operations at Antios Therapeutics. PHOTO: ANTIOS THERAPEUTICS INC.
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Potential chronic hepatitis B cure. Biotechnology startup Antios Therapeutics Inc. has secured $96 million in venture capital to fund its quest to effectively cure people with chronic hepatitis B infections, WSJ Pro’s Brian Gormley reports.
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Hepatitis B is liver inflammation caused by infection with the hepatitis B virus. Most healthy adults who are infected can clear the virus, but in some people hepatitis B infections persist for the long term. Chronic hepatitis B infection can lead to cirrhosis, liver cancer and death.
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U.S. children have received a vaccine to prevent hepatitis B infection since the 1980s, but infections that developed before vaccines became available remain a concern.
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Antios raised this financing to test its drug, which works in the liver to quell the virus, in clinical trials alongside an existing medicine, tenofovir. The combination could cure patients of chronic infections, according to Antios.
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862,000
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The estimated number of Americans living with chronic hepatitis B infections, according to the Centers for Disease Control and Prevention.
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Cybersecurity Firm Darktrace Targets $4 Billion London IPO
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Cybersecurity firm Darktrace PLC said Monday it aims to go public in London, hoping to cash in on growing demand for its software, The Wall Street Journal reports. The British technology company is targeting a valuation of as much as $4 billion in the initial public offering, which could raise between $350 million to $400 million, according to people familiar with the matter. Darktrace uses artificial intelligence to detect cyberattacks on the computer networks of companies and organizations. Darktrace said its sales grew at a compound annual rate of 58% between 2018 and 2020 as companies sought help tackling faster and more sophisticated cyberattacks that humans were struggling to keep up with.
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How Payment Processor Stripe Became Silicon Valley’s Hottest Startup
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The pandemic threatened to clobber Stripe Inc. Instead, it turbocharged the company, WSJ reports.
Stripe processes payments for e-commerce companies, keeping a tiny cut of each purchase as a fee for its services. When stay-at-home orders early in the pandemic caused spending to plunge and refund requests to skyrocket, the outlook wasn’t great.
Then everything moved online. More than 500,000 doctors’ offices, farmers markets and other businesses migrated to online payments and used Stripe to do it. As people worked out at home, redecorated or both, Stripe customers such as Peloton Interactive Inc. and Wayfair Inc. enjoyed blockbuster sales.
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Funds
TDK Corp.’s venture arm, TDK Ventures, closed its second fund at $150 million, or triple the amount raised for its inaugural fund in 2019. The new fund will focus on early-stage investments in sectors including clean technology, advanced materials, industrial, robotics, energy, autonomous vehicles, electric vehicles and healthtech, worldwide. TDK Ventures has offices in San Jose, Calif. and Boston.
Starting Line closed its second fund with $30 million in commitments, nearly double the amount raised for its initial fund in 2018. Limited partners in the new fund include Foundry Group, Vintage Investment Partners, Bracket Capital, 50 South Capital, Wicklow Capital and several individual investors. In addition to the new fund, the Chicago-based firm promoted Haley Kwait Zollo from principal to partner. Prior to joining Starting Line, she was vice president of strategy and business operations at Mac & Mia.
People
Shadow Ventures, which invests in the built environment, said Dana Barrett joined the firm as a venture partner. She will focus on media, communications and marketing strategy at the firm.
Suffolk Technologies, another built environment investor, hired Wan Li Zhu as managing director. Prior joining the firm, he was a partner at Fairhaven Capital.
Rental property management startup Mynd Management appointed Alejandro Ayestarán as chief business officer, Garret Albert as chief financial officer and David Zanaty as chief real estate officer. Mr. Ayestarán joins the Oakland, Calif.-based startup from Shift Technologies. Mr. Albert was previously vice president of finance at One Medical. Mr. Zanaty previously worked at Opendoor. Mynd raised a $41.5 million Series C round in June 2020 from Wells Fargo, Canaan Partners, Lightspeed Venture Partners and Jackson Square Ventures.
Exits
Accounts-payable automation provider Tipalti Inc. acquired procurement operations platform Approve.com for an undisclosed amount. In October 2020, Tipalti raised a $150 million Series E funding round at a valuation of more than $2 billion from Durable Capital Partners, Greenoaks Capital and 01 Advisors. Approve.com was seeded with a $5 million investment in August 2020 led by Aleph.
Podcast hosting network Liberated Syndication Inc. purchased podcast monetization platform Glow for an undisclosed sum. Glow was seeded in 2019 by investors including Greycroft, Norwest Venture Partners and Revolution’s Rise of the Rest Seed Fund.
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The Zebra, an Austin, Texas-based insurance comparison provider, raised $150 million in Series D funding from investors including Weatherford Capital and Accel, at a valuation of more than $1 billion. The company, whose backers also include Silverton Partners, Ballast Point Ventures, Daher Capital and Floodgate Fund, has secured more than $250 million to date.
GH Research Ireland Ltd., whose lead product is currently undergoing a clinical trial in patients with treatment-resistant depression, completed a $125 million Series B round led by RA Capital Management and RTW Investments. Additional new investors Acuta Capital Partners, Boxer Capital, Cormorant Asset Management, Deerfield Management, Logos Capital, Surveyor Capital, Venrock Healthcare Capital Partners and Verition Fund Management also participated in the funding, along with existing backer BVF Partners.
Tend, a dental startup with offices in New York and Nashville, Tenn., added $125 million in Series C financing. Addition led the round, which included support from GV, Juxtapose, Redpoint Ventures and Zigg Capital.
Antios Therapeutics Inc., a Mendham, N.J.-based developer of therapies to treat hepatitis B virus and other viral diseases, picked up $96 million in Series B financing led by Soleus Capital. New investors RA Capital Management, Adage Capital Management, Pontifax, Aisling Capital, Altium Capital, Amzak Health, Granite Point Capital Management and LifeSci Venture Partners also contributed to the round, alongside previous backers Lumira Ventures, CAM Capital, Delos Capital, Domain Associates and Sixty Degree Capital. David Canner from Soleus and Pontifax’s Iyona Rajkomar will join the board.
Memic Innovative Surgery, a Tel Aviv-based robot-assisted surgery startup, closed a $96 million Series D round. Peregrine Ventures and Ceros led the investment, which included participation from OurCrowd and Accelmed.
Hazel Technologies Inc., a Chicago- and Salinas, Calif.-provider of technology to increase the shelf life of produce, fetched $70 million in Series C funding. Pontifax Global Food and Agriculture Technology Fund and Temasek co-led the round, and were joined by S2G Ventures, Pangea Ventures, Rhapsody Venture Partners, Asahi Kasai Ventures, Jordan Park Group and the Jeremy and Hannelore Grantham Foundation.
Veriff, a Estonia-based identity verification provider, landed $69 million in Series B funding. IVP and Accel led the investment, with IVP’s Jules Maltz and Accel’s Matt Weigand joining the board. The company is also backed by Y Combinator, Mosaic Ventures and Nordic Ninja.
HawkEye 360 Inc., a Herndon, Va. developer of a space-based radio frequency mapping and analytics system, secured $55 million in Series C financing. NightDragon led the round, with participation from Advance, Razor's Edge Ventures, Shield Capital, Dorilton Ventures, Adage Capital and Esri International. Dave DeWalt, founder and managing director of NightDragon, will join the company’s board.
Battery Resourcers, a Worcester, Mass.-based lithium-ion battery recycling and manufacturing company, grabbed $20 million in Series B financing. Lead investor Orbia Ventures was joined by At One Ventures, TDK Ventures, Trumpf Venture, Doral Energy-Tech Ventures and Jaguar Land Rover's InMotion Ventures in the round.
Hack the Box, a U.K.-based provider of virtual hacking labs and interactive cybersecurity courses, raised $10.6 million in Series A funding. Paladin Capital Group led the round, with participation from Osage University Partners, Brighteye Ventures and Marathon Venture Capital.
Appzone, a Nigerian startup that delivers digital banking services, snagged a $10 million Series A round. CardinalStone Capital Advisers led the investment, with additional support from V8 Capital, Lateral Investment Partners, Constant Capital and Itanna Capital Ventures.
Movia Robotics Inc., a Bristol, Conn.-based maker of systems and software to help children with autism and robots to work together, was seeded with $5 million investment from ZFC Capital Partners II LP.
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Microsoft views its deal for the artificial intelligence developer as way to tap growth in the healthcare industry. PHOTO: LUCY NICHOLSON/REUTERS
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