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Assessing the Outlook for Venture
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By Marc Vartabedian, WSJ Pro
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Good day. We are restarting our Question of the Week. Each Friday, we will pose a question about the venture capital and startup ecosystem. Please send your answers to the email below by Thursday afternoon of the following week.
Kicking things off for this week, we asked: What is your outlook for venture investments in U.S. startups for the next three to six months? Here are edited responses:
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Maha Ibrahim, general partner at Canaan Partners: “We’ve seen faint signs of life in the IPO market with Instacart’s debut and hope that other companies in the pipeline—enterprise, consumer and healthcare—are able to get out in Q4 2023 or early next year. Distributions and availability of capital feed a healthier venture ecosystem.”
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Mark Buffington, managing partner of Atlanta-based BIP Ventures: “The maturing environment is raising the quality of startups operating in the Southeast. We expect to see similar improvements in the private capital industry. As the investment environment becomes more refined, the firms that have pushed for 'growth at any cost' over the past three or four years will be unable to keep operating. That fallout will create a tremendous investment environment for consistent, value-conscious funds.”
Next week’s question: What does the venture investing pullback mean for startup communities outside the major hubs in California, New York and Massachusetts? Please email responses to vcnews@wsj.com.
And now on to the news ...
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FCC Chairwoman Jessica Rosenworcel. PHOTO: TOM WILLIAMS/CQ ROLL CALL/ZUMA PRESS
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FCC revives ‘net neutrality.’ The Federal Communications Commission proposed to apply utility-like regulations to America’s internet service providers, a policy change expected to raise costs for Comcast, Charter Communications, AT&T and other blue-chip companies, The Wall Street Journal reports. The proposal, adopted by the agency’s Democratic majority Thursday in a 3-2 party line vote, opened another chapter of a long-running dispute about how Washington should oversee internet service.
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Under the Obama administration, the FCC classified internet providers as telecommunications utilities, imposing so-called net-neutrality rules that bar providers from favoring some internet content over others. But the Trump administration repealed that decision, saying utility-style regulation of the broadband market was unnecessarily intrusive.
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PE Firms Kicking In More Cash to Shore Up Portfolio Companies
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Private-equity firms are being forced to spend more money to keep the companies they own alive, as rising interest rates disrupt the buyout industry’s debt-heavy playbook, WSJ Pro reports. With credit costs at the highest level in years, companies that provide debt for private-equity deals are asking firms to chip in additional equity when they look to refinance, say people who research the leveraged-finance markets and advise private-equity firms on transactions.
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Private-equity firms typically try to minimize their own equity investment when they buy companies, while maximizing leverage. Doing so increases their potential profit while minimizing risks.
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But now banks and private-credit firms want private-equity sponsors to put more skin in the game.
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Visa, Mastercard Want a Slice of Africa’s Mobile Money
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African fintech companies have found creative ways to help the continent’s consumers spend their money. Traditional payments companies want in, WSJ reports. Global payment giants, including Mastercard and Visa, are pouring billions of dollars into African companies that have powered a sharp expansion in e-commerce on the continent. Recent deals have focused on mobile-money operators, which allow users to send funds using simple cellphones, and platforms that facilitate such payments for merchants without relying on credit cards or bank accounts.
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Corrections & Amplifications: Springcoast Capital Partners has built a portfolio of five companies so far. A blurb in Thursday’s newsletter incorrectly stated that the firm had a portfolio of more than 20 companies.
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Federal Reserve Chair Jerome Powell at an Economic Club of New York event on Thursday. PHOTO: BESS ADLER/BLOOMBERG NEWS
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Jerome Powell Signals Fed Will Extend Interest-Rate Pause
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Federal Reserve Chair Jerome Powell suggested the run-up in long-term Treasury yields could allow the central bank to suspend a historic run of interest-rate increases so long as recent progress on inflation continues, The Wall Street Journal reports. Powell’s remarks at a Thursday lunchtime address in New York closely tracked those of colleagues who indicated in recent days that they would hold short-term interest rates steady at their next meeting on Oct. 31-Nov. 1.
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Data
Founders of early-stage startups are more optimistic about their ability to raise capital now than they were last year, according to a survey of several hundred entrepreneurs in North America and Europe conducted between June and September by venture firm January Ventures. About 57% of respondents said they were more optimistic than nine months ago, an increase from 43% who said so in 2022, per the survey. Male entrepreneurs were much more confident than female ones. Some 68% of men said their fundraising sentiment improved versus 45% of women. That ratio was 49% to 39% in 2022, per the survey. Close to half of female respondents said they faced difficulties raising capital or put those efforts on pause, versus 32% of male entrepreneurs. — Yuliya Chernova
Funds
RevRoad Capital closed its first fund with $61 million in commitments to make seed-stage investments across the U.S., focusing on sectors including electric vehicles, artificial intelligence, software-as-a-service and manufacturing.
Web3-focused EnigmaFund, based in Portugal, raised a new evergreen fund.
People
Custom jewelry startup Wove appointed Simone Kendle as chief executive officer. She was previously co-founder and chief marketing officer at Parfait.
Property intelligence startup Arturo named Marty Smuin to the post of chief executive officer. He was previously chief operating officer and co-CEO of Weave Communications.
Employee scheduling software provider Shiftboard said Eric Amblard joined the company as chief financial officer. He most recently served as CFO of Roostify.
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SecureW2, an Amsterdam-based passwordless security software provider, landed an $80 million investment from Insight Partners.
Hivebrite, a community management and engagement platform with offices in New York, London and Paris, raised $37 million in Series B funding from investors including Quadrille Capital and Insight Partners.
Lanes & Planes, a Munich-based business travel and expense management software provider, picked up a $35 million Series B investment. Smash Capital led the round, with Managing Partner Brad Twohig joining the company’s board.
Agnikul Cosmos, an India-based space tech startup developing a small satellite rocket, completed a $26.7 million Series B round from investors including Celesta Capital.
Miovision, a Canada-based traffic intelligence provider, added a 36 million Canadian dollar investment (about $26 million) from Maverix Private Equity, McRock Capital and others.
Spec, a San Jose, Calif.-based fraud detection and defense provider, closed a $15 million Series A round led by SignalFire.
Overstory, an Amsterdam-based climate tech startup providing satellite vegetation intelligence, collected $14 million in Series A funding led by B Capital.
Objective, a search platform, emerged from stealth with $13 million in funding. Matrix Partners led the investment, which included participation from Two Sigma Ventures and others.
iink, a Tampa, Fla.-based digital payments network that expedites the disbursement of funds associated with multi-party property insurance claims, secured $12 million in Series A financing led by Headline.
Statement, a Tel Aviv-based startup providing a real-time cash flow forecasting module for companies, was seeded with a $12 million investment led by Glilot Capital Partners.
HawkEye 360, a Herndon, Va.-headquartered space-based radio frequency data and analytics startup, added $10 million in Series D1 funding from Lockheed Martin Ventures and others.
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Here is our weekly roundup of stories from across WSJ Pro that we think you'll find useful. They are unlocked for WSJ subscribers.
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The U.S. is warning businesses to be on the lookout for Iranian attempts to acquire goods–including circuit boards, aluminum tubes and gyroscopes–that could support its ballistic missile program.
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Judgment-preservation insurance will guarantee software firm Appian a $500 million award, despite a potentially lengthy appeal.
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A Houston bankruptcy judge resigned under a misconduct investigation.
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Ransomware attacks are increasing, and insurance claims after such attacks are rising, too.
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A woman walking past the head office of Japanese automaker Honda Motor in Tokyo. PHOTO: YUICHI YAMAZAKI/AGENCE FRANCE-PRESSE/GETTY IMAGES
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