Good day. Last quarter, the U.S. median early-stage startup valuation fell to $38.2 million, an eight-quarter low, according to analytics firm PitchBook.

That is welcome news to Mark Ghermezian, who just closed a $52 million debut fund for his new seed-focused firm MXV Capital. In previous years, startups commanded huge bumps in valuation in going from seed to Series A, which made keeping up difficult, Ghermezian said.

“I think this is healthy and the way it should be,” Ghermezian said.

The broader market made raising the fund difficult, Ghermezian said. He started fundraising at the beginning of last year and it took roughly a year to complete, a process he said he expects would have taken up to four months in a better market.

The firm tapped Bain Capital Ventures, Cendana Capital, Pritzker Group, K5 Global, Social Leverage, general partners of top-tier funds, former founders and family offices.

Ghermezian was previously an angel investor and is a co-founder and former chief executive of the marketing platform Braze, which had an initial public offering in 2021.

MXV so far has invested in 15 startups, is incubating two startups at the firm and has made two special purpose vehicle deals, Ghermezian said. The fund will target enterprise software companies.

The name of his New York-based firm is a play on the formula for momentum, Ghermezian said.

And now on to the news...

Pay cuts. Startup leaders are taking a pay cut to help their companies weather a prolonged slump in venture-capital investing, including fewer funding deals, falling valuations and unfavorable conditions for public-market debuts, WSJ Pro’s Angus Loten reports. 

• The downturn even has some of these chief executives dropping their paychecks to zero, in an effort to preserve cash during wider gaps between funding rounds, financial managers and investors say. 
   
• So far this year, the average annual salary for CEOs at U.S. startups has fallen to $142,000, down from an average of $150,000 in 2022, and a four-year low, according to Kruze Consulting, an accounting firm for venture-backed companies. The salary figures are based on an analysis of financial data from more than 400 of the firm’s private venture-backed startup clients, Kruze said.

Specialist investment firm NGP Energy Capital Management has raised $1.23 billion across two funds to make new bets in both the traditional and clean-energy sectors, The Wall Street Journal reports. The Dallas firm wrapped up its latest energy-transition fund, NGP ETP IV LP, with $700 million in commitments. NGP also said it recently closed on $527 million for its second fund to invest in mineral rights and royalties in oil and gas, NGP Royalty Partners II LP. The effort collected 65% more than the $320 million the firm banked for a predecessor fund in 2021. More than 30 investors backed the clean-energy fund, said NGP Managing Partner Chris Carter. One participant, the Kentucky Teachers’ Retirement System, pledged as much as $30 million, according to the WSJ Pro Private Equity LP Commitments database.

It is often said that investors have short memories. They may not be short enough for the founders of a new crypto exchange. Su Zhu and Kyle Davies, who ran the collapsed crypto hedge fund Three Arrows Capital, are among the founders of Open Exchange, which wants to let its customers trade bankruptcy claims on failed crypto companies, including Celsius, FTX and even Three Arrows itself. But the fledgling venture, which went live in April, has been hit with numerous problems since it launched, WSJ reports.

China is ramping up efforts to develop a satellite-powered internet network that can compete with Elon Musk’s Starlink, which has quickly expanded around the world and whose military applications have been on display in Ukraine’s defense against Russia, WSJ reports. Beijing’s ambition to build a satellite-broadband network has faced hurdles including limited launch capacity and technological barriers. But Starlink’s ability to maintain high-speed internet connections to Ukraine despite the country’s damaged telecommunications infrastructure underscored the need for similar fleets of satellites orbiting close to Earth. 

Private-equity firms are rushing to adapt to an economy in which their longtime cash cow—big leveraged buyouts—has grown a little tired. Recent first-quarter results reported by large private-equity managers showed firms trying to adjust to a new economy, WSJ Pro reports. Financing is tight, so big buyouts are scarce. Valuations are low, so asset sales are out. Instead, firms are rapidly trying to expand in private-credit, an investment strategy expected to thrive as interest rates rise and traditional lenders retreat.

Funds

TDK Ventures, a subsidiary of TDK Corporation, will launch its third fund, totaling $150 million. The new fund will make early-stage investments in energy transition, electrification, and decarbonization within the U.S. and Europe. TDK Ventures’ total assets under management is now $350 million. The fund, called EX1, is TDK Ventures’ first multi-LP fund.

Elkstone, a Dublin-based investment firm, announced that the Ireland Strategic Investment Fund has committed to anchor the final close of its €100 million early-stage Irish venture fund.

Exits

Kansas City, Mo.-based PayIt, a startup providing digital customer experience solutions for state and local governments, said it has entered into a definitive agreement to acquire conservation technology provider Sovereign Sportsman Solutions.

Odyssey, a Boulder, Colo.-based software platform for distributed energy in emerging markets, raised a $15 million Series A round led by Union Square Ventures, with additional participation from Equal Ventures, Twelve Below, Transition, Equator, MCJ Collective, Abstract Ventures, Founder Collective and Climate Capital. The new funding will help the firm to expand into Latin America and Asia.

Tangible, a San Francisco-based climate tech startup, raised $3 million in seed funding led by venture firm Foundamental.

Asymmetry Finance, a liquid staking tokens protocol startup, raised a seed round totaling $3 million in conjunction with the official launch of its platform. The raise was led by Ecco Capital, a venture capital fund focused on frontier crypto innovation.

• Jeff Bezos’ Blue Origin space company chosen to develop moon lander for NASA
   
• Apple restricts employee use of ChatGPT, joining other companies wary of leaks
   
• Google is spared a search-engine switch by a major partner
   
• China’s new chip ban on Micron puts South Korea in a delicate spot
   
• What the beep? Die-hards refuse to let go of their pagers

• This Austin accelerator made big claims; employees and customers say it didn’t deliver (TechCrunch)
   
• Germany pushes to expand startup incentives by end of year (Bloomberg)

This newsletter was compiled by Marc Vartabedian.

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.

Follow us on Twitter: @wsjvc